President Trump Fires Two Commissioners and Solidifies Control Over FTC
On March 18, 2025, President Donald Trump removed the two remaining Democrats serving on the Federal Trade Commission (FTC), Rebecca Slaughter and Alvaro Bedoya.
Commissioners Slaughter and Bedoya, whose terms were not due to expire until September of 2029 and 2026, respectively, declared the firings illegal and vowed to sue to get their jobs back.
By statute, the FTC is headed by five Commissioners, no more than three of whom can represent the political party in power. At present, however, and with the announcement of the firing of Commissioners Slaughter and Bedoya, only two Commissioners remain, Chair Andrew Ferguson and Commissioner Melissa Holyoak, both Republicans. President Trump’s nomination of Mark Meador has been approved by the Senate Commerce Committee but awaits confirmation by the full Senate.
Although the removal of these Commissioners effectively eliminates the current deadlock at the FTC, it is unclear whether the FTC can effectively operate with only two Commissioners. Furthermore, the legality of the firings will surely be questioned, as might any actions made by the remaining Commissioners.
President Trump Announces World-Wide Reciprocal Tariffs
In a “Liberation Day” speech on April 2, 2025, President Trump announced the imposition of world-wide reciprocal tariffs on the United States’ trading partners. The White House shortly thereafter released an Executive Order entitled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits“ (the Reciprocal Tariffs E.O.). The President also issued a supplemental Executive Order titled “Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports“ that removes the $800 de minimis exception for goods sent to the US from China or Hong Kong (the China De Minimis E.O.).
According to the President, the Reciprocal Tariffs E.O. is aimed at addressing the US goods trade deficit through the imposition of reciprocal tariffs on imports from various trading partners. The order seeks to rebalance trade by enforcing higher tariffs on foreign goods, while also encouraging US manufacturing and protecting national security interests. The Administration has asserted that the tariffs are a response to long-standing trade imbalances, where foreign economic policies and non-reciprocal trade practices have contributed to deficits and undermined US industrial capacity.
Both Executive Orders utilize the International Emergency Economic Powers Act (IEEPA) to impose tariffs, a move that was unprecedented prior to this Administration. As this represents a novel use of IEEPA, the courts have yet to directly address the legal implications of imposing tariffs under this authority.
This alert outlines key provisions of the new Executive Orders and the potential implications for businesses and trade practices moving forward.
Reciprocal Tariff Rates
Global 10% Tariff on All Imports: A 10% additional tariff will apply to all imports from all trading partners, unless specifically exempted.
Higher Tariffs for Certain Countries: Higher country-specific tariff rates will apply to imports from certain trading partners listed in Annex I of the Reciprocal Tariffs E.O. The country-specific tariffs range from 11% (Democratic Republic of the Congo) to 50% (Lesotho).
China is assessed a 34% tariff, while countries in the European Union have a 20% tariff. Tariff lists separately released on the White House X account include many smaller countries not included on Annex I, meaning Annex I could be subject to change. Neither Annex I nor the X account lists specify tariffs for Canada, Mexico, or Russia.
Tariffs Are Additional to Other Duties: The new tariffs do not replace existing duties, fees, taxes, or charges. They stack on top of any other applicable trade measures, unless subject to specific exceptions.
Timing of Implementation
General 10% Tariff Implementation (April 5, 2025)
The 10% additional tariff will apply to all imported goods entering the US starting at 12:01 a.m. (EDT) on April 5, 2025.
This tariff applies to goods that are either entered for consumption (formally brought into the US market) or withdrawn from a warehouse for consumption on or after this date.
However, there is an exception: Goods that were already loaded onto a vessel at the port of origin and were in transit as of 12:01 a.m. on April 5, 2025, will not be subject to the additional tariff, even if they arrive and clear customs after this date.
Country-Specific Tariff Implementation (April 9, 2025)
The separate set of country-specific tariffs (as detailed in Annex I of the order) will take effect at 12:01 a.m. (EDT) on April 9, 2025.
These country-specific tariffs apply only to goods from specific trading partners listed in Annex I.
Like the general 10% tariff, these new duties apply to goods that are either entered for consumption or withdrawn from a warehouse for consumption on or after April 9, 2025.
Again, there is an exception: Goods that were already loaded onto a vessel and were in transit before 12:01 a.m. on April 9, 2025, will not be subject to the country-specific tariff, even if they arrive and clear customs after this date.
Goods Exempt From the New Tariffs
National Security Exemptions: Goods covered under 50 USC. 1702(b), which generally includes essential humanitarian items such as food, medicine, and medical devices.
Steel and Aluminum Products: Any steel or aluminum products (and their derivatives) that are already subject to Section 232 tariffs under previous Presidential proclamations, including:
Proclamation 9704 (2018): Aluminum tariffs
Proclamation 9705 (2018): Steel tariffs
Proclamation 9980 (2020): Derivative steel and aluminum tariffs
Proclamation 10895 (2025): Updated aluminum tariffs
Proclamation 10896 (2025): Updated steel tariffs
Automobiles and Auto Parts: Any automobiles and automotive parts that are already subject to Section 232 tariffs under Proclamation 10908 (2025).
Future Section 232 Actions: Any goods that may be subjected to future Section 232 tariffs, meaning additional exemptions could apply if new trade restrictions are enacted under national security grounds.
Specific Product Exemptions: Various goods explicitly exempted in Annex II of the Reciprocal Tariffs E.O., including:
Copper;
Pharmaceuticals;
Semiconductors;
Lumber articles;
Certain critical minerals; and
Energy and energy products, including electricity (note that electricity was already exempt from merchandise entry requirements, including paying import duties and fees).
Goods Subject to Column 2 Tariffs: Any goods imported from a country that falls under Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS), which applies to nations without normal trade relations with the US (i.e., Cuba, North Korea, Russia, and Belarus).
US Content Limitation
Tariffs Apply Only to Non-US Content: If an imported product contains at least 20% US content, the new tariffs will apply only to the non-US portion of the product’s value. This means that products with significant US components or processing will have a lower effective tariff burden.
Definition of US Content: “US content” includes materials or components that are: (1) entirely produced in the United States, or (2) substantially transformed in the United States, meaning they undergo a significant change in form, function, or character within the US.
Interaction Between New Tariffs and Existing Canada, Mexico and China Tariffs
China: The new tariffs are added on top of the recent China IEEPA tariffs. The China De Minimis E.O. also confirms that the Secretary of Commerce now has adequate systems in place to collect tariff revenue and ends the duty-free de minimis treatment for goods from China and Hong Kong valued at or under $800, subjecting them to applicable duties.
Postal items shipped to the US valued at or under $800 will face a duty rate of either 30% of their value or $25 per item, increasing to $50 after June 1, 2025. US Customs and Border Protection (CBP) may also require postal packages to go through formal entry procedures, in which case they will be subject to all applicable duties, taxes and fees.
Canada and Mexico: The new tariffs will not be applied on top of the recent Canada and Mexico IEEPA tariffs.
If those tariffs are terminated, then: (1) United States Mexico Canada Agreement (USMCA) goods originating from Canada and Mexico will not face additional tariffs and (2) non-USMCA-originating goods will be subject to a 12% tariff (instead of 25%).
The new tariffs will not apply to: (1) energy, energy resources, and potash from Canada and (2) US-manufactured products that incorporate duty-free Canadian or Mexican parts under USMCA.
Tariff Mitigation Strategies
Foreign Trade Zones (FTZs): Goods must be admitted as “privileged foreign status” under 19 CFR 146.41. This means the duty rate is locked in at the time of FTZ admission, and the product will be taxed at that rate even if its classification changes later. Goods that qualify for “domestic status” under 19 CFR 146.43 (typically US-origin goods or goods that have cleared customs duties) are not subject to this restriction.
Duty-Free De Minimis Treatment: Goods qualifying under 19 U.S.C. 1321(a)(2)(A)-(B) will continue to receive duty-free de minimis treatment.
With the exception of goods covered by the China De Minimis E.O., goods qualifying under 19 U.S.C. 1321(a)(2)(C) (i.e., small-value shipments under $800) will continue to receive duty-free treatment until the Secretary of Commerce determines that US systems can efficiently process and collect duties on them. Once the Secretary of Commerce notifies the President that enforcement systems are ready, duty-free de minimis treatment will be revoked for affected goods under 19 U.S.C. 1321(a)(2)(C).
