February 2025 ESG Policy Update — Australia
Australian Update
ASIC’s Key Issues Outlook for 2025
On 24 January 2025, the Australian Securities and Investments Commission (ASIC) released its key issues outlook for 2025 which provides insights for Australian businesses and consumers on the most significant current, ongoing and emerging issues within ASIC’s regulatory remit.
ASIC emphasised its desire to be a proactive regulator, ensuring a safe environment for Australian businesses and markets whilst safeguarding consumers. ASIC noted that key factors influencing its perspective on the issues facing Australia’s financial system included:
Increased market volatility;
Geopolitical changes;
The global accumulation of debt to drive growth;
Perceived and real inequality of wealth;
Shifts in the way capital is invested; and
Advances in artificial intelligence, data and cyber risk.
Among other issues, ASIC identified poor quality climate-related disclosures as leading to misinformed investment decisions. ASIC noted that informed decision making by investors is facilitated by the provision of high quality, consistent and comparable information regarding a reporting entities’ climate related risks and opportunities.
Furthermore, ASIC emphasised the importance of reporting entities having appropriate governance and reporting processes to comply with new mandatory climate reporting obligations introduced as part of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth), which took effect on 1 January 2025. Please refer to our earlier summary of the regime here.
ASIC also noted it will continue to scrutinise disclosures which misrepresent the green credentials of a financial product or investment strategies. Please refer to our summary of ASIC’s guidelines to prevent greenwashing here.
AU$2 Billion Investment in Clean Energy Finance Corporation
On 23 January 2025, the Australian Government announced it is providing an additional AU$2 billion to the Clean Energy Finance Corporation (CEFC). This is Australia’s specialist investor in the nation’s transition to net zero emissions.
The investment aims to enable the CEFC to support Australian households, workers and businesses who are making the shift to renewable energy by offering significant savings.
The investment aims to also help deliver reliable, renewable, cost-saving technologies to the Australian community by generating an expected AU$6 billion in private investment. It is anticipated that this will come from global and local organisations looking to capitalise on the nation’s future renewable energy plan.
This follows the CEFC’s announcement on 16 January 2025 that it had invested AU$100 million in a build-to-rent strategy to facilitate the design and delivery of affordable, sustainable and high-quality homes. These homes will harness the benefits of clean energy technologies, by aiming to be highly efficient, fully electric and powered by renewable energy.
Since its establishment in 2012, the CEFC has played a key role in helping Australia strive towards its emissions reduction targets. In 2024, the CEFC invested over AU$4 billion in local projects which the Australian Government claims unlocked around AU$12 billion in private investment and supported over 4,000 Australian jobs.
Superannuation CEO Roundtables Emphasise Importance of Consistent Climate Risk Disclosures
The Australian Prudential Regulation Authority (APRA) and ASIC recently hosted two Superannuation CEO Roundtables in November and December of 2024, attended by 14 chief executive officers (CEOs) and other executives from a cross-section of superannuation funds. Climate and nature risks were the key focus of discussions, given the recent legislation mandating climate-related financial disclosures and the introduction of the Australian Sustainability Reporting Standards.
The CEOs collectively acknowledged the importance of consistent climate risk disclosure whilst emphasising the need for clear and practical guidance from regulators and calling for standardised metrics, methods and scenarios to ensure comparability across the industry. The CEOs also outlined the current challenge of aligning different reporting standards across jurisdictions. The host regulatory bodies recognised the value of consistency with international standards of climate risk reporting. They noted that appropriate alignment can avoid duplication of efforts, ensure Australian superannuation funds remain in line with global best practices and provide for effective disclosures for members through which informed investment decisions may be made. In turn, discussions further touched on the impact of climate risk on investment strategies and the selection of investment managers and custodians, highlighting the impact on investment decision-making by participants across the industry.
The discussion also covered nature risk, with APRA interested in understanding how superannuation trustees are addressing nature risk given it is a topic of growing importance. It was acknowledged this was a topic that should continue to be explored.
Participants also discussed the role of industry bodies, and all agreed these bodies can play a crucial role in supporting trustees navigate the complexities of the data. ASIC and APRA expressed their commitment to support the superannuation industry and collaborate with industry bodies to drive consistent and accurate disclosures, effective communication with members and alignment with global standards.
Australian Government Announces Green Iron Investment Fund
On 20 February 2025, the Australian Government announced an AU$1 billion Green Iron Investment Fund to support green iron manufacturing and its supply chains by assisting early mover green iron projects and encouraging private investment at scale. “Green iron” refers to iron products made using renewable energy.
Australia is the world’s largest iron ore producer, earning over AU$100 billion in export income in the 2023-24 financial year. The iron and steel industry supports more than 100,000 jobs within Australia.
An initial AU$500 million of the Green Iron Investment Fund will be used to support the Whyalla Steelworks (Whyalla) after the Premier of South Australia, Peter Malinauskas, placed Whyalla into administration on 19 February 2025. The funding is proposed to transform Whyalla into a hub for green iron and steel.
Whyalla is considered strategically important for Australia due to its manufacturing capacity, highly skilled workforce, and access to a deep-water port, high-grade magnetite ore reserves and renewable energy sources.
The remaining AU$500 million will be available for nationwide green iron projects, targeting both existing facilities and new developments. Several companies within the industry are already exploring low-carbon iron production from the Pilbara ores in Western Australia.
The Green Iron Investment Fund is the latest initiative from the Australian Government aimed at bolstering Australia’s green metals sector. Existing initiatives include:
An AU$2 billion investment in Australian-made aluminium;
Passing legislation to deliver Production Tax Credits for hydrogen and critical minerals;
Investing in major critical minerals and rare earth projects through the Critical Minerals Facility;
An AU$3.4 billion investment in Geoscience Australia to accelerate the discovery of resources; and
Funding Hydrogen Headstart to support Australia’s hydrogen and clean energy industries.
View From Abroad
CFOs Expect Higher Returns from Sustainability Initiatives than Traditional Investments
A new report from Kearney, ‘Staying the Course: Chief Financial Officers and the Green Transition’ (Report), released on 17 February 2025, reveals that chief financial officers (CFOs) across the world are prioritising sustainability investments.
Despite recent speculation that investments in the green economy would face a slowdown, this Report clearly indicates that out of more than the 500 CFO respondents across several jurisdictions, including the United Kingdom, United States, United Arab Emirates, and India, 92% noted their intention to increase current investments in sustainability. This Report also found that of all the CFOs surveyed:
69% expected a higher return from sustainability initiatives than from traditional investments;
93% saw a clear business case for investing in sustainability; and
61% saw sustainability investments primarily as a cost decision rather than as something that creates value.
This commitment to increasing climate investments indicates that sustainability investment is not viewed as merely an arm of corporate social responsibility but is also seen as an integral means to maximise efficiencies and returns, take advantage of market opportunities and navigate rapidly evolving regulatory landscapes.
Decision to Scrap DEI Policies May Be Indicative of a Broader Trend
The recent omission of diversity, equity, and inclusion (DEI) commitments from numerous listed companies in their annual filing with the US Securities and Exchange Commission may be a harbinger of a broader global trend which could have repercussions for Australia’s environmental, social and governance (ESG) investment landscape.
Many of Australia’s largest funds currently hold significant capital under management which is invested based on ethical criteria.
DEI policies are integral to a company’s ESG rating, as determined by third-party analytics firms, particularly through the lens of social responsibility practices. By demonstrating a commitment to DEI, companies not only fulfil ethical obligations but also align with investor expectations for responsible corporate behaviour, thereby positively influencing their ESG rating. Contrastingly, deprioritising DEI commitments may result in reduced investor demand and potential exclusion from ESG-focused indices.
In the weeks since President Donald Trump signed executive orders to remove DEI hiring initiatives in the US government and its federal contractors, several US companies have begun withdrawing from similar commitments, potentially signalling a broader global trend that other companies might follow. Companies who withdraw from DEI-related commitments may face the possibility of a decrease in their ESG ratings. Broader market consequences include potentially increased volatility in the ESG indices and long-term negative impacts on corporate performance and investor confidence in sustainable economic growth.
Funds with active ESG investment strategies will need to monitor this trend to ensure that their investment portfolios maintain any positive or negative screens and that any ESG disclosures are not misleading or deceptive. ASIC has shown through its recent enforcement activity targeting greenwashing that it will pursue fund managers who do not have appropriate measures in place to ensure the effectiveness of its ESG-related representations.
Nathan Bodlovich, Cathy Ma, Daniel Shlager, and Bernard Sia also contributed to this article.
The authors would like to thank graduates Daniel Nastasi, Katie Richards, Natalia Tan and clerk Juliette Petro for their contributions to this alert.
