Trump Tariffs Survival Guide: 10 Strategies for U.S. Importers
Tariffs remain the focus of the incoming Trump Administration. Over the past several months, the announcements from president-elect Trump and his transition team have been dynamic. We expect the Trump trade policy team to use creative methods to deliver aggressive new tariff policies this year.
There are several strategies U.S. importers may consider to cope with the anticipated tariff increases. Some of the strategies are lessons learned during the first Trump Administration (e.g., to mitigate the impact of the Section 301 tariffs on Chinese-origin imports). The key to success remains to plan ahead, understand the laws, and weigh all options.
Potential New U.S. Import Tariffs
Before turning to strategies, we outline the potential types of tariffs that have been shared by Trump insiders. For each type, we cover the potential tariff action, timing for such imposition, and our assessment of the potential likelihood of imposition. Exporters, please note that we may expect to see other countries impose retaliatory tariffs against imports from the United States following the increase of U.S. import tariffs. China, Canada, Mexico and the EU have all threatened such tariffs.
Chinese-Origin Goods.
Potential Tariff Action: Currently, the Section 301 tariffs on most imports of Chinese-origin goods are largely in the 25-50 percent range. During the Trump presidential campaign, we heard about a 60 percent tariff on all Chinese-origin goods. At the end of November 2024, president-elect Trump announced immediately upon taking office, tariffs on imports from China would increase by 10 percent. When coupled with the existing Section 301 tariffs, that action would result in a 35 to 60 percent tariff on such imports.
Timing: Such a tariff could be imposed using the same Section 301 of the Trade Act of 1974, but that method would take several months to implement. The wild card option under consideration (leaked on January 8, 2025) would be to use the president’s emergency authority under the International Emergency Economic Powers Act of 1977 (IEEPA), which would enable the incoming Administration to impose tariffs almost immediately. IEEPA has not been used previously to implement tariffs, so any such tariff action could be a bit of the Wild West.
Likelihood: Very likely.
Chinese-Owned or Operated Ports.
Potential Tariff Action: During the Trump presidential campaign, we heard brief threats about the imposition of tariffs on any goods, regardless of country of origin, that entered the United States through any Chinese-owned or operated ports.
Timing: Such a tariff could be implemented quickly after inauguration. Congress has delegated broad authority to the Executive Branch to impose tariffs for reasons of national security. Thus, the same IEEPA-type action could authorize such tariffs immediately upon inauguration, or potentially even Section 232 of the Trade Expansion Act. Any Section 232 action would require several months.
Likelihood: Not likely.
Mexico and Canada.
Potential Tariff Action: Trump has all but promised a 25 percent tariff on all imports from United States-Mexico-Canada Agreement (USMCA) partners Canada and Mexico. The USMCA was negotiated by the first Trump Administration. The agreement has a national security carveout (a theme here) that enables a party to the agreement to apply measures it considers necessary for protection of its own essential security interests. Thus, the USMCA gives the incoming Administration the pretext it needs to impose such tariffs.
Timing: Such a tariff could again be implemented quickly using IEEPA or much longer should negotiations drag on related to any such tariff. The immediate imposition of such a tariff would be aggressive, though not impossible. There is a decent chance the threat is being used as a negotiating tool (or stick) ahead of the 2026 joint review of the USMCA by the member parties.
Likelihood: Possible, but more likely used as negotiating leverage.
Universal Tariff.
Potential Tariff Action: The incoming Administration has also announced the potential for a 10 or even 20 percent universal tariff. Such a tariff would apply to all imports from all countries. However, in recent weeks, we have seen leaks that such a universal tariff would be targeted to imports relating to national security as follows: defense industrial supply chain (through tariffs on steel, iron, aluminum and copper); critical medical supplies (syringes, needles, vials and pharmaceutical materials); and energy production (batteries, rare earth minerals and even solar panels).
Timing: Such a tariff could again be implemented quickly using again using national security arguments. There are also recent reports that it would be phased in gradually to minimize disruption to supply chains and financial markets.
Likelihood: A broad universal tariff is not likely, but also not impossible. A universal tariff targeting imports relating to national security considerations is fairly likely.
Antidumping and Countervailing Duties.
Potential Tariff Action: President-elect Trump’s team is committed to the fair trade end of the free trade/fair trade spectrum. The main tool in that arsenal is an old one: antidumping duties and countervailing duties (AD/CVD). We expect the use of the AD/CVD laws to increase steadily during the incoming Trump administration. One major focus will be anti-circumvention proceedings that are designed to punish imports from countries where foreign manufacturers under AD/CVD orders may try to shift their production.
Timing: AD/CVD cases are slow by nature. No real changes will be noticeable until 2026 or 2027.
Likelihood: Very likely.
Top 10 Tariff Coping Strategies
The potential for new tariffs is substantial. We provide the following for consideration in preparing for such actions. Any plan requires tailoring to specific supply chains, products, and compliance realities. Sometimes a combination of the below strategies may be necessary.
Contract Negotiation: Review supplier and customer contracts to assess the assignment of liability for tariff increases; and negotiate favorable tariff burden-sharing.
Supply Chain Management: Consider suppliers in countries subject to lower tariffs, but be aware of the potential for AD/CVD and circumvention issues. Also consider sourcing a different product or raw material subject to a lower tariff rate. Don’t forget to examine whether manufacture in a third country using raw materials from a high tariff country creates a “substantial transformation,” such that the end product would be considered to originate in the third country. And of course, to the extent possible, review the possibility of sourcing from domestic suppliers.
Trade Agreements: Consider sourcing from countries subject to free trade agreements with the United States, which would enable duty-free imports. But do not assume that Canadian and Mexican goods will be duty-free; be aware of the potential of a national security-based tariff or renegotiated USMCA.
Trade Preference Programs: Keep an eye on potential programs that provide duty-free imports. For example, past programs included the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB). But be aware that the GSP and MTB programs have been languishing without reauthorization by Congress for years.
In-Bond Shipments and Foreign Trade Zones (FTZ): If a company’s supply chain involves goods transiting through the United States, for sale elsewhere, consider use of in-bond shipments or an FTZ, where tariffs do not normally apply. But be aware that in-bond and FTZ schemes can involve high storage fees, rigorous accounting procedures, and other costs.