Duty Drawback: The Reciprocal Tariffs E.O. does not specifically prohibit duty drawback, unlike some of President Trump’s other recent tariff actions, including the IEEPA tariffs on Canada, Mexico and China. The absence of an explicit prohibition suggests that, unless CBP determines otherwise, businesses may still be eligible to claim duty refunds on imported goods that are offset by exported goods – including exports of items manufactured from imported components, export of items similar but not identical to imported goods, and even items exported by different companies. This leaves open the possibility for importers to recover duties paid on qualifying goods, which could provide some relief for businesses engaged in re-exporting operations. However, as with previous tariff regimes, it is important for companies to stay informed and monitor CBP guidance for any additional clarifications or restrictions that may be issued regarding duty drawback under this order.
Customs Valuation: Certain costs can be excluded from the customs valuation of imported goods to help reduce the tariff burden, such as expenses for transportation, insurance, and related services incurred during the international shipment process. These exclusions can provide a opportunity for businesses to lower their overall import costs. However, it’s important to note that customs valuation rules are stringent, and with the recent implementation of new tariffs, these practices are likely to be subject to increased scrutiny by CBP—particularly since the President noted during his Liberation Day speech that “we’re going to be very severe on the people at the gate that watch tariffs and watch the products coming in . . . we’re going to treat them so good, but if they cheat the repercussions are going to be extremely strong.” Companies should exercise caution and fully comply with the applicable regulations to avoid potential penalties or adjustments.
Potential Tariff Modifications
Additional Action if Current Tariffs Are Ineffective: The Secretary of Commerce and the United States Trade Representative, in consultation with other key officials, will recommend additional actions to the President if the current tariffs do not effectively address the emergency conditions, such as: (1) the increase in the overall trade deficit; and (2) the expansion of non-reciprocal trade arrangements by US trading partners that threaten US economic or national security.
Response to Retaliation: If a trading partner retaliates by imposing tariffs on US exports or taking other countermeasures, the President may choose to modify the HTSUS to increase or expand the scope of duties to counteract such actions and ensure the tariffs remain effective.
Adjustment Based on Positive Developments: If a trading partner takes significant steps to align with the US on trade and national security issues, the President may modify the HTSUS to reduce or limit the duties imposed under the order, as a sign of goodwill and to encourage further cooperation.
Impact of US Manufacturing Conditions: Should US manufacturing capacity and output continue to worsen, the President may decide to increase the duties under the order to further protect domestic manufacturing.
United States Trade Representative 2025 National Trade Estimate Report on Foreign Trade Barriers – China Needs to Increase Damages and Criminal Penalties for IP Infringement
On March 31, 2025, the United States Trade Representative (USTR) released their 2025 National Trade Estimate Report on Foreign Trade Barriers, with the longest section being dedicated to China at 47 pages. With respect to intellectual property, the USTR acknowledged that China has issued some final measures relating to implementation of the IP chapter of the Phase One Agreement, including the Patent Law, the Copyright Law and the Criminal Law. However, the USTR listed outstanding areas including “the protection of trade secrets and confidential business information from unauthorized disclosures by government personnel and third-party experts; criminal enforcement of trade secrets theft; enforcement procedures to combat online infringement, including an effective notice and takedown system; the protection and enforcement of trademark rights, particularly against bad faith trademark registrations; increases in the minimum and maximum levels of statutory damages and criminal penalties for IP infringement; patent term extensions for unreasonable marketing approval delays; and geographical indications. “
For ease of reference, the China IP-related sections are reproduced below. The full Report is available here.
Technology Transfer
For years, longstanding and serious U.S. concerns regarding forced or pressured technology transfer remained unresolved, despite repeated, high-level bilateral commitments by China to remove or no longer pursue problematic policies and practices. In August 2017, the Office of the United States Trade Representative (USTR) sought to address these concerns by initiating an investigation under Section 301 focused on policies and practices of the Government of China related to technology transfer, IP, and innovation. Specifically, in its initiation notice, USTR identified four categories of reported Chinese Government conduct that would be the subject of its inquiry: (1) the use of a variety of tools to require or pressure the transfer of technologies and IP to Chinese companies; (2) depriving U.S. companies of the ability to set market-based terms in technology licensing negotiations with Chinese companies; (3) intervention in markets by directing or unfairly facilitating the acquisition of U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and IP; and (4) conducting or supporting cyber enabled theft and unauthorized intrusions into U.S. commercial computer networks for commercial gains.
In March 2018, USTR issued a report supporting findings that the four categories of acts, policies, and practices covered in the investigation are unreasonable or discriminatory and burden and/or restrict U.S. commerce. In November 2018, USTR issued an updated report that found that China had not taken any steps to change its problematic policies and practices. Based on the findings in USTR’s Section 301 investigation, the United States took a range of responsive actions, including the pursuit of a successful WTO dispute challenging certain discriminatory technology licensing measures maintained by China in addition to the imposition of substantial additional tariffs on Chinese imports.
The Phase One Agreement, signed in January 2020, addresses certain aspects of the unfair trade practices of China that were identified in USTR’s Section 301 report. In the agreement, among other things, China committed to end its longstanding practice of forcing or pressuring foreign companies to transfer their technology to Chinese companies as a condition for obtaining market access, securing administrative approvals, or receiving advantages from the Chinese Government. China also committed to provide transparency, fairness, and due process in administrative proceedings and to ensure that technology transfer and licensing take place on market terms that are voluntary and reflect mutual agreement. Separately, China committed to refrain from directing or supporting outbound investments aimed at acquiring foreign technology pursuant to its distortive industrial plans.
Since the entry into force of the Phase One Agreement in February 2020, the United States has continually engaged with the U.S. business community, which has expressed concern about China’s actions, including those that are informal and unwritten, that force or pressure U.S. companies to transfer their technology to Chinese entities, including as a condition for obtaining market access. The United States has engaged China as issues arise and will continue to monitor developments closely.
In May 2022, USTR commenced the statutorily mandated four-year review of the tariffs that had been imposed on Chinese imports as a result of the Section 301 investigation into China’s unfair acts, policies, and practices related to technology transfer, IP, and innovation. As part of this review, USTR examined the effectiveness of the tariff actions in achieving the objectives of the original investigation, other actions that could be taken and the effects of those actions on the United States economy, including consumers. In May 2024, USTR issued a report that found that while the Section 301 tariff actions have been effective in certain respects, China’s unfair acts, policies, and practices had continued and, in some cases, had worsened. Pursuant to the President’s direction, USTR also proposed, and sought comments on, modifications to the existing Section 301 tariffs. In September 2024, in accordance with the President’s direction and after reviewing the public comments, USTR announced the final modifications to the actions, which maintained the current tariffs while increasing tariffs on Chinese products in targeted strategic sectors. In December 2024, USTR announced further modifications, which increased some of the tariffs.
Technical Barriers to Trade
Standards
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Over the years, U.S. stakeholders have also reported that, in some cases, Chinese Government officials have pressured foreign companies seeking to participate in China’s domestic standards-setting processes to license their technology or IP on unfavorable terms. In addition, China has continued to pursue unique national standards in a number of high technology areas. The United States continues to press China to address these specific concerns, but this bilateral engagement has yielded minimal progress.
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INTELLECTUAL PROPERTY PROTECTION
Overview
After its accession to the WTO, China undertook a wide-ranging revision of its framework of laws and regulations aimed at protecting the IP rights of domestic and foreign right holders, as required by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement). Despite various plans and directives issued by the State Council, inadequacies in China’s IP protection and enforcement regime continue to present serious barriers to U.S. exports and investment. As a result, as in the previous year, China was again placed on the Priority Watch List in USTR’s 2024 Special 301 Report. In addition, in January 2025, USTR announced the results of its 2024 Review of Notorious Markets for Counterfeiting and Piracy (Notorious Markets List), which identifies online and physical markets that exemplify key challenges in the global struggle against piracy and counterfeiting and explains the harm not only to U.S. businesses, but also to U.S. workers. Several markets in China were among those named as notorious markets, as China continues to be the number one source of pirated and counterfeit products in the world.
The Phase One Agreement addresses numerous longstanding U.S. concerns relating to China’s inadequate IP protection and enforcement. Specifically, the agreement requires China to revise its legal and regulatory regimes in a number of ways in the areas of trade secrets, pharmaceutical-related IP, patents, trademarks, and geographical indications. In addition, the agreement requires China to make numerous changes to its judicial procedures and to establish deterrent-level penalties. China must also take a number of steps to strengthen enforcement against pirated and counterfeit goods, including in the online environment, at physical markets and at the border.