“Regulations of the State Council on the Settlement of Foreign-Related Intellectual Property Disputes” Unveils Countermeasures Against Those That Use IP Disputes as an Excuse “to Contain and Suppress China”
On March 19, 2025, China’s State Council released the Regulations of the State Council on the Settlement of Foreign-Related Intellectual Property Disputes (国务院关于涉外知识产权纠纷处理的规定), effective May 1, 2025. As compared to last year’s draft, this final version unveils new articles 15-17 to counter countries, individuals and organizations that “use intellectual property disputes as an excuse to contain and suppress China” perhaps in response to Secretary Lutnick’s comments regarding Chinese IP at his confirmation hearing. This final version also maintains article 8 that “encourages law firms to…establish practice institutions abroad through the establishment of branches…”
A translation follows. The original is available here (Chinese only).
Article 1 These Regulations are formulated in order to strengthen intellectual property protection, promote citizens and organizations to handle foreign-related intellectual property disputes in accordance with the law, safeguard the lawful rights and interests of citizens and organizations, promote high-level opening up to the outside world, and promote high-quality economic development.
Article 2 The department of the State Council responsible for the management of intellectual property rights such as trademarks, patents, and copyrights (hereinafter referred to as the intellectual property management department) and the commercial authorities shall strengthen guidance and services to citizens and organizations in handling foreign-related intellectual property disputes, and other relevant departments of the State Council shall perform related work in accordance with their division of responsibilities.
The relevant departments of the State Council will strengthen work coordination and information communication, and jointly do a good job in handling foreign-related intellectual property disputes.
Article 3 Local people’s governments at or above the county level and their relevant departments shall, in light of the actual conditions of their respective regions, do a good job in handling foreign-related intellectual property disputes.
Article 4 The intellectual property management department of the State Council and relevant departments such as commerce and judicial administration shall, in accordance with their respective responsibilities, promptly collect and publish information on foreign intellectual property legal systems, improve the public service system for intellectual property information, and provide foreign intellectual property information query services to the public.
Article 5 The intellectual property management department and the commercial department of the State Council shall, in accordance with their respective responsibilities, strengthen tracking and understanding of key information such as changes in foreign intellectual property legal systems, conduct analysis and research on typical cases, issue risk warnings in a timely manner, and provide the public with foreign-related intellectual property warnings.
Article 6 The intellectual property management department and the commercial department of the State Council shall improve the guidance work institutions and work procedures for handling foreign-related intellectual property disputes in accordance with the division of responsibilities, and provide response guidance and rights protection assistance to citizens and organizations in handling foreign-related intellectual property disputes.
Article 7 Support commercial mediation organizations and arbitration institutions to participate in the resolution of foreign-related intellectual property disputes, provides citizens and organizations with efficient and convenient channels for resolving foreign-related intellectual property disputes, and encourages and guides citizens and organizations to quickly resolve foreign-related intellectual property disputes through reconciliation, mediation, arbitration, etc.
The judicial administrative department of the State Council will strengthen guidance on the mediation and arbitration of foreign-related intellectual property disputes.
Article 8 Encourage law firms, intellectual property service agencies, etc. to improve their foreign-related intellectual property service capabilities, establish practice institutions abroad through the establishment of branches, joint operations, etc., and provide high-quality and efficient foreign-related intellectual property services to citizens and organizations.
The judicial administrative department and the intellectual property management department of the State Council will take measures together with relevant departments to create conditions for law firms, intellectual property service agencies and other organizations to strengthen foreign-related intellectual property related services.
Article 9 Support enterprises in establishing mutual assistance funds for the protection and maintenance of foreign-related intellectual property rights, encourages insurance institutions to conduct foreign-related intellectual property rights-related insurance business in accordance with market principles, and reduces the costs of rights protection for enterprises.
Article 10 Encourage chambers of commerce, industry associations, cross-border e-commerce platforms and other organizations to build foreign-related intellectual property rights protection assistance platforms, open service hotlines, and provide public services such as consultation and training.
Article 11 Enterprises shall enhance their awareness of the rule of law, establish and improve internal rules and regulations, strengthen the reserve of intellectual property talent, and intensify the protection and use of intellectual property rights; when entering foreign markets, they shall take the initiative to understand the legal system and intellectual property protection status of the country or region where they are located, carry out production and business activities in accordance with the law, and actively safeguard their legitimate rights and interests.
The intellectual property management department and the commercial department of the State Council, together with relevant departments, focus on the intellectual property protection needs of enterprises in their foreign-related production and operation activities, carry out publicity and training for enterprises around key areas and key links of foreign-related intellectual property disputes, and introduce experiences and practices in handling foreign-related intellectual property disputes in accordance with the law based on typical cases, so as to enhance enterprises’ awareness of foreign-related intellectual property protection and dispute resolution capabilities.
The judicial administrative departments of the State Council shall, in accordance with the requirements of the legal education responsibility system of “whoever enforces the law shall educate the public on the law”, strengthen legal publicity and education related to intellectual property rights, and comprehensively enhance citizens’ and organizations’ awareness of intellectual property protection and their ability to safeguard their rights in accordance with the law.
Article 12 The service of documents and investigation and collection of evidence within the territory of China shall be handled in accordance with international treaties concluded or acceded to by China, as well as the Civil Procedure Law of the People’s Republic of China, the Law of the People’s Republic of China on International Criminal Judicial Assistance and other laws. No organization or individual may violate the laws of China when serving documents or investigating and collecting evidence within the territory of China.
Article 13: Organizations and individuals within the territory of China that participate in overseas intellectual property-related litigation or are subject to overseas judicial or law enforcement investigations and need to provide evidence or related materials to overseas countries shall comply with laws and administrative regulations on maintaining state secrets, data security, personal information protection, technology export management, judicial assistance, etc. If approval by the competent authority is required according to law, relevant legal procedures shall be followed.
Article 14 The competent commerce department of the State Council may, in accordance with the Foreign Trade Law of the People’s Republic of China, investigate the following matters and take necessary measures:
(1) Imported goods infringe intellectual property rights and endanger foreign trade order;
(2) The intellectual property rights holder prevents the licensee from questioning the validity of the intellectual property rights in the licensing contract, conducts compulsory package licensing, stipulates exclusive re-grant conditions in the licensing contract, etc., and endangers the fair competition order in foreign trade;
(3) Other countries or regions fail to accord national treatment to Chinese citizens and organizations in terms of intellectual property protection, or are unable to provide adequate and effective intellectual property protection for goods, technologies or services originating from China.
Article 15: Where foreign countries violate international law and basic norms governing international relations, use intellectual property disputes as an excuse to contain and suppress China, adopt discriminatory restrictive measures against Chinese citizens and organizations, and interfere in China’s internal affairs, the relevant departments of the State Council may, in accordance with the Foreign Relations Law of the People’s Republic of China, the Anti-Foreign Sanctions Law of the People’s Republic of China, and other laws, include organizations and individuals that directly or indirectly participate in the formulation, decision-making, and implementation of discriminatory restrictive measures in the countermeasure list and adopt corresponding countermeasures and restrictive measures.
Article 16 No organization or individual may implement or assist in the implementation of discriminatory restrictive measures taken by foreign countries against Chinese citizens or organizations under the pretext of intellectual property disputes.
If any organization or individual violates the provisions of the preceding paragraph and infringes upon the legitimate rights and interests of our citizens or organizations, our citizens or organizations may, in accordance with the law, bring a lawsuit to the people’s court and demand that it stop the infringement and compensate for the losses.
Article 17 The relevant departments of the State Council shall strengthen coordination and cooperation, and take corresponding measures in accordance with the National Security Law of the People’s Republic of China, the Foreign Relations Law of the People’s Republic of China, the Anti-Foreign Sanctions Law of the People’s Republic of China and other laws against those who use intellectual property disputes to endanger China’s sovereignty, security and development interests; those who abuse intellectual property rights to exclude, restrict competition or implement unfair competition shall be dealt with in accordance with the Anti-Monopoly Law of the People’s Republic of China, the Anti-Unfair Competition Law of the People’s Republic of China and other laws.
Article 18 These Provisions shall come into force on May 1, 2025.
What Every Multinational Company Should Know About … The Current Trump Tariff Proposals
Although we are only two months into the new administration, we have seen a dizzying array of new tariffs that have been proposed, imposed, revoked, suspended, and sometimes reimposed. It can be difficult for importers to keep up with all the proposals. So, as an aid to the importing community, we have put together an “evergreen” tariff article, which contains three key items for importers:
A table of the tariff proposals, including their current status[1] and the key importer issues for each;
A list of resources for importers looking for aids to cope with tariff and international trade uncertainty; and
A list of the most common questions we are receiving from clients regarding the new tariffs and their implementation.
We will be regularly updating these resources to reflect new tariff proposals and modifications, which are in some cases being updated or changed daily.
Where Are We on the Various Tariff Announcements?