Duty Drawback: If manufacturing products in the United States for export, consider making use of a drawback program. Drawback enables importers to obtain refunds of certain U.S. duties paid on the imported component goods or materials. Section 301 duties are eligible for drawback, but AD/CVD are not.
Exclusions: If new tariffs are issued under Sections 301 or 232, consider seeking a tariff exclusion if such an administrative process is provided.
Comments: If Sections 301 or 232 are used, we expect to see a notice and comment period as part of the rulemaking, which should provide interested parties an opportunity to comment on the economic impact of the proposed tariffs.
Congressional Relations: Consider whether outreach to congressional delegations could help in any tariff mitigation strategy.
Litigation: We expect multiple lawsuits challenging the authority to impose certain tariffs. But U.S. courts have generally been receptive to the national security justifications offered for such tariffs, and the timeline to resolve such actions requires years.
In sum, while the imposition of additional tariffs will be challenging for U.S. importers, there are several possible strategies that may reduce certain negative impacts of these tariffs. All importers must carefully analyze any supply chain changes under the applicable laws, and each decision should be well documented and supported by the company’s written import policies and procedures.
Supreme Court Won’t Consider Federal Contractor Minimum Wage Mandate
The Supreme Court on Monday, Jan. 13, 2025, declined to take up a decision addressing the president’s authority under the Procurement Act to issue a minimum wage mandate for employees working on federal government contracts. The denial of the petition for certiorari keeps a circuit split intact, and leaves federal contractors to navigate the wage mandate’s uncertain legal status while complying with the latest minimum wage hike to $17.75 per hour, which took effect Jan. 1.
President Biden issued Executive Order (EO) 14026 in 2021, which increased from $10.95 to $15 the minimum hourly wage for employees working on federal government contracts, and provided for annual increases to the minimum wage. In 2022, the U.S. Department of Labor (DOL) issued regulations implementing the EO.
In the case rejected by the Supreme Court, a Colorado federal court refused to grant a preliminary injunction barring enforcement of the wage mandate. The U.S. Court of Appeals for the Tenth Circuit affirmed. Bradford v. United States DOL, 2024 U.S. App. LEXIS 10382 (D. Colo. Apr. 30, 2024). The appeals court held the plaintiffs were not likely to show that the DOL lacked statutory authority to issue the DOL rule implementing EO 14026. The appeals court did not issue a final decision on the merits, however. The plaintiffs’ petition for certiorari asked the justices to address whether the wage mandate exceeds the president’s authority under the Procurement Act and, if not, whether the statute improperly gives lawmaking authority to the president. Their petition was denied, leaving these critical questions unresolved.
Meanwhile, two other challenges to the federal contractor wage mandate are pending.
In November, the U.S. Court of Appeals for the Ninth Circuit held that the president lacked authority under the Procurement Act to issue EO 14026. State of Nebraska v. Su, 2024 U.S. App. LEXIS 28010 (9th Cir Nov. 5, 2024). The appeals court also held the DOL regulation implementing the EO was arbitrary and capricious because the DOL failed to consider alternatives to the $15 rate, such as a lower wage rate or phasing in the $15 rate over several years.
Again, however, the Ninth Circuit also did not address the merits. Instead of invalidating EO 14026 and the implementing regulation, the Ninth Circuit sent the case back to the federal district court in Arizona, which had upheld the wage mandate in a legal challenge brought by several states. On remand, the district court is expected to issue a preliminary injunction barring application of the wage mandate, although it is not clear whether the injunction will apply to just the plaintiff states (to the extent of their relationships with the federal government as federal contractors) or as a complete ban to enforcement within the states. On Dec. 20, 2024, the DOL filed a petition for en banc rehearing of the divided Ninth Circuit panel decision.
The wage mandate is also facing an ongoing challenge in the U.S. Court of Appeals for the Fifth Circuit. The appeals court will consider the Biden Administration’s appeal of a 2023 decision invalidating EO 14026 in a case brought by the states of Louisiana, Mississippi, and Texas. The Texas district court had narrowly enjoined the wage mandate only as applied to the plaintiff state governments, refusing to issue a nationwide injunction because it did not want to “encroach” upon other federal courts that had upheld the executive order. State of Texas v. Biden, 2023 U.S. Dist. LEXIS 171265 (S.D. Tex. Sept. 26, 2023). The appeals court heard oral argument last August. The Fifth Circuit could reverse the Texas court and uphold EO 14026, setting up a split with the Ninth Circuit. This outcome is unlikely, however.
For now, the minimum wage mandate is in effect. But a broader reprieve (through a variety of avenues) may be forthcoming. The Trump Administration may opt to abandon the Fifth Circuit appeal and the bid to rehear the Ninth Circuit panel’s holding. President-Elect Trump also may opt to rescind President Biden’s executive order and decline to defend the wage mandate.
GeTtin’ SALTy Episode 44 | California 2025 SALT Outlook [Podcast]
In the latest episode of the GeTtin’ SALTy podcast, host Nikki Dobay and guest Shail Shah, both shareholders at Greenberg Traurig, discuss the complexities of California’s state and local tax landscape as 2025 begins. The episode kicks off with a surprising announcement from Governor Gavin Newsom: California has shifted from a significant budget deficit to a surplus.
The discussion delves into the implications of this fiscal roller coaster, with Shail offering insights into Governor Newsom’s positioning on taxes. The conversation explores indirect tax increases through adjustments in apportionment factors and deductions.
Nikki and Shail address the changes in California’s apportionment rules from the 2024 budget. They provide updates on legal challenges against these retroactive changes, with organizations like the National Taxpayers Union questioning the constitutionality. This litigation is likely to shape the tax landscape in 2025, with potential outcomes still uncertain.
They also tackle the topic of California’s market-based sourcing regulations, which have been in development since 2017, and the future of FTB (Franchise Tax Board) guidance.
The episode concludes with a surprise non-tax question about the perils of a malfunctioning coffee maker.