China has published a number of draft measures for comment and issued some final measures relating to implementation of the IP chapter of the Phase One Agreement. Notably, China amended the Patent Law, the Copyright Law and the Criminal Law. At the same time, U.S. right holders have expressed serious concerns about some final measures that lack details and leave too much discretion with the enforcement authorities, which creates uncertainties and can lead to inconsistencies in the scope of coverage and the availability and nature of relief. In addition, China has outstanding work to finalize the draft measures that it has published and to publish other draft measures in accordance with the Intellectual Property Action Plan that it released in April 2020. Outstanding areas to be addressed include areas such as: the protection of trade secrets and confidential business information from unauthorized disclosures by government personnel and third-party experts; criminal enforcement of trade secrets theft; enforcement procedures to combat online infringement, including an effective notice and takedown system; the protection and enforcement of trademark rights, particularly against bad faith trademark registrations; increases in the minimum and maximum levels of statutory damages and criminal penalties for IP infringement; patent term extensions for unreasonable marketing approval delays; and geographical indications.
Meanwhile, in connection with the Phase One Agreement, China has reported increased enforcement actions against counterfeit medicines and increased customs actions against pirated and counterfeit goods. However, China has yet to demonstrate that it has taken the following actions: (1) published data online regarding enforcement actions against counterfeit goods with health and safety risks, enforcement actions at physical markets, and enforcement actions at the border; (2) increased enforcement actions against counterfeits with health and safety risks and at physical markets; (3) increased training of customs personnel; or (4) ensured the use of only licensed software in government agencies and state-owned enterprises.
Going forward, the United States will continue to monitor China’s implementation of the IP chapter of the Phase One Agreement. The United States will also assess the impact of the final measures that have been issued by China and the enforcement actions that China takes.
Trade Secrets
Serious inadequacies in the protection and enforcement of trade secrets in China have been the subject of high-profile engagement between the United States and China in recent years. Several instances of trade secret theft for the benefit of Chinese companies have occurred both within China and outside of China. Offenders in many cases continue to operate with impunity. Particularly troubling are reports that actors affiliated with the Chinese Government and the Chinese military have infiltrated the computer systems of U.S. companies, stealing terabytes of data, including the companies’ proprietary information and IP, for the purpose of providing commercial advantages to Chinese enterprises.
In high-level bilateral dialogues with the United States over the years, China has committed to issue judicial guidance to strengthen its trade secrets regime. China has also committed not to condone state-sponsored misappropriation of trade secrets for commercial use. In addition, the United States has urged China to make certain key amendments to its trade secrets-related laws and regulations, particularly with regard to a draft revision of the Anti-Unfair Competition Law. The United States has also urged China to take actions to address inadequacies across the range of state-sponsored actors and to promote public awareness of trade secrets disciplines.
At the November 2016 U.S.-China Joint Commission on Commerce and Trade (JCCT) meeting, China claimed that it was strengthening its trade secrets regime and bolstering several areas of importance, including the availability of evidence preservation orders and damages based on market value as well as the issuance of a judicial interpretation on preliminary injunctions and other matters. China amended the Anti-Unfair Competition Law, effective January 2018 and April 2019, as well as the Administrative Licensing Law, effective April 2019, and the Foreign Investment Law, effective January 2020. Nevertheless, the amendments still do not fully address critical shortcomings in the scope of protections and obstacles to enforcement. In 2022, China published additional draft amendments to the Anti-Unfair Competition Law, but they contain few changes to the law’s trade secrets provisions.
The Phase One Agreement significantly strengthens protections for trade secrets and enforcement against trade secret theft in China. In particular, the chapter on IP requires China to expand the scope of civil liability for misappropriation beyond entities directly involved in the manufacture or sale of goods and services, to cover acts such as electronic intrusions as prohibited acts of trade secret theft and to shift the burden of proof in civil cases to the defendants when there is a reasonable indication of trade secret theft. It also requires China to make it easier for right holders to obtain preliminary injunctions to prevent the use of stolen trade secrets, to allow for initiation of criminal investigations without the need to show actual losses, to ensure that criminal enforcement is available for willful trade secret misappropriation, and to prohibit government personnel and third party experts and advisors from engaging in the unauthorized disclosure of undisclosed information, trade secrets, and confidential business information submitted to the government.
In 2020, China published various measures relating to civil, criminal, and administrative enforcement of trade secrets. In September 2020, the Supreme People’s Court issued the Provisions on Several Issues Concerning the Application of Law in Civil Cases of Trade Secret Infringement and the Interpretation III on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights. In September 2020, the Supreme People’s Procuratorate and the Ministry of Public Security also issued the Decision on Amendment of Docketing for Prosecution of Criminal Trade Secrets Infringement Cases Standards. These measures relate to issues such as the scope of liability for trade secret misappropriation, prohibited acts of trade secret theft, preliminary injunctions, and thresholds for initiations of criminal investigations for trade secret theft. In December 2020, the National People’s Congress passed amendments to the Criminal Law that included changes to the thresholds for criminal investigation and prosecution and the scope of criminal acts of trade secret theft. The Criminal Law amendments require revisions to certain previously issued judicial interpretations and prosecution standards. However, three years after the passage of the Criminal Law amendments, these other measures remain unchanged, and implementation of the Criminal Law amendments therefore remains incomplete. Indeed, China has only published a draft judicial interpretation. The United States will continue to monitor the effectiveness of all of these measures.
Bad Faith Trademark Registration
The continuing registration of trademarks in bad faith in China remains a significant concern. For example, “trademark squatters” attempt to take advantage when a genuine trademark owner has not yet registered its trademark in China by registering that trademark and then trying to sell it to the genuine trademark owner. Bad faith trademark registration also occurs when trademarks intending to deceive or confuse consumers are registered.
At the November 2016 JCCT meeting, China publicly noted the harm that can be caused by bad faith trademarks and asserted that it was taking further steps to combat bad faith trademark filings. Amendments to the Trademark Law made in 2019 and subsequent implementing measures, including the State Administration for Market Regulation (SAMR) Provisions on Standardizing Applications for Registrations of Trademarks issued in 2019 and the Trademark Examination and Review Guidelines updated in 2021 by the China National Intellectual Property Administration (CNIPA), require the disallowance of bad faith trademark applications. In January 2023, China proposed further amendments to the Trademark Law regarding bad faith trademarks.
However, implementation in this area by China suggests that right holders remain insufficiently protected, as bad faith trademarks remain widespread and problems persist with the large number of inconsistent decisions, low rate of success for oppositions, lack of transparency in opposition proceedings, and unavailability of default judgments against applicants who fail to appear in proceedings. Onerous documentation requirements are also an ongoing concern for right holders. China acceded to the Convention of 5 October 1961 Abolishing the Requirement of Legalization for Foreign Public Documents (Apostille Convention), effective November 2023. The United States will monitor China’s implementation of the obligations under the Apostille Convention and whether it addresses right holders’ concerns regarding foreign government document legalization requirements.
As a result of these deficiencies, U.S. companies across industry sectors continue to face Chinese applicants registering their marks and “holding them for ransom” or seeking to establish a business building off of U.S. companies’ global reputations. The Phase One Agreement requires China to ensure adequate and effective protection and enforcement of trademark rights, particularly against bad faith trademark registrations. The United States will continue to closely monitor developments in this area of long-standing concern.
Online Infringement
Online piracy continues on a large scale in China, affecting a wide range of industries, including those involved in distributing legitimate music, motion pictures, books and journals, software, and video games. While increased enforcement activities have helped stem the flow of online sales of some pirated offerings, much more sustained action and attention is needed to make a meaningful difference for content creators and right holders, particularly small and medium-sized enterprises. In response to the COVID-19 pandemic, reports indicate that many infringers have moved online to distribute their pirated and counterfeit goods, which further increases the need for targeted and sustained enforcement measures in the online environment.
The United States has urged China to consider ways to create a broader policy environment to help foster the growth of healthy markets for licensed and legitimate content. The United States has also urged China to revise existing rules that have proven to be counterproductive.
At the November 2016 JCCT meeting, China agreed to actively promote electronic commerce-related legislation, strengthen supervision over online infringement and counterfeiting, and work with the United States to explore the use of new approaches to enhance online enforcement capacity. In December 2016 and November 2017, China published drafts of a new E-Commerce Law for public comment. In written comments, the United States stressed that the final version of this law should not undermine the existing notice-and-takedown system and should promote effective cooperation in deterring online infringement. In August 2018, China adopted its new E-Commerce Law, which entered into force in January 2019. This law was an opportunity for China to institute strong provisions on IP protection and enforcement for its electronic commerce market, which is now the largest in the world. However, as finalized, the law instead introduced provisions that weaken the ability of right holders to protect their rights online and that reduce the liability of China-based electronic commerce platforms for selling counterfeit and other infringing goods.