At this point, we count 12 tariff initiatives that are proposed or in play. They range from broad-based tariffs that cover all goods from a certain country (Canada, China, and Mexico), tariffs that cover certain types of goods (aluminum and steel), promises of future tariffs (automotives, semiconductor, pharmaceutical, copper, and lumber), and promised retaliatory tariffs (European wine and alcoholic beverages). Further, although we have seen more tariff announcements in the first two months of the second Trump administration than we saw in the entirety of the first one, the largest tariff shoe is yet to drop: It is likely that the announced “Fair and Reciprocal” tariff rollout will dwarf the tariffs imposed to date, with the countries at the greatest risk of increased tariffs consisting of:
Countries that impose high tariffs. Notable examples include Argentina, Bangladesh, Brazil, Egypt, India, and Pakistan.
Countries that are viewed as heavily subsidizing their manufacturers. Depending on the particular type of products, examples include China (especially) as well as Australia, Canada, and the European Union countries.
Countries that are viewed as manipulating their exchange rate. The Department of Commerce already has issued a finding that Vietnam grants subsidies by manipulating its exchange rate, in a countervailing determination involving tires from Vietnam. As part of its semiannual report to Congress, the Treasury Department maintains a “monitoring list” of exchange rate policies that arguably confer subsidies. The November 2024 list included China, Germany, Japan, Singapore, South Korea, Taiwan, and Vietnam.
Countries that have put in place import barriers aimed at high-profile, high-volume products such as automobiles. While the United States maintains tariff levels of 2.5 percent for automobile imports, most of the rest of the world starts at 10 percent or higher.
We will be updating this article as new policies are announced, including the reciprocal tariffs. The state of play for each tariff is as follows:
Where Are We on the Trump Tariffs?
Tariff Proposal
Effective Date
Likely To Stick?
Likely To Increase?
Key Issues for Importers
2018 Section 301 Tariffs 83 FR 28710; 83 FR 40823; 83 FR 47974; 84 FR 43304
In force
Yes
Probably; likely to be equalized at top level and/or raised
Review HTS classifications to ensure accuracy, particularly for List 4B products; see “New 20% China Tariffs” below
2018 Aluminum/ Steel Tariffs 83 FR 11625; 83 FR 11619
Superseded as of 3/4/2025
N/A
N/A
N/A
New 20% China Tariffs 90 FR 11426
3/4/2025
Yes
Possibly
Use of Chinese parts and components for China+1 strategies; ensure substantial transformation of all products manufactured in +1 countries
25% Canada and Mexico Tariffs 90 FR 9113; 90 FR 9117
3/4/2025- 3/6/2025
Superseded as of 3/6/25
N/A
3/6/2025 (non-USMCA-Compliant goods) 90 FR 11429 90 FR 11423
Possibly
Possibly
Verify and document compliance (e.g., rules of origin, special rules for autos and textiles) for all claims of preferential treatment under USMCA; maintaining certificates of origin at time of entry. Consider Mexico duty-saving opportunities (e.g., IMMEX)
New 25% Aluminum/ Steel Tariffs 90 FR 9807; 90 FR 9817;
3/12/2025
Yes
Yes, by adding new derivative products
Monitor for new derivative products proposed for addition to steel and aluminum derivative products; verify potential HTS matches for aluminum and steel derivatives; look for Customs instructions regarding derivative products and apply
Reciprocal Tariffs
4/2/2025 (likely roll out in stages)
Yes
Unclear
Monitor; see above for list of high-tariff countries
Broad European Tariffs
Promised
Unclear
N/A
Monitor
25% Auto, Semiconductor, Pharmaceutical Tariffs
Promised
Yes
Subject to negotiation with Europe, Korea, Japan, and Mexico
Monitor; consider front-loading inventory for critical components
New Lumber Tariffs
Under study
Yes (if issued)
N/A
Monitor; consider front-loading inventory
New Copper Tariffs
Under study
Yes (if issued)
N/A
Monitor; consider front-loading inventory
200% Retaliatory Wine Tariffs
Threatened
No (if issued)
EU
Monitor; consider front-loading inventory
Future of USMCA
2026 review
Unclear
N/A
See Canada and Mexico Tariffs; monitor for expedited negotiations
Frequently Asked Questions
After presenting at numerous seminars and webinars, and in discussions with clients, we have noticed certain recurring questions. As an aid to the importing community, we have compiled a list of these, which include the following:
General
Do the tariffs stack?
Yes, all tariffs stack. This means an entry of steel from China would incur:
the normal Chapter 1–97 tariff;
the 25-percent Section 232 steel tariff;
the original Section 301 China steel tariff (up to 25 percent); and
the new 20-percent additional China tariff.
In addition, if the product is covered by an antidumping or countervailing duty order, then those duties also would stack.
Is the stacking compounded?
No. The tariffs add up without compounding. If both a 20-percent and a 25-percent tariff apply, then this results in a 45-percent increased tariff.
Are you seeing clients pursue a China +1 strategy to cope with the new tariffs?
Yes. Many clients have been pursuing a strategy of adding additional capacity outside of China since the imposition of the original Section 301 duties. These efforts appear to be accelerating, as there is a growing realization that high tariffs on China are the new normal. In this regard, it is important to note the original Section 301 tariffs remained in place even under the Biden administration. Further, China is likely to see the greatest amount of increased tariffs under the reciprocal tariff proposal because it hits so many categories — it heavily subsidizes its industries, it has been tagged as a currency manipulator by the Department of Treasury for years, and there are numerous countervailing duty findings by the Department of Commerce that provide a clear roadmap to identify subsidy programs.
One caution is that when companies move production out of China, they often continue to use Chinese-origin parts and components. Companies pursuing this strategy need to do a careful analysis to ensure they are “substantially transforming” the product by doing enough work and adding enough value in the third country to create a new and different article of commerce with a new name, character, or use, thus giving it a new, non-Chinese country of origin.
Will there be exceptions for goods like medical devices in the proposed tariffs?
Unclear. But the tariffs have veered toward being universal. Further, one of the purposes of the aluminum and steel tariff announcement was to wipe out the list of accumulated product-specific exceptions that had grown over the years. These factors work against an announcement of tariff-specific exceptions.
Are there any discussions relating to potential tariff relief for certain sectors (Defense, Navy, etc.)?
So far, the only somewhat industry specific reprieve has been the lifting of tariffs on USMCA compliant goods until April 2, 2025, as a result of the U.S. auto manufacturer concerns. While this is intended to apply to a lot of automotive imports, the lifting of the tariffs on USMCA compliant items is not exclusively tied to automotive imports. If discussions regarding tariff relief for other sectors have been occurring, they have not been announced.
Will the Executive Orders on tariffs be challenged in litigation?
Almost certainly, yes. But in general, the Court of International Trade and the Court of Appeals for the Federal Circuit tend to defer to the Executive in matters of international trade policy. Also, the imposition of special tariffs in the first Trump administration were generally upheld by the trade courts.
Have you heard of any plans to change Foreign Trade Zones (FTZ) laws?
In general, no. Specific tariff announcements, however, have contained provisions relating to the FTZs, such as stating any goods that go into Foreign Trade Zones need to enter in “privileged foreign status.” This means the duty rate is fixed at the time the goods enter the zone, meaning even if the goods are further manufactured within the FTZ, the duty will be based on the original classification when they entered the FTZ.
Steel and Aluminum Tariffs
How have the Section 232 aluminum and steel tariffs changed from the original 2018 version?
The aluminum tariffs increased from 10 to 25 percent.
All negotiated tariff-rate quotas for the EU, Japan and the United Kingdom, as well as the quotas negotiated with Argentina, Brazil, and South Korea, are no longer applicable. The previous exemptions for Australia, Canada, Mexico, and Ukraine no longer apply.
All product-specific exemptions that had been granted under the original aluminum and steel program are revoked.
The “derivative articles list” is considerably expanded.
Are Chapter 72 articles still subject to 25-percent tariffs?
Yes. Certain headings in Chapter 72 that were previously subject to the original Section 232 tariffs are still covered. All exclusions that previously applied to certain Chapter 72 products are now revoked.
Are iron products covered?
Based on the description of the covered products in the Executive Orders, carbon alloy steel products, not iron, are covered by the exclusions.
How should we treat imports that fall under the “derivative articles” HTS codes but do not actually contain any aluminum or steel?
In some cases, certain HTS classifications that are on the derivative aluminum and steel HTS classifications can cover types of products that may not contain any aluminum or steel. For example, certain types of metal furniture are covered, but if these are made out of a metal other than steel then they would not be covered even though they fall within an HTS that is listed in Annex 1 of the steel proclamation. In these cases, it would be appropriate to have the foreign producer include a statement on the commercial invoice to state that the product does not contain aluminum or steel, to support why the tariffs are not due on the entry.
After the elimination of the product-specific exemptions, are there any remaining exemptions?
The only exemption remaining is for derivative articles that are manufactured from steel melted/poured in the United States or aluminum smelted/cast in the United States. For such products, the importer should request a statement on the commercial invoice stating that the product contains aluminum smelted/cast in the United States or steel that was melted/poured in the United States. In case of Customs inquiry, it would be appropriate to include copies of steel mill certificates or aluminum certificates of analysis in the 7501 Entry Summary packet.
For derivative articles, is the 25-percent tariff paid on the full value of the article?