2025 Budget Reconciliation Roadmap: Impacts and Action Steps
Overview
The budget reconciliation process is a critical legislative tool that allows Congress to pass budget-related measures with a simple majority in the Senate, bypassing the filibuster and expediting passage of significant legislative priorities. Established under the Congressional Budget Act of 1974, reconciliation is designed to align revenue and spending with Congress’ annual budget resolution. This mechanism is particularly valuable when one party controls Congress and the White House, as it allows major initiatives to advance without bipartisan support. However, reconciliation is subject to strict rules, including the “Byrd Rule,” which restricts provisions to those with direct budgetary impacts, i.e., with direct impact on either spending or revenues.
Prior Uses of Reconciliation During President Trump’s first term, budget reconciliation was a key tool for advancing significant legislative priorities, including the Tax Cuts and Jobs Act of 2017, which enacted sweeping tax changes. Similarly, the Biden Administration utilized reconciliation to pass key components of its agenda, such as the American Rescue Plan Act of 2021, which provided critical pandemic relief and economic stimulus. These examples highlight reconciliation’s utility in enacting transformative policies under unified government control.
Trump and Congressional Agenda for Reconciliation For the incoming Trump administration and Republican-majority Congress, reconciliation will be instrumental in enacting an ambitious agenda, that encompasses tax provisions, border security, energy production and deregulation, and defense funding. As stakeholders in energy, maritime, transportation, trade, defense, and railway, and Native American and Alaska Native affairs, all stakeholders should prepare for significant opportunities and risks as these measures take shape.
Reconciliation Strategy: One Bill or Two?President-elect Trump’s position on the scope and structure of reconciliation has evolved in recent weeks. While initially favoring a single comprehensive package, he has expressed openness to a two-bill strategy. The first bill would focus on energy, border security, and defense, while the second would address tax provisions and broader fiscal priorities.
House Speaker Mike Johnson (R-LA) has strongly advocated for a single reconciliation bill, arguing that it is the most efficient way to advance Trump’s agenda within the first 100 days. Johnson’s approach is supported by House Budget Committee Chairman Jodey Arrington (R-TX) and House Ways and Means Chairman Jason Smith (R-MO), who believe a unified package will maximize legislative momentum. However, Senate Republicans, including Budget Committee Chairman Lindsey Graham (R-SC), have emphasized the urgency of addressing border security and defense separately to mitigate national security risks, with tax policy changes following later this year in a second bill. This internal debate could impact the timeline and scope of reconciliation efforts.
Scope of Potential Legislation
Tax ProvisionsTax changes are expected to play a significant role in the reconciliation process, with the extension of the 2017 tax cuts at its core. These extensions aim to provide continued relief for businesses and high-earner individuals while reducing corporate tax rates further to enhance global competitiveness and attract investment. Additional measures under consideration include eliminating taxes on tipped income to support the service industry, eliminating taxes on Social Security benefits, simplifying the tax code by reducing brackets, and eliminating certain deductions to streamline compliance and reduce costs. A new revenue-generating mechanism involving tariffs on imports is also being proposed.
Border Security and DefenseBorder security and defense funding are poised to feature prominently in the reconciliation agenda. Significant allocations are anticipated for border wall construction, advanced surveillance technologies, and enhanced U.S. Customs and Border Protection and Immigration and Customs Enforcement operations. Simultaneously, the military will receive increased funding to address strategic vulnerabilities and modernize equipment. These measures not only aim to provide immediate legislative wins but also to mitigate pressing national security concerns.
Energy PolicyEnergy policy will focus on streamlining permitting processes for critical infrastructure projects, such as pipelines, renewable energy installations, and oil and gas export terminals. Domestic energy production will be promoted through the reduction of regulatory barriers, particularly in the oil, gas, and nuclear sectors. Further, energy independence initiatives, including incentives for clean energy and advanced technology adoption, will be advanced. However, proposals to reform environmental protections, such as the National Environmental Policy Act (“NEPA”) review process, are expected to face legal and public opposition, even as they aim to accelerate project timelines. Whether or not permitting reform meets the Byrd Rule by saving tax revenues remains to be seen.
Debt CeilingDebt ceiling adjustments are also on the table, with plans to raise the debt limit within the reconciliation package to ensure government solvency and avoid market disruptions. To secure support from conservative members, this increase will likely be paired with $2.5 trillion in spending cuts over ten years, focused on discretionary spending and the reduction of waste and inefficiencies. It remains to be seen whether these tax cuts can be balanced out simply with discretionary spending cuts. Balancing the debt limit increase with long-term fiscal sustainability will be a key focus.
Tentative Timeline and Legislative Actions
Early February: Adoption of a budget resolution with reconciliation instructions is expected, providing the framework for committees to draft detailed legislation.
March 14, 2025: Deadline to pass final fiscal 2025 spending bills to avoid a government shutdown.
Early April: House passage of the reconciliation package, with the goal of Senate approval by the end of April or early May.
May 2025: Final reconciliation measures enacted, aligning with Trump’s first 100 days.
It is important to note that this is an ambitious one-bill strategy timeline, and dates could be delayed due to lengthy negotiations. A two-bill approach may stretch until the end of the 2025 calendar year to meet the deadline for expiration of the original Trump tax cuts.
Implications for Stakeholders
EnergyIn the energy sector, increased project approvals and decreased regulatory hurdles may present significant opportunities for developers of fossil fuels, renewables, and nuclear energy. However, potential reforms of environmental protections may lead to legal risks for stakeholders. Moreover, the introduction of tariffs on imports, aimed at funding reconciliation priorities, could disrupt supply chains for energy infrastructure projects reliant on imported materials and potentially cause consumer prices to rise, creating inflation-related risks. This may be ameliorated if the incoming Administration, as reported, focuses the tariffs on only certain critical imports. This may, though, positively impact domestic energy producers due to an increased demand for low-cost, non-tariffed energy.
Maritime and TransportationThe maritime and transportation sectors stand to benefit from infrastructure investments that could drive growth in port modernization and rail projects. Streamlined regulatory approvals are expected to accelerate construction timelines, creating additional opportunities for stakeholders involved in large-scale projects. However, proposed discretionary spending cuts could reduce the availability of federal grants that support critical transportation infrastructure upgrades.