The Phase One Agreement requires China to provide enforcement procedures that permit effective and expeditious action against infringement in the online environment, including by requiring expeditious takedowns and by ensuring the validity of takedown notices and counter-notifications. It also requires China to take effective action against electronic commerce platforms that fail to take necessary measures against infringement.
In May 2020, the National People’s Congress issued the Civil Code, which included updated notice-and takedown provisions. In September 2020, the Supreme People’s Court issued Guiding Opinions on Hearing Intellectual Property Disputes Involving E-Commerce Platforms and the Official Reply on the Application of Law in Network-Related Intellectual Property Infringement Disputes. These measures relate to issues such as expeditious takedowns and the validity of notices and counter-notifications, but have only recently taken effect. In November 2020, the National People’s Congress adopted long-pending amendments to the Copyright Law, including provisions relating to increasing civil remedies for copyright infringement, new rights of public performance and broadcasting for producers of sound recordings, and protections against the circumvention of technological protection measures. Right holders have welcomed these developments but have noted the need for effective implementation as well as new measures to address online piracy. The United States will closely monitor the impact of these measures going forward.
In August 2021, SAMR issued draft amendments to the E-Commerce Law for public comment. These draft amendments further attempt to address concerns that have been raised about procedures and penalties under China’s notice-and-takedown system.
Counterfeit Goods
Counterfeiting in China remains widespread and affects a wide range of goods. In April 2019, China amended its Trademark Law, effective November 2019, to require civil courts to order the destruction of counterfeit goods, but these amendments still do not provide the full scope of civil remedies for right holders. One of many areas of particular U.S. concern involves medications. Despite years of sustained engagement by the United States, China has failed to adequately improve its regulation of the manufacture of active pharmaceutical ingredients to prevent their use in counterfeit and substandard medications. At the July 2014 meeting of the United States-China Strategic and Economic Dialogue (S&ED), China committed to develop and seriously consider amendments to the Drug Administration Law that will require regulatory control of the manufacturers of bulk chemicals that can be used as active pharmaceutical ingredients. At the June 2015 S&ED meeting, China further committed to publish revisions to the Drug Administration Law in draft form for public comment and to consider the views of the United States and other relevant stakeholders. In October 2017, China published limited draft revisions to the Drug Administration Law and stated that future proposed revisions to the remainder of this law would be forthcoming. Although the final Drug Administration Law, issued in August 2019, requires pharmaceuticals products and active pharmaceutical ingredients to meet manufacturing standards, it remains unclear how these requirements will be implemented or enforced.
The Phase One Agreement requires China to take effective enforcement action against counterfeit pharmaceuticals and related products, including active pharmaceutical ingredients, and to significantly increase actions to stop the manufacture and distribution of counterfeits with significant health or safety risks. The agreement also requires China to provide that its judicial authorities shall order the forfeiture and destruction of pirated and counterfeit goods, along with the materials and implements predominantly used in their manufacture. In addition, the agreement requires China to significantly increase the number of enforcement actions at physical markets in China and against goods that are exported or in transit. It further requires China to ensure, through third party audits, that government agencies and state-owned enterprises only use licensed software.
In August 2020, SAMR issued the Opinions on Strengthening the Destruction of Infringing and Counterfeit Goods, and the State Council amended the Provisions on the Transfer of Suspected Criminal Cases by Administrative Organs for Law Enforcement, which relate to the transfer of IP cases from administrative authorities to criminal authorities. China has reported increased enforcement actions against counterfeit medicines and increased customs actions against pirated and counterfeit goods, but has yet to demonstrate that it has increased enforcement actions against counterfeits with health and safety risks and at physical markets, increased training of customs personnel, transferred more cases for criminal prosecution, and ensured the use of only licensed software in government agencies and state-owned enterprises.
Indigenous Innovation
Policies aimed at promoting China’s “indigenous innovation” continue to represent an important component of China’s industrialization efforts. Through intensive, high-level bilateral engagement with China since 2009, the United States has attempted to address these policies, which provide various preferences when IP is owned or developed in China, both broadly across sectors of China’s economy and specifically in the government procurement context. For example, at the May 2012 S&ED meeting, China committed to treat IP owned or developed in other countries the same as IP owned or developed in China.
The United States also used the JCCT process in 2012 and subsequent discussions to press China to revise or eliminate specific measures that appeared to be inconsistent with this commitment. At the December 2014 JCCT meeting, China clarified and underscored that it will treat IP owned or developed in other countries in the same manner as domestically owned or developed IP. However, these commitments have not been fulfilled. China continues to pursue myriad policies that require or favor the ownership or development of IP in China. The United States secured a series of similar commitments from China in the government procurement context, where China agreed to de-link indigenous innovation policies at all levels of the Chinese Government from government procurement preferences, including through the issuance of a State Council measure mandating that provincial and local governments eliminate any remaining linkages by December 2011. Many years later, however, this promise had not been fulfilled. At the November 2016 JCCT meeting, in response to U.S. concerns regarding the continued issuance of scores of inconsistent measures, China announced that its State Council had issued a document requiring all agencies and all sub-central governments to “further clean up related measures linking indigenous innovation policy to the provision of government procurement preference.”
Over the years, the underlying thrust of China’s indigenous innovation policies has remained unchanged, as China’s leadership has continued to emphasize the necessity of advancing indigenous innovation capabilities. Through plans such as the 14th Five-Year Plan for the Protection and Utilization of National Intellectual Property Rights, China has continued to implement discriminatory policies encouraging “indigenous IP rights” and “core technologies” that are owned or developed in China. Accordingly, USTR has used mechanisms like a Section 301 investigation to seek to address, among other things, China’s use of indigenous innovation policies that effectively force or pressure foreigners to transfer their technologies to Chinese companies or develop their IP in China.
Blockading the Ports: U.S. Imposes 10% Global Tariff; Higher Reciprocal Tariff Rates by Country
On April 2, President Trump issued an Executive Order (EO) imposing global reciprocal tariffs (White House Fact Sheet). The EO drew enough parallels to the Smoot-Hawley Tariff Act that Trump mentioned it in his Rose Garden announcement. The EO imposes a 10% baseline tariff on all imports to the United States beginning April 3, 2025.
On top of that baseline, the EO also imposes country-by-country tariffs reciprocal tariffs represented in the chart below. Those amounts are based on what the United States Trade Representative (USTR) determined in its 2025 Foreign Trade Barriers report to be the current tariff rate imposed on U.S. goods for imports to that country. That rate includes official tariffs, as well currency manipulation and other “trade barriers.” The “kind” reciprocal tariffs for each country are roughly half of that amount.
Certain goods will not be subject to the reciprocal tariff. Those include the following:
Communications of no value, humanitarian donations, information materials and media, and personal luggage, subject to 50 USC 1702(b);
Steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs;
Copper, pharmaceuticals, semiconductors, and lumber articles;
All articles that are or become subject to future Section 232 tariffs (e.g., steel, aluminum, autos and auto parts);
Bullion; and
Energy and other certain minerals that are not available in the United States.
For Mexico and Canada the existing tariffs imposed in March remain in effect. USMCA compliant goods will continue to see a 0% tariff, non-USMCA compliant goods will be subject to a 25% tariff, and non-USMCA compliant energy and potash will be subject to a 10% tariff. However, if the EO specific to Mexico and Canada were to be terminated, USMCA compliant goods would receive preferential treatment, and non-USMCA compliant goods would be subject to the 12% reciprocal tariff.
In addition to the universal tariff imposition, beginning on May 2, 2025, the 54% tariff rate on imports from China will also be applied to packages worth less than $800 coming to the United States from China or Hong Kong.
Because the new tariffs are imposed under the International Emergency Economic Powers Act (IEEPA), there does not appear to be a formal process for requesting a waiver to the tariffs or providing comments on their implementation. However, it is likely that actions will be filed in U.S. courts as well as before the World Trade Organization contesting the tariffs.
Additional Author: Marta Piñol Lindin
What Every Multinational Company Should Know About … The Global and Reciprocal Tariffs Announcement
On April 2, 2025, President Trump implemented the steepest American tariffs in over a century. The implications for numerous multinational companies — including importers, manufacturers, distributors, and retailers — will be immense. As an aid to the importing community, we are providing: (1) a summary of the April 2 “reciprocal tariff” and other trade-related proclamations, including how these tariffs fit within other tariff pronouncements and the prior Section 232 and 301 tariffs; (2) an overview of multinational companies that could be most impacted by the reciprocal tariffs; and (3) the implications for importers trying to manage these drastic changes to the cost of importing goods into the United States.