The Executive Orders state that the 25-percent tariff is paid on the “value” of the aluminum or steel “content” of the “derivative article.” There are, however, no instructions as to how this value should be calculated. In accordance with normal Customs requirements, the value should be calculated using a reasonable method that is supportable. This could potentially be based on a calculation from the foreign supplier. Frequent importers of derivative products should monitor CSMS announcements to see if CBP issues instructions on this issue.
Is duty drawback available for the aluminum and steel tariffs?
No, the Executive Orders state that duty drawback cannot be used.
Does Chapter 98 provide relief from the 25-percent aluminum and steel tariffs?
The Executive Orders do not list any Chapter 98 exceptions for the new tariffs. This is consistent with the original Section 232 tariffs, which also did not contain any Chapter 98 exceptions.
Will there be an exclusion process?
None has been announced or established. It is unlikely that the Trump administration would wipe out all product-specific exemptions only to build them back up again.
Could the list of “derivative articles” expand?
The Executive Orders directed the Department of Commerce to establish a process by May 11, 2025, to consider requests to add additional “derivative articles.” We anticipate that U.S. aluminum and steel manufacturers will aggressively use this process to push for additional excluded derivative products.
USMCA/Canada and Mexico Tariffs
Will the reciprocal tariffs replace the Canadian and Mexican tariffs? Or will they stack?
The reciprocal tariffs have not been announced yet. But because all of the other tariffs stack, there is a high likelihood that the reciprocal tariffs also will stack on top of the existing 25-percent tariffs rather than replace them where they overlap. Also, the 25-percent tariffs were announced as being imposed due to concerns about fentanyl and unauthorized immigration, which is an entirely separate issue from the tariff equalization that is the goal of the reciprocal tariffs.
How will tariffs effect the IMMEX/Maquiladora imports from Mexico?
Because the Maquiladora, Manufacturing, and Export Services Industry (IMMEX) Program is a figure of Mexican law, we anticipate Mexico will do all that it can to protect companies that operate using the Program. Although uncertain, as per previous experiences in imposing retaliatory measures, Mexico will most likely establish tariffs on US sumptuous goods and/or finished products, and hardly to raw materials used by IMMEX/Maquiladora companies.
Will the Canada and Mexico tariffs be lifted when the USMCA review occurs?
Unclear. We do note, however, that the United States lifted the prior aluminum and steel tariffs as part of the negotiation of the USMCA under the first Trump administration. The second Trump administration, however, is taking a much harder line on tariff and international trade issues.
Reciprocal Tariffs
What are reciprocal tariffs?
“Reciprocal tariffs” are intended to equalize tariff rates, such as when a foreign country imposes a higher tariff on the United States than the United States does for the same product category. Because the United States generally has low tariffs, this means that there are a great many HTS classifications that likely will increase, with the impact varying by country. Moreover, because the announcement of the coming reciprocal tariffs states that it will take into account any form of discrimination against U.S. companies or programs that favor foreign companies, then calculated reciprocal tariffs will likely be very high. For example, most countries have Value Added Taxes that rebate any VAT payments when goods are exported; the Trump administration has indicated that this would be considered a form of subsidy that should be counteracted with reciprocal tariffs. So would subsidized electricity, currency manipulation, and so forth. Adding these concepts on top of equalizing tariffs across HTS categories leads to likely major increases in tariffs.
When will they be announced?
The reciprocal tariff announcement is expected for April 2, 2025. The Trump Administration also announced that it would proceed to consider countries with major trade deficits with the United States first, so it is possible that April 2nd will be the start of a rolling set of reciprocal tariff announcements.
Force Majeure and Surcharges FAQs
The Foley Supply Chain team also has published a set of FAQs regarding contractual issues, which we are repeating here for convenience.
What are the key doctrines to excuse performance under a contract?
There are three primary defenses to performance under a contract. Importantly, these defenses do not provide a direct mechanism for obtaining price increases. Rather, these defenses (if successful) excuse the invoking party from the obligation to perform under a contract. Nevertheless, these defenses can be used as leverage during negotiations.
Force Majeure
Force majeure is a defense to performance that is created by contract. As a result, each scenario must be analyzed on a case-by-case basis, depending on the language of the applicable force majeure provision. Nevertheless, the basic structure generally remains the same: (a) a listed event occurs; (b) the event was not within the reasonable control of the party invoking force majeure; and (c) the event prevented performance.
Commercial Impracticability (Goods)
For goods, commercial impracticability is codified under UCC § 2-615 (which governs the sale of goods and has been adopted in some form by almost every state). UCC § 2-615 excuses performance when: (a) delay in delivery or non-delivery was the result of the occurrence of a contingency, of which non-occurrence was a basic assumption of the contract; and (b) the party invoking commercial impracticability provided seasonable notice. Common law (applied to non-goods, e.g., services) has a similar concept known as the doctrine of impossibility or impracticability that has a higher bar to clear. Under the UCC and common law, the burden is quite high. Unprofitability or even serious economic loss is typically insufficient to prove impracticability, absent other factors.
Frustration of Purpose
Under common law, performance under a contract may be excused when there is a material change in circumstances that is so fundamental and essential to the contract that the parties would never have entered into the transaction if they had known such change would occur. To establish frustration of purpose, a party must prove: (a) the event or combination of events was unforeseeable at the time the contract was entered into; (b) the circumstances have created a fundamental and essential change; and (c) the parties would not have entered into the agreement under the current terms had they known the circumstance(s) would occur.
Can we rely on force majeure (including if the provision includes change in laws), commercial impracticability, or frustration of purpose to get out of performing under a contract?
In court, most likely not. These doctrines are meant to apply to circumstances that prevent performance. Also, courts typically view cost increases as foreseeable risks. Official comment of Section 2-615 on commercial impracticability under UCC Article 2, which governs the sale of goods in most states, says:
“Increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance. Neither is a rise or a collapse in the market in itself a justification, for that is exactly the type of business risk which business contracts made at fixed prices are intended to cover. But a severe shortage of raw materials or of supplies due to a contingency such as war, embargo, local crop failure, unforeseen shutdown of major sources of supply or the like, which either causes a marked increase in cost or altogether prevents the seller from securing supplies necessary to his performance, is within the contemplation of this section. (See Ford & Sons, Ltd., v. Henry Leetham & Sons, Ltd., 21 Com. Cas. 55 (1915, K.B.D.).)” (emphasis added).
That said, during COVID and Trump Tariffs 1.0, we did see companies use force majeure/commercial impracticability doctrines as a way to bring the other party to the negotiating table to share costs.
May we increase price as a result of force majeure?
No, force majeure typically does not allow for price increases. Force majeure only applies in circumstances where performance is prevented by specified events. Force majeure is an excuse for performance, not a justification to pass along the burden of cost increases. Nevertheless, the assertion of force majeure can be used as leverage in negotiations.
Is a tariff a tax?
Yes, a tariff is a tax.
Is a surcharge a price increase?
Yes, a surcharge is a price increase. If you have a fixed-price contract, applying a surcharge is a breach of the agreement.
That said, during COVID and Trump Tariffs 1.0, we saw many companies do it anyway. Customers typically paid the surcharges under protest. We expected a big wave of litigation by those customers afterward, but we never saw it, suggesting either the disputes were resolved commercially or the customers just ate the surcharges and moved on.
Can I pass along the cost of the tariffs to the customer?
To determine if you can pass on the cost, the analysis needs to be conducted on a contract-by-contract basis.
If you increase the price without a contractual justification, what are customers’ options?
The customer has five primary options:
1. Accept the price increase:
An unequivocal acceptance of the price increase is rare but the best outcome from the seller’s perspective.
2. Accept the price increase under protest (reservation of rights):
The customer will agree to make payments under protest and with a reservation of rights. This allows the customer to seek to recover the excess amount paid at a later date. Ideally, the parties continue to conduct business and the customer never seeks recovery prior to the expiration of the statute of limitations (typically six years, depending on the governing law).
3. Reject the price increase:
The customer will reject the price increase. Note that customers may initially reject the price increase but agree to pay after further discussion. In the event a customer stands firm on rejecting the price increase, the supplier can then decide whether it wants to take more aggressive action (e.g., threaten to stop shipping) after carefully weighing the potential damages against the benefits.
4. Seek a declaratory judgment and/or injunction:
The customer can seek a declaratory judgment and/or injunction requiring the seller to ship/perform at the current price.
5. Terminate the contract:
The customer may terminate part or all of the contract, depending on contractual terms.
[1] Please note that the implementation of the various tariff programs remains in flux, and thus the status of these program should be monitored closely. The included table is current as of the date of publication of this article.
Foley Automotive Update 19 March 2025
Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more.
Special Update — Trump Administration and Tariff Policies
Foley & Lardner partner Kathleen Wegrzyn addressed a number of FAQs regarding force majeure and price increases amid the current turbulent tariff landscape.