Native American/Alaska Native AffairsFor Native American and Alaska Native communities, the reallocation of federal funding poses a significant risk to vital services, including healthcare, education, and housing programs. Advocacy will be essential to ensure equitable treatment and representation in legislative negotiations. Despite these challenges, tribes, native organizations, and corporations may find opportunities to leverage energy and infrastructure investments to promote economic development, including through federal contracts, provided their interests are safeguarded in the reconciliation process.
What to Watch
Legislative DevelopmentsThe reconciliation strategy debate between a single comprehensive package and a two-bill approach will significantly shape the legislative process. Stakeholders should closely monitor the resolution of this debate, as it will determine the sequencing, timeline, and scope of legislative priorities. The progress of key committees in drafting specific provisions will also be critical to understanding how reconciliation impacts various industries.
Stakeholder AdvocacyProactive stakeholder advocacy will play a vital role in shaping favorable outcomes. Engaging with congressional offices to advocate for specific language in reconciliation provisions, particularly those impacting energy, defense, transportation, trade, and tribal programs, will be essential. Building coalitions to amplify industry voices and address shared concerns about proposed cuts or regulatory changes can further strengthen advocacy efforts.
Market ImpactsAdditionally, stakeholders should evaluate the market implications of proposed tax policies, including corporate rate reductions and import tariffs, to understand their potential impact on profitability and supply chain operations. Assessing the implications of energy deregulation measures on project feasibility and financing opportunities will also be critical. Finally, stakeholders should prepare for potential shifts in federal funding priorities, particularly those affecting grant-dependent programs and projects, to mitigate risks while seizing new opportunities.
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Extended Producer Responsibility for Packaging: Taking Stock for 2025
The Extended Producer Responsibility (“EPR”) movement for packaging is growing in the U.S., marking a shift in how some states are approaching waste management and recycling. Rather than leaving municipalities to bear the full cost of waste management and recycling programs, states with EPR programs are poised to shift costs associated with building out recycling infrastructure to producers of products covered by EPR requirements. In 2024, there were significant legislative, regulatory, and programmatic developments in several states. We expect these trends to accelerate in 2025, as several programs reach the initial implementation phase of their EPR programs.
Legislative Developments
Since 2021, five states (Maine, Oregon, Colorado, California, and Minnesota) have passed EPR programs for packaging, and more are considering similar legislation. These programs target “producers,” typically defined as the manufacturer or brand owner for packaged products sold in the relevant state. Producers are generally required to join a Producer Responsibility Organization (“PRO”), which is responsible for collecting data regarding the volume of single-use packaging being sold into the state, charging producer fees based on their contribution, and using the funds to improve recycling infrastructure across the state.
In May of 2024, Minnesota passed legislation for a statewide EPR program addressing most types of packaging and paper products. A number of other states considered some form of EPR legislation in 2024. Although these measures were not adopted, we expect to see advances in 2025. States to watch include Massachusetts, which in December passed legislation calling for a legislative commission on EPR for several product categories, including plastics and packaging, paint, mattresses, and lithium-ion batteries; New York, which has been working on passing EPR legislation for several years; and Washington, which already imposes post-consumer recycled content and other requirements for plastic product packaging and recently considered but failed to pass a bill that would have added packaging to the state’s existing product classes subject to product stewardship programs.
Regulatory Developments
States with existing EPR programs spent the year developing regulatory programs. Colorado, Oregon, and Maine all adopted regulations in 2024. These regulations define key program terms, such as criteria for setting producer fees and conditions of reimbursing municipalities for program implementation costs. California initiated the rulemaking process in 2024, but missed the statutory deadline. CalRecycle will likely adopt final rules soon.
Key issues to watch as regulatory programs develop include covered product exemptions and ecomodulation provisions, which allow the PRO to offer fee adjustments to producers that make changes to the way in which they produce, use, and market covered products, potentially leading to lower fees for covered products with a lower environmental impact.
Programmatic Developments
Different states have different timelines for selecting a PRO, adopting a PRO plan, and requiring producers to join a PRO and begin reporting. Circular Action Alliance (CAA) has emerged as the leading Producer Responsibility Organization (PRO) for states with EPR programs. So far, Colorado and California have both selected CAA as the official PRO.
Producers in Colorado were required to register with the PRO by October 1, 2024. CAA reporting guidance is now available to registered producers, and producers will begin reporting in August 2025. CAA’s program plan for Colorado is due early this year and will detail how CAA plans to establish costs, reimburse recyclers for services, and other program details for review by the state’s EPR advisory board.
In California, producers registration with CAA is open. Producers are waiting for CAA to publish a program plan to initiate program implementation ahead of the January 1, 2027 implementation date.
In Oregon, CAA was the only organization to submit a program plan for consideration by Oregon’s Department of Environmental Quality, and will likely be selected as the official PRO early this year. Implementation is moving forward most quickly in Oregon, where producers are required to pre-register with the PRO and submit data on covered products sold into the state by March 31, 2025. CAA plans to launch a producer reporting portal during the first quarter of 2025.
In Minnesota, the producer-appointed PRO is expected to register with a with the Minnesota Pollution Control Agency by July 1 of this year. On December 30, 2024, CAA submitted an application for registration to the agency .
In late summer, Maine is expected to release a request for proposal for a potential PRO, called a stewardship organization under Maine’s terminology, and CAA is expected to respond to Maine’s request.
Early this year, Maryland is expected to publish the results of its Needs Assessment, which evaluates and provides recommendations on the state’s recycling system, including infrastructure, labor, and environmental impacts. The Producer Responsibility Advisory Council has been meeting regularly since May of 2024 to draft recommendations for the Needs Assessment.
Key Tasks for Producers in 2025
Producers should focus on the following tasks in 2025:
Evaluate applicability under the five EPR programs that are already in place, including by assessing “small producer” exemptions and exemptions for certain categories of covered materials. Importantly, some covered material exemptions apply automatically, while some will require submitting documentation to the relevant states.