At its core, the reciprocal tariff announcement consists of a baseline 10% tariff on all exports to the United States, with significantly higher duties on approximately 60 nations. In essence, countries that maintain a trade surplus or roughly equal trade in manufactured goods were hit with a 10% tariff, while countries that maintain significant trade surpluses — including China, the European Union (EU), Japan, Cambodia, and Vietnam — face steep new levies. China, the primary target of Trump’s trade war, now faces tariffs exceeding 50% on nearly all goods, and tariffs approaching 89% for many imports. Moreover, the tariffs are almost as great on countries that generally have formed the “China +1” strategy of many multinational companies, such as Cambodia, Vietnam, and Malaysia. The net result is an average tariff rate that has climbed from a historic average of under 3% to around 23% — the highest level in over a century.
Details of the Reciprocal Tariff Plan
A statement from the U.S. Trade Representative confirmed that the Trump administration calculated tariffs primarily based on trade imbalances rather than an analysis of trade barriers, as was initially telegraphed by the administration. Countries with neutral trade patterns or even trade deficits with the United States face a minimum 10% duty (the global tariff), while all other major trading partners (with the exception of Canada and Mexico) will be subject to sharply higher rates (the reciprocal tariffs). Tariffs will be imposed using the following timetable:
Implementation Timeline: The 10% global tariff takes effect at 12:01 a.m. on April 5, 2025. The higher reciprocal tariffs will take effect at 12:01 a.m. on April 9, 2025. It is not clear if Customs is already equipped to handle collecting these special tariffs, which likely will require implementation in the Automated Commercial Environment (ACE) portal that Customs maintains for importers to submit import-related information and to pay tariffs.
Notable Exemptions: Prior Trump administration tariffs were carved out:
25% Steel and Aluminum Tariffs:The tariffs on steel and aluminum, and identified derivative products, remain undisturbed at 25%.
25% Canada and Mexico:Canada and Mexico also are exempt from this round of tariffs, although separate 25% tariffs imposed due to the Trump administration’s concerns regarding unauthorized immigration and fentanyl imports remain in place. These latter tariffs continue to be partially suspended for United States-Mexico-Canada Agreement (USMCA)-compliant goods.
25% Automotive Tariffs: The reciprocal tariffs also exclude all automobiles and automotive parts, subject to the additional 25% duties imposed in Proclamation 10908 (“Adjusting Imports of Automobiles and Automobile Parts into the United States”) on March 26, 2025. The automotive tariffs, which became effective on April 3, impose a 25% sectoral tariff on sedans, SUVs, crossovers, minivans, cargo vans, and light trucks up to 8,500 pounds, with a payload capacity up to 4,000 pounds. The tariffs also extend to automobile parts such as engines, transmissions, powertrain parts, and electrical components, beginning on May 3, 2025. Again, this tariff construct is left untouched.
Sector-Specific Exclusions: Certain products, such as copper, pharmaceuticals, semiconductors, lumber, critical minerals, and energy products, are unaffected by the April 2 reciprocal announcement. It is expected that these products will be subject to future tariffs, thus making this an “exemption” to allow for future action, rather than indicating no tariff imposition.
Future Sectoral Tariffs: The proclamation states that it will not apply to any future special tariffs that might be imposed under Section 232.
U.S.-Origin Content: The proclamation states that “the ad valorem rates of duty set forth in this order shall apply only to the non-U.S. content of a subject article, provided at least 20 percent of the value of the subject article is U.S. originating.”
Finally, President Trump also announced the end of duty-free shipping for many small parcels using the “de minimis” exemption. This further tightens trade restrictions, particularly on goods from China, which most commonly used the exemption.
U.S. Multinational Companies and Importers Hit Hardest Hit by the New Tariff Announcements
The new tariffs are likely to hit U.S. multinationals hardest in the following areas:
Companies that Import from China: China, which runs the largest trade surplus with the United States, continues to bear the brunt of duties. Goods from China now have to pay: (1) the normal Chapter 1-97 duties (generally 3%–6%); (2) the 20% additional duties imposed earlier this year by the Trump administration, related to Chinese government’s alleged failure to prevent fentanyl precursor exports; (3) a 34% reciprocal tariff rate; and (4) for about half of all Chinese imports, the 2018 Section 301 tariffs, which range from 7.5% to 25%. All of these tariffs stack, meaning that imports of Chinese-origin goods now face duties of 55%–60% and potentially up to 89%. There are no exceptions for goods produced by U.S.-owned subsidiaries.
Companies that Pivoted from China, Using a “China +1 Strategy”: In response to the tariffs imposed on China during the first Trump administration, many multinational companies — with the encouragement of both the Trump and the Biden administrations — pivoted to a “China +1” strategy. This involved generally moving production out of China and into other countries (the +1) to minimize tariffs and geopolitical risks and to reduce dependency on Chinese production. But the countries that most popularly used this strategy — Cambodia, Vietnam, Thailand, Malaysia, and India — now are facing high tariffs of their own, upending the benefits of the China +1 strategy.
Companies that Import from the EU: Companies importing goods from the European Union will be impacted more than anticipated by the reciprocal tariffs, with the Trump administration imposing a 20% duty on EU-origin products.
Automotive Companies: Automotive companies will be hit particularly hard in the new tariff environment, as they face increased costs on multiple fronts. Automobiles and automotive parts that fall under the specific automotive tariffs will see significant duty hikes, raising the cost of manufacturing and assembly. Additionally, reciprocal tariffs on all other imported components will further strain supply chains and profit margins.
Moreover, the following countries and sectors, while not a focus of the new tariffs, are at heightened risk for future tariff increases:
U.S. Importers Already Hit by High Reciprocal Tariffs: According to administration officials, the currently announced tariffs are the “ceiling” — unless other countries retaliate. To this end, many countries (and the European Union) have announced plans to develop retaliatory tariffs. The currently announced tariffs could thus increase even further if other countries implement their own retaliatory tariffs.
Canada and Mexico: Canada and Mexico were carved out from the April 2 tariffs, but this exemption is largely because of previously implemented tariffs on certain imports from these countries. For some importers, it may seem encouraging that USMCA-compliant products from Canada and Mexico remain duty-free. This relief, however, may be temporary. The USMCA is set to be reviewed by 2026, creating uncertainty about future trade terms.
Lumber, Pharmaceuticals, and Copper: While lumber, pharmaceuticals, and copper were excluded from the new reciprocal tariffs, this exemption is not expected to provide long-term relief for importers in these sectors. Instead, it is widely anticipated that these goods will be targeted by separate sector-specific tariffs in the coming months.
U.S. Companies Selling U.S.-Origin Goods into the EU, Canada, Japan, Korea, and Other Countries Hit by High U.S. Tariffs: While the Trump administration has cautioned countries from retaliating, all of the countries listed above are known to be preparing retaliatory tariffs, which potentially will be done on a joint basis.
Implications of the Tariff Announcements
The April 2 tariffs exceed initial expectations, both in scale and impact. The average U.S. tariff rate was just 2.7% at the outset of the first Trump administration, with earlier increases confined to one country and a couple of products. It now stands at 23% or higher, a nearly fourfold increase. The U.S. government is projected to collect $600–700 billion in tariffs annually, up from $95 billion per year — with importers of record (generally, U.S. companies) paying these tariffs. Further, unlike prior tariffs, the administration has signaled that few, if any, exemptions will be granted.
The April 2 tariffs also introduce significant compliance and cost-allocation challenges for U.S. importers. In this new trade environment, we expect CBP will increase its enforcement efforts considerably, focusing on high-tariff goods. Further, while previous tariffs generally were focused on one country (China), tariff-related risks are now spreading out to a large number of countries, especially those that once benefited from U.S. efforts to reduce reliance on China such as Cambodia, Vietnam, Thailand, and Malaysia.
Multinational companies thus should carefully and thoroughly reevaluate their import and customs programs in light of the new tariffs to ensure compliance and to mitigate potential financial risks. Below are several items that merit a special Customs and tariff compliance focus:
Country of Origin Determination: The level of tariffs is now most heavily influenced by the country of origin of imported goods, making accurate country of origin determinations a top (if not the highest) priority. Incorrect origin reporting could result in penalties, back duties, and potential legal consequences. To help prevent these outcomes, importers should focus on the following:
Importers should conduct thorough origin analysis by reviewing raw material/component sourcing, manufacturing processes, and assembly locations to ensure compliance with CBP transformation requirements.