Key tariff announcements include:
President Trump on March 17 told reporters that “in certain cases, both” 25% sector-specific tariffs as well as unspecified “reciprocal tariffs” could apply on U.S. imports beginning April 2. U.S. imports that have been traded duty-free under the United States-Mexico-Canada Agreement (USMCA) are exempt — until April 2 — from the 25% tariffs on goods from Mexico and Canada that were announced on March 4.
Following the implementation of 25% tariffs on U.S. imports of steel and aluminum, Canada on March 13 imposed levies on C$29.8 billion in U.S. imported goods. This follows 25% tariffs on C$30 billion of products Canada announced on March 4.
Mexican President Claudia Sheinbaum thus far has not moved forward with a plans to apply retaliatory tariffs on U.S. imports.
The European Union intends to reinstate 2018 and 2020 countermeasures on April 1 against a range of U.S. goods, with a more extensive retaliatory tariff package planned for later next month.
China imposed tariffs on U.S. goods including large-engine vehicles, as well as export and investment controls on over two dozen U.S. firms after the Trump administration applied 20% duties on Chinese imports.
Automotive Key Developments
Analysis from S&P Global Mobility indicates the disruptive effects of 25% tariffs on all vehicle imports could potentially reduce North American production “by up to 20,000 units per day within a week.” S&P predicted a 50% probability for a tariff-related “extended disruption scenario” this year, during which certain high-profile vehicles “will slow or cease production.”
MichAuto and AlixPartners described volatile tariff policies as “crippling” and “debilitating” for the automotive industry and noted the ongoing uncertainty has already damaged OEMs’ and suppliers’ ability to make investment and product decisions.
Statements from MEMA and the American Automotive Policy Council emphasized the potential for significant cost increases for automakers, suppliers, and consumers resulting from the 25% tariffs on U.S. imports of steel and aluminum. In addition, a recent survey by the vehicle suppliers association found 97% of respondents had concerns regarding increased financial distress among sub-tier suppliers due to the announced tariffs, and over 80% of surveyed suppliers are exposed to steel and aluminum derivative tariffs.
Tariffs on steel and aluminum could raise costs up to$400 to $500 per vehicle on average, with the potential for greater impact on larger, aluminum-intensive vehicles such as the Ford F-150 pickup.
Relocating an assembly line between existing facilities can take up to eight months, and an automaker would likely need up to three years or longer to fully staff and significantly build out new U.S. manufacturing capacity.
Ford is reported to be amassing inventories of USMCA-compliant parts to mitigate the effects of tariffs, and the automaker has told its suppliers to keep shipping under existing terms, according to an update from Crain’s Detroit.
Automotive News assessed the exposure of certain EV brands to the impact of U.S. import tariffs.
University of Michigan economists projected U.S. new light-vehicle sales will reach 16.3 million units in 2025, while noting the projections have “substantial uncertainty” due to trade policy volatility. The economists also expect steel and aluminum tariffs to “raise production costs in the automotive supply chain,” and the levies could reduce Michigan’s employment by approximately 2,300 jobs by 2026.
Preliminary discussions concerning the renewal of the USMCA suggested a revised pact could result in higher tariffs for non-compliance, according to unidentified sources in The Wall Street Journal.
The Environmental Protection Agency on March 12 announced 31 deregulatory actions that include the reconsideration of the Biden administration’s emissions standards for light-duty, medium-duty and heavy-duty vehicles.
OEMs/Suppliers
While tariffs in the U.S., Canada, and the EU may continue to impede sales by Chinese automakers in the near term, market share is rising in emerging markets for Chinese brands that include BYD, Great Wall Motor, Chery Automobile, and SAIC Motor Corp.
Volkswagen intends to reduce production and headcount at its Chattanooga, Tennessee plant to support cost-cutting initiatives and in response to lower EV demand. Planned layoffs across VW Group have reached nearly 48,000 globally, including a 30% headcount reduction at its Cariad software unit by the end of this year.
Ford will invest €4.4 billion ($4.8 billion) in its German operations, in an effort to boost sluggish sales in Europe.
Nissan named Ivan Espinosa, currently serving as Chief Planning Officer, to succeed CEO Makoto Uchida, effective April 1.
Market Trends and Regulatory
U.S. new light-vehicle inventory reached 3 million units at the beginning of March, representing an 89-day supply industrywide, according to analysis from Cox Automotive.
The percentage of subprime auto borrowers at least 60 days past due on their loans reached 6.56% in January, representing the highest level in over 30 years, according to data from Fitch Ratings. The share of auto loans in serious delinquency across all borrower types was 2.96% in the fourth quarter of 2024, compared to 2.66% in Q4 2023 and 2.22% in Q4 2022.
Kelley Blue Book estimates that new-vehicle sales incentives were up 18.6% year-over-year in February 2025. The average incentive package last month reached 7.1% of average transaction price, or $3,392, compared to 6% of ATP in February 2024.
U.S. Senate Republicans introduced the Preserving Choice in Vehicle Purchases Act (S. 2090) to “prevent the elimination of the sale of motor vehicles with internal combustion engines” by limiting the Environmental Protection Agency’s issuance of certain Clean Air Act waivers.
GM has again applied with the Federal Deposit Insurance Corp. to establish an industrial bank, and this would enable the automaker to hold deposits and expand their financial offerings to consumers, dealerships, and employees. Stellantis and Ford have also recently submitted applications for banking licenses.
U.S. House lawmakers included language in an amendment to the Full-Year Continuing Appropriations and Extensions Act that effectively “removes the ability for any House members to use an expedited process” to compel a vote for the remainder of this calendar year on whether to terminate the national emergency declaration utilized as the basis to pursue tariffs on imports from Canada and Mexico. The “continuing resolution” (CR) to fund the federal government through the rest of the fiscal year 2025 was signed by the president on March 15, 2025.
Autonomous Technologies and Vehicle Software
Industry organizations, including the Alliance For Automotive Innovation, urged the Department of Transportation to establish a national framework to support the deployment of autonomous vehicles.
NVIDIA will collaborate with GM and Magna to advance next-generation vehicle technologies. NVIDIA has described artificial intelligence technologies in the auto industry as a “trillion-dollar opportunity.”
GM named Barak Turovsky, formerly of Cisco and Google, as its first Chief Artificial Intelligence Officer.
Ford announced tech veteran Mike Aragon will join the company as President, Integrated Services. The position is expected to support the automaker’s goals to boost revenue from software-enabled subscriptions and features.
Autonomous trucking startup Bot Auto plans to begin its first driver-out commercial freight pilot program in Texas this year, on routes between Houston and San Antonio. Houston-based Bot Auto was founded in 2023 by former TuSimple CEO Xiaodi Hou.
Electric Vehicles and Low-Emissions Technology
Over 50% of new EV purchases in the fourth quarter of 2024 were leases, and EVs accounted for nearly 20% of all new vehicle leases during the quarter, according to data from Experian released this month.
BYD plans to launch new charging technology on certain models in China next month that will enable 400 kilometers (249 miles) of range with five minutes of charge time, or roughly the same duration required to refuel comparable gas-powered models.
Cadillac intends to begin production of the electric 2026 Cadillac Escalade IQL in mid-2025 at GM’s Factory Zero electric vehicle assembly plant in Detroit.
Volkswagen recently debuted its ID Every1 electric minicar concept, and the low-cost EV will be the brand’s first model to use software from the automaker’s joint venture with Rivian.
Isuzu will invest $280 millionto establish a commercial EV plant in Piedmont, South Carolina.
UAW members ratified their first labor agreement at the Ultium Cells joint venture battery plant in Spring Hill, Tennessee.
SK On will supply Nissan with nearly 100 gigawatt-hours of batteries from 2028 to 2033, to support future EV models produced at the automaker’s Canton, Mississippi plant.
Stellantis will invest €38 million ($41 million) to produce EV engine parts at its Verrone transmissions plant in Italy.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
UK-Based Graffiti Artists Sue Vivienne Westwood in California for Misuse of Their Tags
“In a culture where association with philistines is a death knell,” UK-based graffiti and street artists Cole Smith, Reece Deardon and Harry Matthews have brought a lawsuit against Vivienne Westwood and retailers of the brand for the fashion house’s allegedly unauthorized use of their tags “to lend credibility and an air of urban cool” to its apparel. See Smith v. Vivienne Westwood, Inc., Case No. 2:25-cv-01221 (C.D. Cal. Filed 02/12/25). The artists, known professionally as DISA, SNOK and RENNEE, respectively, argue that their tags are, like their name or signature, “deeply personal and determinative of their identity.” In turn, they claim that Vivienne Westwood’s use of their tags falsely represents their endorsement of the fashion house to the consumer and causes “the world to think that they are corporate sellouts, willing to trade their artistic independence, legacy and credibility for a quick buck.”
According to allegations in this and a long string of similar lawsuits by street artists against fashion brands like Moschino, Roberto Cavalli, Guess?, North Face and Puma, the use of graffiti artists’ tags on apparel purportedly generates “huge revenues” for brands based on their supposed affiliation with the artists. Those familiar with the legacy of Vivienne Westwood’s eponymous founder as a punk icon (far from a philistine) might agree that her brand illustrates the profitability of incorporating urban counterculture into retail fashion.