If not already done, register with CAA in Colorado, California, Oregon, and Minnesota.
Develop a data collection plan.
Assess opportunities for fee reduction, including by leveraging ecomodulation provisions and lifecycle assessments.
Continue to monitor new legislation, regulatory processes, and updates from CAA.
French Insider Episode 38: Securing the Future: Cybersecurity & Data Privacy in the Trump Era with Jonathan Meyer, Liisa Thomas and Carolyn Metnick of Sheppard Mullin [Podcast]
In this episode of French Insider, Sheppard Mullin partners Jonathan Meyer, Liisa Thomas and Carolyn Metnick join host and French Desk Co-Chair, Valérie Demont, to explore the evolving landscape of cybersecurity and privacy under a new Trump administration.
What We Discussed in This Episode:
What is CISA and what is its role in cybersecurity?
What can we expect from the Trump administration regarding cybersecurity?
Could we see less regulation but greater enforcement?
Might there be more stringent regulation with respect to cyber attacks and private ransomware?
Where does the United States currently stand in terms of privacy law?
What is the current status of state and federal privacy laws in relation to the healthcare industry?
In terms of privacy, where could enforcement be headed under the incoming administration?
How do the various state attorneys general and federal agencies coordinate on enforcement?
What enforcement trends should businesses be aware of, and what do they need to focus on?
What specific enforcement trends are we seeing in the healthcare space?
Generally speaking, what types of penalties could result from enforcement actions?
Could a company’s officers and directors face personal liability, either criminal or civil?
How might class action litigation originate from a cybersecurity or privacy incident?
What should businesses prioritize in terms of cybersecurity and privacy compliance?
The Impact of Trump’s Tariffs on the Wine Industry: Past and Future
The wine industry faced significant challenges due to tariffs imposed by President Trump’s first administration. During the presidential campaign, and since his election on November 5, 2024, President Trump has made it clear that he will enact higher tariffs as a key part of the political agenda of his second administration. A few days ago, he nominated Jamieson Greer as his pick for U.S. Trade Representative as the nation’s top trade official, who served as chief of staff to Robert Lighthizer, then U.S. Trade Representative during Trump’s first term; if confirmed by the U.S. Senate, Mr. Greer is expected “to pursue an ambitious trade agenda.” This post highlights the history of Trump’s tariffs on wine, their effects, and what might be expected in his new term.
Trump’s First Term: A Retrospective
In October 2019, the Trump administration imposed a 25% tariff on still wines under 14% alcohol by volume from France, Germany, Spain, and the United Kingdom. These tariffs were part of a broader trade dispute with the European Union over subsidies to aerospace companies. The tariffs led to increased costs for importers, distributors, and ultimately consumers, causing significant disruption in the wine market.
Notable Effects of the 2019 Tariffs:
Increased Prices: The cost of European wines in the U.S. rose, leading to higher prices for consumers. The tariffs specifically targeted alcoholic beverages. However, supplies such as barrels and other equipment were not subject to them.
Market Shifts: Some European producers adjusted their products to avoid tariffs, such as by increasing the alcohol content of their wines.
Economic Impact: The tariffs strained relationships with European trade partners and led to retaliatory tariffs on American products. For instance, the European Union imposed a 25% tariff on American whiskey and Harley-Davidson motorcycles.
Potential Tariffs in Trump’s New Term
As Trump begins his new term, there is speculation about the potential for new tariffs and their impact on the wine industry. Trump has indicated a willingness to impose even higher tariffs on a broader range of products. Here are some possibilities:
Broader Tariffs: Trump has suggested tariffs as high as 100% on goods from China and 25% on goods from Mexico and Canada. When Trump imposed tariffs on China in his first administration, in April 2018, China retaliated by imposing a 15% tariff on U.S. wine. Thus, broader tariffs in Trump’s second administration could impact (directly or indirectly) the wine industry.
Economic Consequences: Higher tariffs could lead to a “long-term war” in trade, affecting thousands of jobs and causing economic instability.
Industry Response: The wine industry is already preparing for potential disruptions. Importers and retailers are considering stockpiling European wines to hedge against future price increases.
The Broader Economic Context
The potential for new tariffs comes at a time when the global economy is already facing significant challenges. The COVID-19 pandemic had already disrupted supply chains and led to economic slowdowns worldwide. In this context, additional tariffs could exacerbate existing problems and create new ones.
Supply Chain Disruptions: The wine industry relies on a complex global supply chain. Tariffs can disrupt this chain by increasing costs and creating uncertainty.
Consumer Behavior: Higher prices for imported wines may lead consumers to switch to domestic alternatives or reduce their overall wine consumption.
Global Trade Relations: Tariffs can strain relationships between countries and lead to retaliatory measures, further complicating international trade.
Industry Strategies and Adaptations
The wine industry has shown resilience in the face of past challenges and is likely to adapt to new tariffs as well. Some strategies that industry stakeholders might employ include:
Diversifying Supply Chains: Importers may seek to diversify their sources of wine to reduce reliance on countries subject to tariffs.
Product Adjustments: Producers might adjust their products to avoid tariffs, such as by changing the alcohol content or packaging size.
Advocacy and Negotiation: Industry groups may engage in advocacy efforts to influence trade policy and negotiate for more favorable terms.
Conclusion
The wine industry faces significant uncertainty as President Trump begins his new term. The tariffs imposed during his first term had far-reaching effects, and new tariffs could exacerbate these challenges. Industry stakeholders are bracing for potential economic fallout and preparing strategies to mitigate the impact. As the situation evolves, the wine industry will need to navigate these complexities to maintain stability and growth.
The future of the wine industry under Trump’s new term remains uncertain, but one thing is clear: the industry will need to remain adaptable and resilient in the face of ongoing challenges. By understanding the potential impacts of new tariffs and preparing accordingly, the wine industry can continue to thrive despite the obstacles it may encounter.