Importers should consider working with customs compliance specialists or trade attorneys to assist with complex origin determinations and to avoid unexpected tariff liabilities.
Importers should prepare reasonable care memorandums to document the methodology and evidence used in determining the country of origin, providing a defensible position in case of an audit.
Importers should consider requesting advisory opinions regarding gray areas relating to the country of origin.
USMCA Compliance: USMCA-compliant goods may be exempt from many of the newly imposed tariffs, including the April 2 reciprocal tariffs. Accordingly, we expect Customs will focus heavily on ensuring all goods claiming preferential status under the USMCA in fact meet all requirements. Items for a probing compliance review in these areas include:
To take advantage of duty-free treatment under the USMCA, companies must have valid and complete USMCA certificates of origin at the time of entry. Post-entry certification is not permitted.
CBP is expected to closely scrutinize USMCA claims, so importers should immediately confirm all originating status claims are well documented. This includes conducting product-specific audits to verify that products meet regional value content (RVC) and tariff shift rules, ensuring eligibility before making a claim.
Anti-Dumping and Countervailing Duties (AD/CVD): In addition to reciprocal tariffs, we expect CBP to continue its strict enforcement of AD/CVD orders, particularly on imports from China and Southeast Asia. Importers should take steps to ensure compliance and minimize exposure to unexpected duty liabilities, including:
Importers should closely review Commerce Department scope determinations to confirm whether their products fall within the scope of existing AD/CVD orders.
Customs entry documentation (CF-7501) and supplier contracts should be carefully reviewed to ensure proper classification and duty payment. Importers should be prepared for enhanced CBP audits and verifications.
Chinese Parts and Components: We expect that the presence of Chinese-origin parts and components in finished goods will continue to be an area of particular CBP scrutiny. Consistent with the above point regarding country-of-origin determinations, the presence of Chinese-origin parts and components raises concerns about substantial transformation claims, which determine whether a product’s country of origin is considered China or another jurisdiction. Importers should consider putting reasonable care memorandums in place to document the analysis supporting substantial transformation claims, including descriptions of manufacturing processes and component alterations and supporting CBP advisory rulings.
Direct and Indirect Supply Chain Costs: Companies should take a holistic approach when evaluating the impact of tariffs, considering not just the direct cost but also indirect costs associated with supply chain adjustments, contract renegotiations, and compliance risks. Steps to consider include the following:
Importers should review supplier contracts to determine how tariff costs are allocated between buyers and sellers.
Importers should consider that supply chain disruptions due to increased tariffs may lead to delays in production and ordering, higher transportation costs, and the need to identify alternative sourcing options.
Companies should conduct cost-benefit analyses to evaluate whether shifting production to low-tariff jurisdictions or USMCA partners would provide long-term savings, despite short-term transition costs.
The message from Washington is clear: We are entering what will likely be an extended high-tariff, high-enforcement environment. The current trade landscape has vastly multiplied the need for multinational companies to understand the new importing rules and emphasize full compliance.
Privacy Tip #438 – FTC Chairman Shares Concerns Over 23andMe Data
In the ongoing saga of the 23andMe bankruptcy, Federal Trade Commission Chairman Andrew N. Ferguson recently sent a letter to the Trustee overseeing the 23andMe bankruptcy proceeding stating, “As Chairman of the Federal Trade Commission, I write to express the FTC’s interests and concerns relating to the potential sale or transfer of millions of American consumers’ sensitive personal information.”
The letter further outlined the promises 23andMe made to consumers about protecting the sensitive information it collected and maintained and that it had “made direct representations to its users about how it uses, discloses, and protects their personal information, including how personal information will be safeguarded in the event of bankruptcy.” It outlined additional promises 23andMe made to consumers and that “these types of promises to consumers must be kept.” Importantly, the letter states:
This means that any bankruptcy-related sale or transfer involving 23andMe users’ personal information and biological samples will be subject to the representations the Company has made to users about both privacy and data security, and which users relied upon in providing their sensitive data to the Company. Moreover, as promised by 23andMe, any purchaser should expressly agree to be bound by and adhere to the terms of 23andMe’s privacy policies and applicable law, including as to any changes it subsequently makes to those policies.
For 23andMe customers, now is the time to request the deletion of their data. Hopefully, the letter from the FTC will also escalate the concern over the potential sale of genetic information.
Opposition to Renewed COPA Application in Indiana Reveals FTC Leadership’s Views on Hospital Merger Enforcement
The Federal Trade Commission (FTC) recently submitted comments in opposition to a renewed application for a certificate of public advantage (COPA) that would, if granted, allow two hospitals in Indiana to merge despite potential antitrust concerns.
In its submission, the FTC suggested that it had no institutional bias against COPAs but routinely objects because of the price increases, declines in quality, and lower wages that the FTC argues result from most mergers subject to a COPA.
The FTC also said that it takes “failing-firm” defense arguments (i.e., the claim that one of the parties to the transaction will fail unless the merger is permitted) seriously and “never wants to see a valued hospital exit a community.” Furthermore, the FTC stated that it “has not challenged mergers with hospitals that are truly failing financially and cannot remain viable without the proposed acquisition.”
Nevertheless, the FTC noted the potential for cross-market harms as a reason to object to the Indiana hospitals’ COPA application. The FTC identified businesses with employees in counties not directly in the hospitals’ service areas who might be adversely affected by the transaction, the impact on the cost of health care for state employees, and the purported effect on patients insured by Medicare and Medicaid as reasons to object to the proposed application.
Trump Administration Announces “Reciprocal” Tariffs
On April 2, 2025, President Trump announced a minimum tariff of 10% on all imported goods, which take effect on April 5 at 12:01am EDT. He also announced “discounted reciprocal tariffs” higher than 10% for goods from several additional countries. In a separate order, the administration also announced the elimination of the de minimis exception to tariffs for goods coming from China.
Our Tariff Strategy team has distilled these latest orders into these important provisions:
Elimination of the de minimis exception – which exempts shipments of goods valued at less than $800 – for China unless sent through the international postal service. While de minimis was eliminated for China under a previous order, it was stayed due to challenges in its implementation. As this latest order is more specific regarding tariff collection mechanisms, it is more likely to be implemented on time. For those shipments through international postal services, de minimis will remain intact but other duties will come into effect, including 30% of shipment value OR $25 per item. Comes into effect May 2 and postal item duty escalates to $50 on June 1.
“Reciprocal tariffs” applicable to countries worldwide. These are the key provisions:
All countries: 10% tariff on all articles imported into the U.S. (not including services). Comes into effect at 12:01am EDT April 5, except goods loaded and in final mode of transit prior to 12:01am EDT on April 5.
Country-by-country: Country “reciprocal tariffs” – click here for the detailed list of countries. Comes into effect at 12:01 EDT on April 9.
Exemptions: These duties do NOT apply to a specific list of HTS codes, found here. This includes articles subject to the tariffs already imposed on steel, aluminum, copper, cars, and auto parts (those tariffs stand; these tariffs are not added on). Other exemptions include pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products. Any future tariffs pursuant to Section 232 will replace these tariffs.
USMCA: Other than those subject to exemptions OR goods originating from Canada and Mexico (as defined by USMCA), these duties are in addition to existing tariffs. If the goods are from Canada and Mexico but do NOT qualify as originating under USMCA, they are already subject to 25% tariffs except energy, energy resources, and potash from Canada, which are 10%.
Origin: These duty rates apply only to the “non U.S. content” of the article, if at least 20% of the content originates in the U.S.
De minimis exceptions remain available (except for China under the other order) for an indefinite period of time until Customs has processes in place to collect it; once those processes are in place de minimis will be eliminated for all countries.
It’s important to note that any tariffs on China — both in these orders and going forward — apply to Hong Kong and Macau as well. As it currently stands, all imports from China carry a MINIMUM tariff of 54%.
The order makes clear that the U.S. is open to negotiation. The responses of U.S. primary trade partners have varied, from threats of retaliatory tariffs to indications they will enter into negotiations with the administration to see if they can reduce them or exempt particular goods. Some countries are considering “countermeasures” that might go beyond tariffs.
The Senate has signaled its discomfort with tariffs against Canada, passing a bill (including Republican support) to undo the Canada tariffs by invalidating the “national emergency” that was used as the presidential authority to impose the tariffs. While the vote is symbolic, as the House has already committed to maintaining the national emergency and the White House has said it would veto the bill in any event, the bill may signal that tariffs on Canadian goods will be eased.