Yet, the extent to which DISA, SNOK and RENNEE may recover their alleged damages as UK-based artists before the US District Court for the Central District of California remains an open question. While these artists may pursue their copyright infringement claims under the Berne Convention without having registered their tags in the United States Copyright Office, they probably are not entitled to recover either statutory damages or attorneys’ fees without US registrations. Additionally, although they may have a viable claim that their tags are copyright management information subject to the Digital Millenium Copyright Act (17 U.S.C. § 1202) — as other courts in the Central District ruled in the cases against Moschino and Roberto Cavalli — their claims under California’s right of publicity statute (Cal. Civ. Code § 3344) may be somewhat less certain. There is a dearth of precedent for extending the protections of California’s right of publicity statute to out-of-state residents, even if the court, as in the case against Moschino, finds that a graffiti artist’s tag is a name in a literal sense.
Therefore, this case has the potential to better define the legal landscape faced by foreign street artists pursuing copyright infringement in the United States and right of publicity claims in California. Still, the lawsuit is at its infancy and, similar to the cases against other retailers, may settle before being fully litigated on its merits. We will continue to monitor this case and provide updates as it develops.
GT Legal Food Talk Episode 27: From Slam Dunks and Big Tech to Launching New Brands: Alan and Maxine Henderson’s Journey into Food & Beverage Entrepreneurship [Podcast]
In this episode of Greenberg Traurig Legal Food Talk, host Justin Prochnow sits down with Alan and Maxine Henderson, a dynamic husband-and-wife duo in the food and beverage industry. Alan, a former college basketball and NBA star and more recent spirits entrepreneur, and Maxine, a former electrical engineer turned beverage innovator, share their unique paths to launching their respective brands, Henderson Spirits Group and Bollygood.
Maxine brings the flavors of India to her beverage with Bollygood, the first Indian-inspired sparkling lemonade, rooted in her family’s recipe for Nimbu Pani. Alan crafts spirits that honor African American history under brands like Tom Bullock’s and Birdie Brown. They discuss the challenges of entrepreneurship, the lessons learned, and how their backgrounds in sports and engineering have shaped their approach to business.
Whether you’re a budding entrepreneur or a fan of innovative products, this episode offers valuable insights and inspiration. Tune in!
KSA Introduces New Ultimate Beneficial Ownership Rules
Go-To Guide:
The Kingdom of Saudi Arabia’s new UBO Rules, effective 3 April 2025, require most companies to disclose their UBOs to the Ministry of Commerce.
Companies must register UBOs during incorporation, maintain updated UBO records, and notify authorities of changes within 15 days, with penalties up to SAR 500,000 for non-compliance.
The rules exclude publicly listed companies, state-owned entities, and those under liquidation.
The Kingdom of Saudi Arabia minister of commerce recently issued the Rules for the Ultimate Beneficial Owner (UBO Rules), which aim to enhance corporate transparency and align with international standards by requiring companies to disclose their ultimate beneficial owners (UBOs) to the Ministry of Commerce (the Ministry). The UBO Rules apply to all companies registered in the Kingdom, except publicly listed joint-stock companies, and will take effect 3 April 2025.
These rules are part of Saudi Arabia’s commitment to international best practices, including compliance with Financial Action Task Force (FATF) recommendations, and are designed to combat financial crimes, enhance anti-money laundering (AML) enforcement, and improve corporate accountability.
Previous Regulatory Framework
Previously, Saudi Arabia’s regulatory framework required companies to maintain ownership records, but there was no centralized obligation for private companies to disclose UBOs. UBO identification was primarily enforced in financial and regulated sectors under AML and Know Your Customer requirements. However, non-financial businesses lacked a structured UBO disclosure process, making it difficult to trace ownership in complex corporate structures or offshore entities.
Despite this, it was previously possible to obtain some information about the direct owners of companies through the Aamaly portal, where companies’ constitutional documents were published as required under the Saudi Companies Law. Since the constitutional documents typically contained details about shareholders and ownership percentages, anyone could access these documents to determine the direct legal owners of a company. However, this method had limitations, as it only reflected registered direct shareholders rather than the actual UBOs who might control the company through indirect ownership, nominee structures, or layered corporate entities. If ownership was structured through trusts, offshore holdings, or other intermediaries, the true UBOs could remain undisclosed, making it difficult to trace ultimate ownership and control.
Key Changes the UBO Rules Introduce
With the introduction of the new UBO Rules, all companies (except publicly listed joint-stock companies) must now formally register and maintain a record of their UBOs with the Ministry. This expands regulatory oversight beyond financial institutions to all corporate entities, ensuring greater transparency, accountability, and alignment with international standards such as Financial Action Task Force recommendations. Companies will now be required to submit UBO details during incorporation, update them annually, and notify authorities of any changes within 15 days.
UBO Criteria
A UBO is defined as any natural person who meets at least one of the following criteria:
Owns at least 25% of the company’s share capital, directly or indirectly.
Controls at least 25% of the company’s voting rights, directly or indirectly.
Has the power to appoint or remove the majority of the board, manager, or chairman.
Has the ability to influence the company’s operations or decisions.
Represents a legal entity that meets any of the above conditions.
If no individual qualifies under these criteria, the company’s manager, board member, or chairman will be deemed as the UBO.
Key Obligations
Disclosure at Incorporation: Newly formed companies must disclose UBO information as part of the registration process.
Annual Filings: Existing companies must confirm UBO details annually within 30 days before their registration anniversary.
UBO Register & Updates: Companies must maintain a UBO register containing details such as the UBO’s name, national ID or passport details, residential address, contract information, and the criteria used to determine their UBO status. The register must be maintained in the Kingdom.
Updates to UBO Information: Companies are required to notify the Ministry of any changes to the UBO details within 15 days of such change.
Regulatory Requests: The Ministry has the discretion to request UBO related information and supporting documents.
Exemptions
The following entities are exempt from the UBO disclosure requirements:
Companies the state wholly owns or any state-owned authorities, whether directly or indirectly.
Companies undergoing liquidation under the bankruptcy law.
Companies specifically exempted by decision of the minister.
If a company is exempt, it is required to submit proof of its exemption to the Ministry.
Penalties
Failure to comply with the UBO Rules may result in penalties, including fines of up to SAR 500,000 (approx. USD 133,000). Companies operating in the Kingdom should consider taking proactive measures to comply with the UBO Rules.
Navigating Trump’s Semiconductor Strategy
As President Donald Trump’s second term continues, the government’s approach to the semiconductor industry is undergoing a significant shift. Industry stakeholders should anticipate changes in key areas, including the “CHIPS and Science Act,” tariff implementations, export controls, and regulatory frameworks.
Reassessment of the CHIPS and Science Act
Enacted in 2022, the “CHIPS and Science Act” allocated substantial funding to bolster domestic semiconductor manufacturing and research. Despite its bipartisan support, President Trump has criticized the act, describing it as unnecessary subsidization.
“Your CHIPS Act is a horrible, horrible thing. We give hundreds of billions of dollars and it doesn’t mean a thing. They take our money and they don’t spend it… You should get rid of the CHIPS Act and whatever is left over, Mr. Speaker, you should use it to reduce debt.”
Remarks by President Trump in Joint Address to Congress, March 4, 2025
Reports suggest that the Administration is considering repealing or modifying the law, favoring broader tax reductions and elevated tariffs as mechanisms to stimulate a “manufacturing renaissance.” Such a policy shift will inevitably impact ongoing and future semiconductor projects within the United States.
At a minimum, the Trump Administration will likely review and look for opportunities to modify contracts and grants issued under the Biden Administration, including trying to remove provisions related to diversity, equity, and inclusion. Companies that participated in the “CHIPS Act” programs should expect increased scrutiny from federal departments, Inspector Generals, and Congress looking to prove that the Biden Administration wasted taxpayer funds in carrying out the “CHIPS Act.”
Elevated Tariffs, Export Controls, and Technology Restrictions
Consistent with his “America First” trade philosophy, President Trump has launched into imposing significant tariffs on imports, including a universal 20% tariff on Chinese goods and 25% tariff on all products from Canada and Mexico – with notable exceptions for those covered by the United States–Mexico–Canada Agreement (USMCA). With additional measures under consideration, these moves are anticipated to disrupt global supply chains, particularly affecting the semiconductor industry, which relies heavily on international collaboration. The imposition of these tariffs could lead to increased costs for consumer electronics and potential retaliatory actions from trade partners.
During the final months of the Biden Administration, significant export controls were introduced to limit China’s access to advanced U.S. semiconductor technology, citing national security concerns. These measures included restrictions on advanced AI chips, cloud access, and model weights. The implementation of these controls now falls under the purview of the Trump Administration.