Healthcare Preview for the Week of: January 13, 2025 [Podcast]
Final Week of Biden Administration
During the Biden Administration’s final week, congressional Republicans are moving full steam ahead with Senate confirmation hearings for Trump-nominated officials and with ongoing budget reconciliation discussions. Nomination hearings this week include Doug Collins for secretary of Veterans’ Affairs and Russell Vought for Office of Management and Budget (OMB) director. Hearings have yet to be scheduled for Robert F. Kennedy Jr., nominated for Health and Human Services (HHS) secretary, and other HHS agencies.
We are waiting to see if certain Biden Administration proposed rules, some of which have cleared OMB review, will be finalized this week, before President-elect Trump is inaugurated on January 20, 2025. These proposed regulations include the Marketplace Notice of Benefit and Payment Parameters, a regulation that would require coverage of over-the-counter contraception without cost-sharing or a prescription, and a rule on telemedicine prescribing of controlled substances, among others. Other proposed regulations with comment periods still open, including the 2026 Medicare Advantage policy and technical rule, could be substantially changed when Trump takes office.
Looking ahead to the new Administration, congressional Republicans are eyeing healthcare policies as potential savers for their forthcoming budget reconciliation, which is expected to target significant cuts in federal spending. At a December 2024 Republican conference meeting, $2.5 trillion in mandatory spending cuts were put on the table in exchange for a $1.5 trillion increase in the debt limit. The Congressional Budget Office (CBO) recently released options for reducing the deficit; CBO periodically releases such options, providing legislators with price tags for various policies. Healthcare options outlined by CBO include a version of Medicare site neutral payment reforms, Medicaid per capita caps, and a reduction in payment rates for 340B entities. The House Budget Committee also circulated a spending reform options document late last week detailing up to $5.7 trillion in savings. Healthcare is a primary target for savings as it makes up almost $3.5 trillion of the total figure, with $2.3 trillion coming solely from Medicaid savings.
The key House and Senate healthcare committees (Senate Finance; Senate Health, Education, Labor and Pensions; House Energy and Commerce; and House Ways and Means) are officially formed for the 119th Congress, with new members on both sides of the aisle for all four committees. The House Rules Committee is still without a chair, however, and other committees, including the House Education and Workforce Committee, are not yet formed.
Today’s Podcast
In this week’s Healthcare Preview podcast, Debbie Curtis joins Maddie News to discuss the final week of the Biden administration and the week ahead in the 119th Congress, with the Senate focused on confirmation hearings for Trump-nominated officials, and Congressional Republicans eyeing healthcare policies as potential savers for upcoming legislation.
Navigating the Complexities of Pay Transparency Legislation
Employers are paying close attention to pay transparency laws, which are the latest trend in employment legislation. Often expanding on existing pay equity laws, many state and local governments have enacted or proposed legislation with the stated goal of reducing pay inequity and combating wage discrimination.
Hawaii and Washington, DC, each passed legislation that went into effect in 2024. Illinois and Minnesota rang in the new year with pay transparency legislation which took effect on January 1. And Massachusetts and New Jersey each passed laws which will take effect later in 2025.
The Salary Transparency Act is currently pending before US Congress. If passed, it would amend the Fair Labor Standards Act (FLSA) and make it unlawful for an employer to fail or refuse to disclose the wage or wage range for a position in a job posting, employee opportunity, or upon hire, and at least annually. The federal law would apply to all employers in the United States. The Act is in the very early stages of consideration and has not yet passed the US House or Senate.
Pay transparency laws typically require employers to disclose the wages or wage range for a particular position to current and/or prospective employees. However, each state’s transparency law differs slightly in its application, including which employers are covered, when employers must disclose pay ranges or other details, and to whom employers must disclose them. For this reason, multi-state employers may find it challenging to comply with their obligations, an issue compounded by an increasingly dispersed and often remote workforce for many employers.
FAQs
Do pay transparency laws apply to internal transfers or promotions?
Many states with pay transparency laws require employers to disclose the applicable wage range to existing employees offered a promotion or transfer. For example, laws in Connecticut, New York, and Massachusetts require employers to disclose a pay range in the event of an existing employee’s internal promotion or transfer. On the other hand, California and Hawaii’s disclosure requirements do not apply to internal promotions or transfers, and instead, focus solely on disclosures for external job postings and communications to potential new employees.
Can current employees request pay ranges for their current jobs from their employers?
In addition to requiring disclosures of wage ranges to applicants for employment, certain states also permit current employees to make reasonable requests to their employer with respect to the pay range for their current role. For example, the Massachusetts law requires employers to provide the pay range for a specific employment position to an employee holding that position, or to an outside applicant for the position, upon request. For a more comprehensive look at the forthcoming Massachusetts pay transparency law, you can read our full alert on the topic here.
How do pay transparency laws apply to remote workers?
State laws differ as to whether they require employers to apply pay transparency statutes to remote workers. Colorado, for example, has issued explicit guidance with respect to remote employees. The Colorado Department of Labor and Employment (CO DLE) clarified that the pay transparency rules apply to job postings for work tied to Colorado locations or remote work performable anywhere, but not to work performable only at a non-Colorado worksite. The CO DLE’s guidance further clarifies that postings for remote positions that can be performed anywhere are subject to the requirements in Colorado’s pay transparency law, the Equal Pay for Equal Work Act, even if the posting explicitly excludes Colorado applicants. Similarly, the Illinois and New York state pay transparency laws cover positions that will be physically performed at least in part in the state, or that will be physically performed outside the state when the employee reports to a supervisor, office, or other work site located within the state.
Which states’ pay transparency laws include additional reporting requirements?
California and Massachusetts also impose certain wage reporting requirements for covered employers. In California, a private employer with 100 or more employees and/or workers hired through labor contracts must submit annual pay data reports[1], which require employers to provide pay, demographic, and other workforce data, to the state Civil Rights Department. In Massachusetts, employers with 100 or more Massachusetts employees will have the additional requirement of submitting Equal Employment Opportunity (EEO) pay data annually to the Commonwealth. The first round of EEO reporting for covered employers in Massachusetts is due by February 1.
What are the penalties for failing to comply with pay transparency requirements?
Depending on the jurisdiction, employers may face varying degrees of liability if they fail to comply with pay transparency laws. For example, in Massachusetts, the state attorney general can bring an action against a covered employer for a violation of the law. Incremental fines are imposed for successive violations to further encourage compliance.[2] However, California’s pay transparency act takes this a step further by providing a private right of action for aggrieved parties.