Our Tariff Strategy team suggests that companies should:
Check your contracts: whether the buyer or the seller ultimately pays the tariffs usually hinges on contract language rather than statutory or administrative law, and multiple clauses might be applicable depending on how tariffs and duties are defined.
Revisit shipping terms: different INCOTERMS can shift responsibility for payment, so companies may want to consider whether they want to adjust their shipping terms.
Check the HTS code under which you import to see if your product is exempt, and review products to determine if they may qualify for a tariff reduction if they contain U.S. origin components.
Consider standing by and delaying high-value imports for the moment if possible, as some countries will negotiate with the U.S., so their tariffs may be delayed or reduced.
Productively Pursuing and Maximizing Insurance Claims
Maximizing insurance claims starts with locating and notifying all potentially responsive coverages when facing a loss or claim. This article offers a 101 about what types of maritime-, transportation-, and shipping-related events insurance may cover and how to go about productively pursuing an insurance recovery when disaster strikes—even if your insurance company says “no.”
Two Overarching Types of Insurance
Without getting too far into the weeds of the many different types of insurance coverage available to policyholders, think about them as falling into one of these two broad buckets: (1) first-party insurance coverage, and (2) third-party insurance coverage.
First-party insurance describes coverages that respond to a policyholder’s losses, which do not involve any claim asserted against the policyholder (e.g., you, your business, your employer). First-party property policies such as marine property insurance and bumbershoot property insurance, for example, typically insure against loss of, or damage to, the policyholder’s property (e.g., structures, terminals (including piers, breasting dolphins, storage tanks, etc.), electronic equipment), as well as coverage for lost business revenue. These first-party property policies frequently are “all risk” policies, meaning they cover the policyholder’s losses unless caused by an expressly excluded peril that the insurer can prove (e.g., ordinary wear and tear). Property policies often include business interruption coverage and coverage for inventory or goods lost or damaged in transit. Other types of first-party policies relevant to the maritime industry include:
Inland Marine Insurance that protects movable business property for policyholders that aren’t on the seas, including trucking and construction companies, property developers, and contractors, for example;
Marine Hull and Machinery Insurance that protects from physical damage to ships, vessels, and their machinery on the water, at the dock, and under construction for most sizes of commercial vessels including tugs, barges, dredges, and passenger vessels;
Marine Cargo Insurance that protects goods while in transit, across various modes of transportation, and while in storage; and
Political Risk Insurance that protects against losses caused by “political” events in a foreign country.
Third-party insurance coverage sometimes is called liability insurance. That’s because it includes policies that provide insurance for the policyholder’s liability to third parties alleging damages. Perhaps the most well-known form of third-party insurance for policyholders in the maritime industry is maritime general liability insurance (and excess bumbershoot liability insurance), which provides broad coverage for allegations asserted against the policyholder for bodily injury, property damage, and product and completed operation for marine risks. Other types of potentially relevant third-party policies include:
Cargo Owner’s Liability Insurance to protect against the risks for property damage, bodily injury to third parties, and as a result of pollution from a cargo event in ocean transit;
Shipowners’ Liability (“SOL”) Insurance for a shipowner’s exposure arising from an alleged breach of a contract of carriage and certain liabilities that fall outside of the Protection and Indemnity (“P&I”) Club’s standard P&I rules;
Directors and Officers (“D&O”) Insurance that protects companies and their corporate officers and directors against claims alleging wrongful acts and may cover legal fees for responding to subpoenas and search warrants; and
Pollution Liability Insurance to supplement or bolster pollution coverage that may exist in other marine liability (and property) insurance; some policyholders have standalone pollution liability insurance to broadly cover allegations of property damage from an actual or threatened pollution incident (spill) including fines, penalties, criminal defense, and more.
A single event can implicate several types of coverage found in multiple different insurance policies. For example, a vessel colliding with a terminal may involve loss to:
the terminal’s structures and equipment covered by a marine property insurance policy;
the terminal owner’s profits covered by business interruption insurance (and other time element coverages);
claims by third parties (adjacent property owners or the government, for example) alleging property damage from pollutants released from the vessel or terminal’s structures that are covered by marine general liability insurance and pollution liability insurance;
claims by shareholders alleging malfeasance in allowing the collision to happen (depending on which entity was responsible for the tugs, for example) that are covered by D&O insurance; and
this does not begin to untangle the myriad insurance implications when analyzing claims against the vessel and potential subrogation claims.
It’s important to look for responsive coverage from a company’s entire insurance portfolio when facing a loss or claim.
Three Things to Keep in Mind When Pursuing Insurance
Many policyholders don’t productively or efficiently pursue all of the insurance that is provided by their insurance policies. Here are three considerations when filing claims:
Be prompt. One of the most important first steps in pursuing insurance is to make sure that notice of a loss, claim, or occurrence is prompt and otherwise meets the requirements of the insurance policy.
Be thorough. It is important to look at all potentially responsive coverages that may be located in several different insurance policies with varying notice provisions. The general rule is that notices should be given under all possible policies that might be triggered—regardless of type, year, or layer. The old adage “better safe than sorry” never rings more true than when it comes to a company giving notice to its insurers.
Be diligent. As already stressed, the notice provisions in insurance policies also may specify how, and in what form, notice should be given. The policies typically identify to whom notice should be addressed, and request a statement regarding all the particulars of the underlying claims.
After a loss or claim has occurred, the policyholder should present its claim to the insurer in a way that will maximize coverage. Many legal issues, such as trigger of coverage, number of occurrences, and allocation, can significantly affect the existence or amount of an insurance recovery. Moreover, certain causes of loss or liability may be excluded from coverage, while others are not. These are complex issues that vary by state law and require a high level of legal sophistication to be understood and applied to the facts of a particular case.
The insurer may respond to its policyholder’s notice letter with a request for information. Such requests may seek to have the policyholder characterize its claim in a way that will limit coverage. Before the policyholder engages in any such communications with its insurance company, the policyholder should know what legal issues are likely to arise, and how best to describe its claim to maximize coverage.
It’s important to get the little things right from the beginning to avoid being blindsided and enhance the likelihood of succeeding at the finish line.
Cleo AI Agrees to $17 Million Settlement with FTC
Sometimes, deals are too good to be true. That was the case for Cleo AI, an online cash advance company that promised consumers fast, up-front cash payments. According to the Federal Trade Commission (FTC), Cleo AI offered consumers a mobile personal finance application that “promises consumers instant or same-day cash advances of hundreds of dollars.” When a consumer requests a cash advance, Cleo AI offers two subscription models, Cleo Plus and Cleo Builder. Once the consumer picks a subscription, they must provide a payment method that Cleo AI can use to obtain a cash advance repayment and subscription and other fees.
According to the FTC’s Complaint filed against Cleo AI, the company limits the cash advances promised to consumers below the advertised amounts. In addition, Cleo AI “falsely promises that consumers can obtain cash advances ‘today’ or instantly,” while it actually takes several days. Cleo AI required consumers to pay an extra fee to obtain the cash advance the same day or the next.
After much dissatisfaction, many consumers attempted to cancel their subscriptions. However, Cleo AI made it difficult to cancel their subscriptions and stop the recurring fees.
The FTC alleges that Cleo AI violated Section 5 of the FTC Act because it made material misrepresentations or deceptive omissions of material fact to consumers that constitute deceptive acts or practices. It also alleges violations of the Restore Online Shoppers’ Confidence Act.
Cleo AI has agreed to pay $17 million to settle the allegations against it.
This settlement reinforces that the FTC will not tolerate companies making misrepresentations to consumers. It also teaches consumers to: a) beware of advertisements that are too good to be true, and b) be wary of providing payment information for a subscription. Once they have your payment information, it is difficult to end the subscription.
New “Reciprocal” Tariffs Announced, Effective Starting April 5 for Nearly All Countries and Sectors
On April 2, President Trump announced new tariffs impacting a wide array of imported products from nearly all countries. Additional tariffs range from 10% to nearly 50% and become effective starting April 5. Concurrently, the President took action to again terminate the eligibility of Chinese-origin items for low-value shipment benefits, including duty-free treatment.
President Trump’s actions are intended to address “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits.” Invoking for a second time the International Emergency Economic Powers Act of 1977 (IEEPA), President Trump’s “Reciprocal Tariff” executive order imposes:
A 10% additional tariff on the vast majority of countries effective April 5, 2025, at 12:01 a.m. ET. Excluded from these duties are goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on April 5, 2025.