That said, while President Trump has historically advocated for stringent measures against China, certain post-election actions suggest a pragmatic moderating. In a notable example, President Trump delayed the shutdown of TikTok to facilitate a sale of the app, indicating that the Administration may reassess existing export controls to balance national security concerns with economic interests. However, any effort to significantly relax export restrictions on advanced chips to China will run into bipartisan opposition from Congress as well as China hawks within the Administration.
Deregulation and Industry Incentives
In alignment with its broader deregulatory agenda, there is an expectation that the Trump Administration will relax regulations across the technology sector. Notably, President Trump revoked an executive order on artificial intelligence signed by former President Biden, suggesting an intention to foster innovation and reduce compliance burdens for technology companies. This policy shift is likely to create a more favorable environment for domestic semiconductor manufacturers and encourage increased investment and production within the United States, along the lines of the recently announced US$500 billion Project Stargate.
A second “CHIPS Act” is unlikely to gain traction in Washington. Many Republican members of Congress have committed to making federal spending cuts in exchange for a US$4 trillion dollar increase in the debt ceiling, a reauthorization of President Trump’s Tax Cuts and Jobs Act (TCJA), new tax breaks, and additional funds for border security and the military. As it stands now, there is simply no appetite among congressional Republicans for another large spending bill. TCJA reauthorization does present some opportunities for chip industry stakeholders, as bipartisan provisions being discussed include reinstating immediate R&D expensing.
Geopolitical Implications
The Administration’s policies are poised to reshape the global semiconductor landscape significantly. By implementing protectionist measures and reassessing existing trade agreements, the Trump Administration aims to strengthen the U.S.’s position in the semiconductor sector. However, there is a real risk that these actions lead to heightened geopolitical tensions, particularly with China and Europe, and could result in retaliatory measures affecting other industries. The potential for a more fragmented global market poses challenges for corporations operating within the semiconductor supply chain.
Conclusion
In summation, President Trump’s Administration is adopting a more protectionist and assertive approach in the semiconductor industry, focusing on reshoring manufacturing through a combination of export controls, de-regulation, favorable tax policy, and tariffs. While these policies aim to bolster U.S. competitiveness, they also introduce uncertainties and potential challenges within the global semiconductor landscape.
CJEU Ruling on Asymmetric Forum Selection Clauses
The Court of Justice of the European Union (CJEU) has recently ruled on the validity of asymmetric forum selection clauses, which grant one party the right to bring proceedings before multiple alternative jurisdictions while restricting the other party to a single forum
On 27 February 2025 (Case C-537/23), the CJEU clarified that, under the principle of contractual autonomy set out under Article 25 of Regulation (EU) 1215/2012 (known as Brussels I-bis), the imbalance characterizing any such clauses does not automatically invalidate them, provided that the parties have freely negotiated and consented to them.
The Case
The dispute arose from a supply contract for cladding panels between two individuals (the “Clients”) on one side, and the French company Agora SARL (Agora) and the Italian company Società Italiana Lastre (SIL) on the other. The contract included a forum selection clause stating that “[for] any dispute arising from or related to this contract,” the “Court of Brescia [Italy]” would have jurisdiction, except that SIL retained the right “to bring proceedings against the purchaser before another competent court, in Italy or elsewhere” (the “Clause”).
A dispute arose with respect to contract performance and the Clients brought an action before the Tribunal de Grande Instance of Rennes (France) against Agora and SIL. Agora brought an action on a guarantee against SIL. Invoking the forum selection clause, SIL opposed that action on a guarantee and challenged the French court’s jurisdiction in favor of the Italian court, “on grounds of a lack of international jurisdiction.” The Tribunal rejected the objection, declaring the Clause unlawful under French law due to its unbalanced and imprecise (i.e., purely discretionary) nature, which was contrary to the principle of foreseeability.
The decision was upheld by the Cour d’Appel de Rennes (France), leading SIL to seek review before the French Cour de Cassation, arguing that the Cour d’Appel had misinterpreted Article 25(1) of the Brussels I-bis Regulation, according to which the validity of an agreement conferring jurisdiction should be assessed in light of the law of the Member State whose courts are designated pursuant to that agreement. Hence, SIL argued that the validity of the Clause should be assessed under Italian law – the law of the designated jurisdiction – rather than French law.
The Cour de Cassation sought clarification from the CJEU on the proper legal framework for assessing the validity of an asymmetric forum selection clause. The Court requested a preliminary ruling on three key questions: (i) whether the substantive validity of an asymmetric clause should be assessed autonomously according to EU law criteria or according to the lex fori electi (i.e., the national law of the Member State where the Court designated in the clause sits), and whether the substantial validity of such a clause under Article 25(1) of the Brussels I-bis Regulation strictly refers only to grounds such as fraud, error, violence, and incapacity, (ii) if the assessment is based on EU law, whether asymmetric forum selection clauses remain valid in light of the principle of foreseeability and legal certainty set forth by Article 25(1) of the Brussels I-bis Regulation, and (iii) alternatively, if the lex fori electi applies, which Member State’s law should govern the assessment of the validity of an asymmetric forum selection clause when multiple courts are designated or the party (having the right to choose) has not yet exercised this choice at the time the case is brough before the court.
The Decision
On the first issue, the CJEU clarified that, in light of the Brussels I-bis Regulation’s objective to “unify the rules on conflicts of jurisdiction in civil and commercial matters,” issues concerning the alleged imprecision or imbalance of the asymmetrical forum selection clause must be assessed according to “autonomous criteria” derived from Article 25 of the Brussels I-bis Regulation (i.e., the principles of foreseeability and legal certainty), rather than substantive invalidity criteria defined by Member States’ laws (which typically address issues like fraud, capacity, or error.)
Regarding the second issue, the CJEU clarified that asymmetric forum clauses are not inherently invalid, provided they meet the Brussels I-bis Regulation’s requirements of certainty and foreseeability. Specifically, asymmetric clauses are valid to the extent that:
(i) they are the result of the parties’ free determination (rather than unilateral imposition) and they designate courts in EU Member States or countries parties to the Lugano II Convention;
(ii) they do not undermine the Brussels I-bis Regulation’s objectives of transparency and predictability, ensuring that the court having jurisdiction is identifiable with sufficient certainty based on clear, objective criteria; and
(iii) they comply with the limitations and requirements expressly imposed by the provisions of the Brussels I-bis Regulation concerning insurance, consumer, and employment contracts, and they do not conflict with the rules on exclusive jurisdictions under Article 24 of the Brussels I-bis Regulation.
Conclusion
With this ruling, the CJEU reinforced the central role of contractual autonomy, while clarifying the criteria for assessing the validity of asymmetric forum selection causes. The CJEU confirmed that the evaluation should be based on both the formal criteria set out in Article 25 of the Brussels I-bis Regulation – such as clarity and precision, the designation of courts within EU Member States or Lugano II Convention countries, and compliance with exclusive jurisdiction rules–as well as the substantive criteria, including contractual freedom of the parties, foreseeability and predictability.
Hence, businesses entering international contracts should ensure such clauses are clearly drafted, mutually agreed upon, and aligned with Brussels I-bis Regulation’s principles to avoid enforceability challenges in cross-border disputes.
China’s National Development and Reform Commission: High-Value Invention Patents per 10,000 People Reached 14
On March 11, 2025, the National People’s Congress approved the China’s National Development and Reform Commission report on the 2024 implementation of China’s economical and social development and draft plan for 2025. Of note, the number of high-value invention patents per 10,000 people reach 14, exceeding the 2025 goal of 12 high-value patents per 10,000 people in China’s National Intellectual Property Administration’s (CNIPA) 14th five-year plan.
Closing of the third session of the 14th National People’s Congress.
Per China’s National Intellectual Property Administration (CNIPA), a high-value patent includes:
A patent in the strategic emerging industries;
A patent with overseas patent family member(s);
A patent maintained for more than 10 years after grant;
A patent that realizes a higher amount of pledge financing (secured debt); or
A patent that wins State Science and Technology Awards or the China Patent Awards.
Intellectual property-related excerpts from the report follow:
Guidelines on improving the market access system were issued, and evaluations of market entry efficiency were conducted across the board. An initiative was launched to build up the system for protecting intellectual property rights (IPR), the initiative to promote the practical application of patents was fully implemented, and reform was advanced to integrate prosecutorial powers over civil, administrative, and criminal cases involving IPR.
We accelerated efforts to improve the foundational system for all-around innovation and sped up the translation of technological advances into higher productivity. Per capita labor productivity reached 174,000 yuan, a 4.9% increase in real terms. Spending on research and development (R&D) hit 3.6 trillion yuan, an increase of 8% in real terms. Investment in basic research accounted for 6.91% of the country’s total R&D spending, and the number of high-value invention patents per 10,000 people reached 14.
The mechanisms for inter-regional cooperation saw steady improvements. Practical results were achieved in promoting industrial connectivity and cooperation, improved environmental protection through joint efforts, sharing of public services, and the flow of officials and high-caliber personnel across regions. Trans-regional collaboration was enhanced in terms of testing and inspection, intellectual property rights, and oversight. Tax-related issues can now be dealt with across regions at a faster pace, with more than 530,000 trans-regional cases being handled by tax payment service centers across the country.