Key Takeaways for Employers
Differences between state pay transparency legislation present complex challenges for multi-state employers. To navigate these complexities and to ensure compliance with national pay transparency standards employers should work closely with counsel to:
Update Policies: Align internal policies with pay transparency laws, including training HR personnel and hiring managers with best practices to ensure compliance with pay transparency for current employees and applicants.
Maintain Records: Keep up-to-date records on all employees to ensure compliance — especially important for remote employees.
Monitor Changes: Stay informed and consult with counsel with respect to legislative changes that could affect compliance obligations.
[1] There are now two distinct types of reports in California: (1) a payroll employee report which covers the employer’s California payroll employees and (2) a labor contractor employee report, covering only labor contractors.
[2] For the first two years after the effective date of July 31, a covered employer in Massachusetts shall have two business days after notice of a violation to cure any defect before a fine is imposed. See Massachusetts’ statute.
Beltway Buzz, January 10, 2025
Welcome to the 119th Congress. Even before President-elect Donald Trump is sworn in on January 20, 2025, change has come to Washington, D.C., as the 119th Congress gaveled in late last week. Here is what the Buzz is watching as the new Congress kicks off:
A Trifecta? Yes, but … Republicans control the White House, as well as the U.S. Senate and U.S. House of Representatives, but that doesn’t mean that getting legislation to President-elect Trump’s desk is going to be easy. In the Senate, Republicans hold a 53–47 majority, with Vice President-elect J.D. Vance as the potential tiebreaking vote. This is seven votes short of a filibuster-proof majority, meaning that most partisan bills will have a hard time getting through the Senate. Moreover, in the House, Republicans hold a 219–215 majority. This razor-thin majority will get even thinner, as President-elect Trump has promised to nominate Representative Elise Stefanik (R-NY) as ambassador to the United Nations and Representative Mike Waltz (R-FL) as national security adviser. Depending on the timing of confirmations and special elections, this could mean that Republicans won’t be able to lose a single vote on any bill.
Get Ready for Reconciliation. Because Republicans are unlikely to sway at least seven Democrats to join them in voting for most bills, they will likely turn to the arcane budgetary process called reconciliation to advance their policy priorities. Ostensibly reserved for budgetary matters, the reconciliation process has the advantage of only needing a majority vote in the U.S. Senate. The drawback of the process is that because it is a budgetary tool, issues contained in such a bill must be fiscally related. Over recent years both Democrats (Affordable Care Act, American Rescue Plan Act, the Inflation Reduction Act) and Republicans (Tax Cuts and Jobs Act) have used the process to secure legislative victories. So, while this process could be used by Republicans to score wins on certain policy positions (e.g., tax cuts), they will not be able to use reconciliation to pass every legislative priority.
“Must-Pass” Legislation. As always, there are annual legislative exercises that must be addressed by Congress. Funding the federal government beyond the current March 14, 2025, deadline and lifting or suspending the debt limit will be major issues that Congress will have to address in the coming weeks and months. This could take time and attention away from other matters, such as the confirmation of political nominees.
Nominations. Speaking of nominations, the Buzz will be watching the confirmation process for putative secretary of labor nominee Lori Chavez-DeRemer. We will also be monitoring vacancies at the National Labor Relations Board and U.S. Equal Employment Opportunity Commission (as well as potential vacancies in the general counsel’s office at each of these agencies). The early rounds of confirmation hearings are usually reserved for high-profile cabinet-level positions such as secretary of state, secretary of the treasury, and attorney general.
Other Legislation. The Buzz will be watching for the reintroduction of the Dismantle DEI Act. The bill is unlikely to pass the Senate, but it could be the subject of congressional hearings.
Ports Strike Averted. This week, the International Longshoremen’s Association (ILA) and the group representing shippers and employers at East Coast and Gulf Coast ports announced a tentative agreement on a new six-year collective bargaining agreement, avoiding a potential strike. Buzz readers may recall that the parties have been negotiating over the introduction of automation technology at the ports. According to a joint statement released by the parties, the “agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports—making them safer and more efficient, and creating the capacity they need to keep our supply chains strong.” ILA members must still vote to ratify the contract.
Fed Contracting Agency Withdraws Salary History and Transparency Rule. On January 8, 2025, the Federal Acquisition Regulatory Council (FAR Council) withdrew its January 30, 2024, proposed rule that would have prohibited federal contractors from considering an applicant or employee’s salary history when making compensation decisions. The proposal also would have required federal contractors to disclose compensation information in advertisements for job openings in connection with a federal contract. The FAR Council stated that “[i]n light of the limited time remaining in the current Administration,” it had “decided to withdraw the proposed policy and rule and focus [its] attention on other priorities, including directives in recent National Defense Authorization Acts.”
OSHA Heat Docket Wraps Up. January 14, 2025, is the deadline for stakeholders to submit comments in response to the Occupational Safety and Health Administration’s proposed heat standard. The incoming Trump administration is unlikely to move forward with the proposal, at least as currently written.
A Commanding Act. During his four years in office, President Biden, the commander in chief, signed into law the American Rescue Plan Act, the Inflation Reduction Act, and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022, among others. But for residents of Washington, D.C., President Biden’s most enduring legislative victory is probably the D.C. Robert F. Kennedy Memorial Stadium Campus Revitalization Act. The statute instructs the secretary of the interior to transfer “administrative jurisdiction over the Robert F. Kennedy Memorial Stadium Campus” to the District of Columbia for, among other purposes, “[s]tadium purposes, including training facilities, offices, and other structures necessary to support a stadium.” The act likely paves the way for the construction of a stadium in Washington, D.C., that will hold professional football games.
Illinois Warehouse Worker Bill Brings New Challenges for Employers with Quotas
Illinois employers with warehouse worker production quotas should be aware of a bill that has now passed both legislative houses as of Jan. 7, 2025. The Warehouse Worker Protection Act would affect employers with (1) 100 or more employees at a single warehouse in Illinois or (2) 1,000 or more employees across warehouses in Illinois.