Higher individualized tariffs on countries with which the US has the largest trade deficits, as set out in Annex I. This higher rate will replace the 10% additional tariff for the identified countries effective April 9, 2025, at 12:01 a.m. EDT. Excluded from these duties are goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on April 9, 2025.
Countries subject to Column 2 rates (such as Russia and Belarus) remain the same.
A list of all country-specific tariff rates can also be found here. These country-specific ad valorem rates of duty shall apply to all goods, including articles imported pursuant to the terms of all existing U.S. trade agreements, except as provided below.
The following are excluded from any of the above tariffs regardless of country of origin:
Donations intended to relieve human suffering, informational materials, importations ordinarily incident to travel to or from any country (such as personal luggage), and any other articles subject to 50 USC 1702(b);
steel and aluminum articles and autos and auto parts already subject to Section 232 tariffs;
all articles that may become subject to future Section 232 tariffs; and
copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals and energy and energy products, as set out in Annex II.
For goods of Canada and Mexico, the existing February/March IEEPA orders and exclusions are unaffected by these announcements. This means that USMCA eligible goods will continue to enter free of the newly announced reciprocal tariffs, and non-USMCA eligible goods will be subject to the same 25% IEEPA tariff as has been in place since March 4, 2025, (other than Canadian energy and potash which will continue to be subject to a 10% IEEPA tariff which has been in place since March 4, 2025).
If at least 20% of the value of any article imported into the U.S. is U.S.-originating, and that value is substantiated by the importer, then the newly announced reciprocal duties will be collected only on the non-U.S. content of the imported article.
Finally, concurrent with today’s actions imposing new tariffs as discussed above, President Trump also took further action to eliminate the ability of articles of country-of-origin China to utilize de minimis duty-free treatment. Generally, shipments valued at $800 or less have been eligible for duty-free entry under provisions allowing smoother entry for low-value shipments. However, concurrent with the Reciprocal Tariff Executive Order President Trump signed an executive order amending the prior China-related IEEPA executive orders to decree that effective 12:01 am ET on May 2, 2025, shipments of Chinese-origin items, including international postal packages sent to the United States through the international postal network from the PRC or Hong Kong, will be ineligible for de minimis treatment and duties will be collected
For all other items subject to the reciprocal tariff announcements, de minimis will be terminated as soon as Commerce notifies the President that systems are in place to collect duties on those shipments.
Crafting Composition Claims: Federal Circuit Reverses ITC on Diamond Polycrystalline Diamond Compact Patent Eligibility
The U.S. Court of Appeals for the Federal Circuit recently reversed an International Trade Commission decision that found certain composition claims for a polycrystalline diamond compact patent ineligible
This ruling provides valuable insights for companies drafting composition of matter claims in materials science, particularly when the claims involve measurable properties that reflect material structure
Companies drafting composition of matter claims should define a specific, non-natural material with measurable parameters, provide detailed specification support for enablement, and link measurable properties to structural features
In a significant decision for the materials science and patent law communities, the U.S. Court of Appeals for the Federal Circuit has overturned a ruling by the International Trade Commission (ITC) that found certain claims of a polycrystalline diamond compact (PDC) patent ineligible under U.S. patent laws. The case, US Synthetic Corp. v. International Trade Commission, decided on Feb. 13, 2025, offers important guidance on the patentability of composition of matter claims involving measurements of natural properties.
US Synthetic Corp. (USS) filed a complaint with the ITC alleging violations of customs laws known as Section 337 based on the importation and sale of products infringing its U.S. Patent No. 10,508,502 (‘502 patent), titled “Polycrystalline Diamond Compact.”
A PDC includes a polycrystalline diamond table bonded to a substrate, typically made from a cemented hard metal composite like cobalt-cemented tungsten carbide. PDCs are manufactured using high-pressure, high-temperature (HPHT) conditions. The process involves placing a substrate into a container with diamond particles positioned adjacent to it. Under HPHT conditions and in the presence of a catalyst (often a metal-solvent catalyst like cobalt), the diamond particles bond together to form a matrix of bonded diamond grains, creating the diamond table that bonds to the substrate.
The ‘502 patent describes several key properties of the PDC. It exhibits a high degree of diamond-to-diamond bonding and a reduced amount of metal catalyst without requiring leaching. The PDC’s magnetic properties reflect its composition, including coercivity, specific magnetic saturation, and permeability.
The patent discloses that USS developed a manufacturing method using heightened sintering pressure (at least about 7.8 GPa) and temperature (about 1400°C) to achieve these properties without resorting to leaching, which can be time-consuming and may decrease the mechanical strength of the diamond table.
ITC’s Initial Determination
The ITC initially found the asserted claims infringed and not invalid under Sections 102, 103, or 112 of U.S. patent laws. However, it determined they were patent ineligible under Section 101, preventing a finding of a Section 337 violation. Specifically, the ITC concluded the asserted claims were directed to the “abstract idea of PDCs that achieve . . . desired magnetic . . . results, which the specifications posit may be derived from enhanced diamond-to-diamond bonding,” and that the magnetic properties are merely side effects of the unclaimed manufacturing process.
Federal Circuit’s Analysis
The Federal Circuit focused its analysis on claim 1 and 2 of the ‘502 patent. Claim 1 recited, “a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table including: a plurality of diamond grains bonded together via diamond-to-diamond bonding … a catalyst including cobalt … wherein the unleached portion of the polycrystalline diamond table exhibits a coercivity of about 115 Oe to about 250 Oe; wherein the unleached portion of the polycrystalline diamond table exhibits a specific permeability less than about 0.10 G∙cm3/g∙Oe.” Claim 2, depending from claim 1, further recited, “wherein the unleached portion of the polycrystalline diamond table exhibits a specific magnetic saturation of about 15 G∙cm3/g or less.”
The court emphasized that the claims were directed to a composition of matter, not a method of manufacture. It noted that USS had developed a way to produce PDCs with high diamond-to-diamond bonding and reduced metal catalyst content without leaching, addressing known issues in the field.
The Federal Circuit delved deeper into the relationship between the claimed magnetic properties and the structure of the PDC. The court recognized that coercivity, specific magnetic saturation, and specific permeability provide information about the quantity of metal catalyst present and the extent of diamond-to-diamond bonding, which were key features of the inventive PDC. As the court summarized, “Each of these magnetic properties provides information about the quantity of metal catalyst present in the diamond table and/or the extent of diamond-to-diamond bonding.”
The court also highlighted the importance of the specification’s disclosure, which included comparative data between the claimed PDCs and conventional PDCs. This data demonstrated that the claimed PDCs exhibited significantly less cobalt content and a lower mean free path between diamond grains than prior art examples. The court recognized that the prior art examples “exhibit a lower coercivity indicative of a greater mean free path between diamond grains and thus may indicate relatively less diamond-to-diamond bonding between the diamond grains.”
The Federal Circuit engaged in the two-step analysis established by Alice Corp. v. CLS Bank International. Applying Alice step No. 1, the court determined that the claims were directed to a specific composition of matter having particular characteristics, rather than being directed to an abstract idea and did not reach Alice step No. 2. The court found that, in view of the recitation of “a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table,” a “plurality of diamond grains,” a “catalyst including cobalt,” and the limitations of magnetic properties, dimensional parameters, and the interface topography between the polycrystalline diamond table and substrate, the claims are plainly directed to matter.
In so holding, the court found the ITC erred when it concluded that the asserted claims are directed to the “abstract idea of PDCs that achieve . . . desired magnetic . . . results, which the specifications posit may be derived from enhanced diamond-to-diamond bonding.” The court also disagreed with the commission’s apparent expectations for precision between the claimed properties and structural details of the claimed composition. As the court noted, a perfect proxy is not required between the recited material properties and the PDC structure.
The court also affirmed the ITC’s finding that the claims were enabled under Section 112, indicating that the specification provided sufficient information for a person of ordinary skill to make and use the invention without undue experimentation. This determination was based on the detailed manufacturing methods and examples provided in the patent specification.
Takeaways
This decision provides valuable guidance for patent practitioners in the materials science field and reinforces the importance of carefully crafting claims and specifications to withstand Section 101 challenges. Composition of matter claims can remain patent-eligible under Section 101 even when they involve measuring natural properties, as long as they claim a non-naturally occurring composition.
When drafting claims for materials science inventions, practitioners should consider including specific, measurable parameters that distinguish the invention from naturally occurring substances or prior art.
The decision also highlights the importance of providing detailed descriptions in the specifications of how to measure claimed properties and how they relate to the composition’s structure or function.