We will establish a sound system for the comprehensive management of intellectual property rights and effective mechanisms for responding to overseas IP disputes and facilitate improvements to the system enabling IP courts to handle cross-regional cases. We will take the initiative to align with high-standard international economic and trade rules, harmonizing domestic policies and regulations with relevant international rules. We will improve customs clearance procedures and facilitate the building of the Single Window System for international trade.
The full report is available here (Chinese) and here (English).
CIPL Submits Response to India’s Draft Digital Personal Data Protection Rules
Earlier this month, the Centre for Information Policy Leadership at Hunton submitted a response (the “Response”) to India’s Ministry of Electronics and Information Technology (“MeitY”) regarding the Draft Digital Personal Data Protection Rules 2025 (the “Draft Rules”), which were published on January 3, 2025. The Draft Rules provide greater detail on a number of statutory provisions of India’s Digital Personal Data Protection Act 2023 (the “Act”).
As detailed further in the Response, it is CIPL’s view that given the complexities involved for certain operational and technical requirements of the Draft Rules, MeitY should consider a staggered or phased implementation period, particularly with respect to Rule 10 (which addresses verifiable consent) and Rule 13 (which addresses consent managers).
CIPL included the following comments in its Response, among others:
Rule 3 (notice): the notice requirements as drafted could be interpreted as requiring unwieldy and long notices that do not benefit the relevant individuals.
Rule 4 (consent managers): the rule fails to address the interoperability of platforms maintained by different consent managers and to what extent such platforms must be interoperable with systems used by data fiduciaries.
Rule 6 (security): the rule should be amended to provide organizations with a degree of flexibility to employ context-specific security safeguards, as opposed to setting a “minimum” requirement.
Rule 7 (incident notification): the rule should require notification of a personal data breach only where the breach is material, i.e., where it is likely to result in significant harm to individuals.
Rule 8 (retention and deletion): the rule should adopt accountability-based safeguards for data fiduciaries, such as risk assessments and privacy enhancing measures, to determine appropriate retention and deletion practices based on context.
Rule 10 (verifiable consent): the rule requires further clarification on key terms, such as “identity” and “age,” and whether data fiduciaries may meet their compliance obligations based on self-declarations and supporting documents provided by individuals claiming guardianship.
Rule 11 (children’s data exemptions): exemptions for processing children’s data should be broadened to include the personalization of services that do not otherwise have detrimental effects on children.
Rule 12 (significant data fiduciary): MeitY should provide guidance establishing a clear threshold for an entity’s designation as a “Significant Data Fiduciary,” and modify the rule to either delete the reference to algorithmic software, or limit its coverage to address situations that pose significant risk.
Rule 14 (international transfers): the rule should be amended to explicitly recognize lawful data transfer mechanisms that align with global standards—such as standard data protection clauses, binding corporate rules, certification mechanisms, or binding schemes such as Global Cross Border Privacy Rules—thereby ensuring that personal data remains protected while enabling India to remain an active participant in the global digital economy.
View CIPL’s full comments.
Navigating DORA Compliance: Recent Developments
The EU Digital Operational Resilience Act (DORA) took effect on 17 January 2025 after a two-year implementation period. DORA sets out new requirements for financial entities (FEs) and their information technology and communication (ICT) third-party service providers (TPPs). This note highlights recent developments in the EU’s efforts to facilitate in-scope firms’ compliance with DORA and authorities’ attempts to avoid duplication of operational resilience requirements.
Further information regarding DORA developments can be found in our previous articles (available here, here, here and here).
EBA Amends Guidelines on ICT and Security Risk Management
On 11 February 2025, the European Banking Authority (EBA) amended its existing 2019 guidelines on ICT and security risk management measures (Guidelines) to align them with DORA.
The EBA has narrowed the scope of its Guidelines to cover:
only FEs subject to DORA, including credit institutions, payment institutions, account information service providers, exempted payment institutions and exempted e-money institutions; and
relationship management of the payment service users in relation to the provision of payment services.
The EBA’s aim is to simplify the ICT risk management framework and provide legal clarity for the industry, by avoiding duplication of requirements and ensuring consistency across the EU single market.
However, other types of payment service providers (PSPs), such as post-office giro institutions and credit unions, who are not covered by DORA, will still have to comply with the security and operational risk management requirements under the revised Payment Services Directive (PSD2), which has been in force since March 2018. In addition, PSPs that remain subject to the PSD2 security and operational risk management requirements can potentially be subject to additional national requirements.
The Guidelines will apply within two months of the publication of the translated versions.
The Guidelines and accompanying press release are available here and here, respectively.
Commission Adopts Delegated Regulation on Threat-led Penetration Testing under DORA
On 11 February 2025, the European Central Bank (ECB) published an updated version of its framework for threat intelligence-based ethical red teaming (TIBER-EU Framework) that aligns with the DORA regulatory technical standards on threat-led penetration testing (TLPT RTS). This follows the ECB’s publication of a paper considering the TIBER-EU Framework in the context of DORA. Further information on this earlier paper can be found in our previous article (available here).
DORA mandates the European Supervisory Authorities (ESAs), together with the ECB, to develop draft RTS in accordance with the TIBER-EU Framework to specify the following:
the criteria to identify FEs required to perform TLPT;
the requirements regarding test scope, testing methodology and results of TLPT;
the requirements and standards governing the use of internal testers; and
the rules on supervisory and other co-operation needed for the implementation of TLPT and for mutual recognition of testing.
On 13 February 2025, the European Commission (Commission)adopted a delegated regulation (Delegated Regulation), with accompanying annexes 1-8, supplementing DORA in relation to the TLPT RTS. The Delegated Regulation shall enter into force and apply 20 days after its publication in the Official Journal of the European Union.
The Delegated Regulation and updated version of the TIBER-EU Framework are available here and here, respectively.
ESAs Publish Roadmap on the Designation of CTPPs under DORA
On 18 February 2025, the ESAs published a roadmap (Roadmap) for the designation of critical ICT TPPs (CTPPs), which will be subject to direct EU supervision under DORA.
Notably, the Roadmap sets out four steps to designation of CTPPs in 2025:
by 30 April 2025, the ESAs will collect the registers of information on ICT third-party arrangements submitted by FEs to their national competent authorities;
by the end of July 2025, the ESAs will perform the criticality assessments mandated by DORA and notify ICT TPPsif they are classified as critical;
by mid-September 2025, there will be a six-week hearing period where TPPs can object to the assessment, with a reasoned statement and supporting information; and
by the end of 2025, the ESAs will have designated and published a list of CTPPs and commenced oversight engagement.
The accompanying press release notes that TPPs that are not designated as critical can voluntarily request to be designated once the list of CTPPs is published, with details on how to raise such a request to be provided soon.
The ESAs expect to organise an online workshop with TPPs in Q2 2025 to provide further clarity on preparatory activities, the designation process and the ESAs’ oversight approach.
The Roadmap and press release are available here and here, respectively.
Delegated and Implementing Regulations on Major ICT-Related Incidents and Cyber Threats Under DORA Published
On 20 February 2025, Delegated and Implementing Regulations (together, the Regulations) supplementing DORA were published in the Official Journal of the European Union, setting out the detailed requirements and procedures for reporting and notifying ICT-related incidents and cyber threats. The Commission adopted the Regulations in October 2024.
The Delegated Regulation specifies the content and time limits for the initial notification of, and intermediate and final report on, major ICT-related incidents by FEs, and the content of the voluntary notification for significant cyber threats.
The Implementing Regulation sets out the standard forms, templates and procedures for FEs to report a major ICT-related incident and to notify a significant cyber threat.
Both Regulations will enter into force on 12 March 2025.
The Regulations are available here and here, respectively.
ESAs Publish Opinion on Commission’s Rejection of Draft RTS on Sub-contracting ICT Services Supporting Critical or Important Functions
On 7 March 2025, the ESAs published an opinion (Opinion) on the Commission’s rejection of its draft RTS on the elements an FE needs to determine and assess when sub-contracting ICT services supporting critical or important functions.
The Commission notified the ESAs that it had rejected the draft RTS in January 2025 on the basis that certain requirements introduced by the draft RTS went beyond the mandate given to the ESAs under DORA. The Commission noted that Article 5 of the draft RTS, and the related recital 5, should be removed from the draft RTS. The Commission then stated it would adopt the RTS once the ESAs had made the necessary modifications.
In the Opinion, the ESAs acknowledge that the Commission’s amendments will ensure that the draft RTS are fully in line with its mandate under DORA. The ESAs do not recommend changes to the Commission’s proposed amendments. They note that FEs are expected to adhere to the provisions on subcontractors as set out in Article 29(2) of DORA and Article 3(6) of the implementing technical standards on the register of information.
The Opinion is available here.