The highlights of the bill include:
Employers that use production quotas for warehouse employees must provide those employees with a written description of the quota and any potential adverse action that could result from failure to meet the quota. This written description must be provided within 30 days of the bill’s passage and upon hire for employees hired thereafter. Subsequently, if an employee requests a written description of each applicable quota, it must be provided.
If an employee receives discipline based on failure to meet a quota, the employee is entitled to a written explanation of their failure to meet the quota within three days of an employee request for such an explanation.
Employers will be required to preserve three years of all records regarding warehouse quotas and employee work speed data.
A current or former employee who believes they were disciplined for failure to meet a quota has the right to request: (1) a written description of each applicable quota, (2) the most recent 90 days of their work speed data, and (3) a copy of the aggregated work speed data for similar employees during the same time period.
There is a rebuttable presumption of unlawful retaliation if an employee is subject to an adverse employment action within 90 days of requesting information under the act or making a complaint under the act.
The Illinois Department of Labor may seek monetary damages and civil penalties. Additionally, there is a private right of action to seek injunctive relief. Although monetary damages cannot result from an employee’s private action, the employee can recover attorney’s fees and costs if they prevail.
While the act has not yet been signed into law, Illinois employers that use production quotas should consider preparing for compliance, including drafting written descriptions of applicable quotas and penalties for failure to meet quotas and completing data preservation of all quotas and employee work speed data.
Pumping the Brakes? Outlook for State and Federal Vehicle, Engine, and Equipment Emissions Standards
With the start of the second Trump administration just over a week away, there are many uncertainties with respect to how the new administration will regulate vehicle, engine, and equipment emissions, and the steps the second Trump administration may take to roll back emission standards set during the Biden administration. However, one thing is certain, there will be changes; and those changes are likely to impact how industry develops new mobile source products, meets emission standards, invests in new technologies, and considers any federal rollbacks of the mobile source obligations set by California and adopted by other states that implement California’s mobile source rules.
Many have speculated that the new administration will take aim at the U.S. Environmental Protection Agency’s (EPA’s) emission standards issued for model year 2027 and later light- and medium-duty vehicles and the new greenhouse gas emission standards set for heavy-duty highway vehicles finalized by the Biden administration in the spring of 2024. Whether there will be a full-scale rollback of those standards or more measured changes is unclear. However, any changes to the federal standards would require a new EPA rulemaking which could take a year or more to accomplish, leaving regulated industry facing uncertainty going into 2026 with respect to the specific standards that will apply for the 2027 model year.
Perhaps more clear is that the change in administration will almost certainly effect at least some of California’s mobile source rules. Under Section 209 of the Clean Air Act, states are preempted from adopting or enforcing emissions standards for new vehicles and engines. However, Section 209 of the Clean Air Act allows California to request that the EPA waive this preemption so that California can enforce more stringent standards in the state. Under Section 209 of the Clean Air Act, unless the EPA finds certain limited grounds for denial it must grant California’s waiver request. Section 177 of the Clean Air Act also allows other states to adopt California’s mobile source standards.
While EPA has never denied a waiver request from California, in the first Trump administration, EPA withdrew California’s waiver for its Advanced Clean Cars I rule. That waiver was subsequently reinstated by the Biden administration, followed by a deluge of litigation related to EPA’s overall waiver authority since then. For example, on December 16, 2024, the Supreme Court denied certiorari in the State of Ohio et al. v. EPA where the joining states argued that the Clean Air Act’s preemption waiver provision violated “equal sovereignty”. While the Supreme Court declined to take on the constitutionality of EPA’s waiver authority in that case, similar challenges may be raised in the future, given that EPA has recently approved a number of new waiver requests and is set to approve the remaining outstanding waiver requests in the coming days.
Regardless of the waiver-related litigation, the Trump administration is likely to withdraw at least some of the EPA’s recently approved waiver requests, which would remove California’s and the states proceeding under the authority of Section 177 to enforce rules covered by the waiver once the waiver is withdrawn.
Currently, there are two California rules awaiting EPA waiver approval or authorization:
In-Use Locomotive regulation
Advanced Clean Fleets regulation
The Trump administration is expected to deny any waivers that remain pending after taking office, which would make those rules unenforceable in California and in the other states that have adopted the California rules. In particular, the Advanced Clean Fleets regulation faces ongoing litigation and industry pushback, which will be difficult for California to overcome if that waiver is denied.
EPA has also recently approved waivers for six additional California rules:
Advanced Clean Cars II regulations
Heavy-Duty Omnibus Low NOx regulations
Small Off-Road Engines (SORE) Amendments
Commercial Harbor Craft Amendments
Transport Refrigeration Unit (TRU) Amendments
In-Use Off-Road Diesel-Fueled Fleet Amendments
How the Trump administration will address these recently issued waiver approvals is less certain. If the first Trump term is any indication, it is likely that all or some of these recently issued waivers will be withdrawn, triggering protracted litigation and industry uncertainty. During Trump’s first term, following the withdrawal of the Advanced Clean Cars I rule waiver, the California Air Resources Board (CARB) entered into voluntary agreements with certain auto manufacturers that imposed alternative greenhouse gas standards as a stopgap while the waiver withdrawal was litigated and to help provide some regulatory certainty for automakers while the state of the regulations was in flux. CARB also indicated that it would retroactively enforce the Advanced Clean Cars I rule if the waiver was later reinstated. This could serve as a playbook for CARB during Trump’s second term if a number of the above waivers are denied or withdrawn. For example, with respect to the Heavy-Duty Omnibus Low NOx regulations, CARB previously entered an agreement with certain manufacturers that sets alternative standards for those parties in an effort to achieve regulatory certainty and stave off protracted challenges. Under that agreement, manufacturers also agreed not to challenge certain CARB regulations including the Advanced Clean Trucks regulation.
While uncertainty remains with respect to how the new administration will address vehicle, engine, and equipment emission standards and requirements, there will be changes that may require regulated industry to adjust current compliance, production, and investment plans, particularly with respect to electric and other zero-emission technologies, related infrastructure, and supply chain arrangements.