Section 232 and Section 301 Trade Investigations under the Second Trump Administration
This is the second installment in a series of pieces in which members of the Womble Bond Dickinson Global Trade Advisors (GTA) team will review a number of current issues in international trade regulation, and discuss strategies for companies to stay aware of change in this dynamic area of law, and achieve their business goals, while avoiding regulatory noncompliance costs. We have modified somewhat our plan for inclusion of topics in this series from our original plan stated in our Introduction to this series, due to the recent dynamic nature particularly of import controls and charges in the U.S. over the past month.
In the first piece in the series, we reviewed the regulatory landscape of, and recent practice regarding, tariffs and other regulatorily mandated charges on imported goods including, in particular, antidumping duties (ADD) and countervailing duties (CVD).
Since returning to office in January, 2025, President Trump’s administration has used several statutory regimes as legal bases for increasing administrative charges on imported goods into the U.S. These statutory sources have included the following:
The International Emergency Economic Powers Act (IEEPA) of 1977, which grants the President broad powers to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the U.S. that has a foreign source;
The Trade Expansion Act of 1962, Section 232 (Section 232), which allows the President to adjust imports, including imposing increased tariffs, if the Department of Commerce (DOC) determines that imports from a particular country threaten national security;
The Trade Act of 1974, Section 301 (Section 301), which gives the President broad authority to take action, including imposing increased tariffs, to enforce U.S. rights under trade agreements and to address unfair foreign trade practices; and
Title VII of the Tariff Act of 1930, which provides the basis for investigations into unfair trading practices including dumping and subsidies, and lays out the requirements and authorities for antidumping and countervailing duty investigations and duty impositions.
These statutes, and regulations adopted pursuant to them, provide a variety of legal bases and defined procedures through which the President through executive action can raise duties on imports, payable by an importer to U.S. Customs and Border Protection (CBP) before imported goods can clear customs and enter the U.S. market.
In a recent client alert, issued by the broader International Trade and National Security team of which we are a part, we reviewed tariff increases adopted by the Trump administration in 2025 pursuant to several of these statutory authorities. The most attention in the media has been paid lately to the “reciprocal tariff” regime announced by the Trump administration on April 5, 2025. Tariff increases announced on particular countries as part of this regime, except for those announced on China, have been temporarily paused.
However, investigations pursuant to Section 232 and Section 301 authority are ongoing, and have received less attention and explanation in the media. This piece will review investigations initiated under Section 232 and Section 301, and explain their significance, as well as provide analysis regarding how companies involved in international trade can stay aware of these developments and take action to adapt to them.
Section 232 National Security Investigations
Since January 20, 2025, the DOC has launched several new investigations under Section 232, broadening the focus beyond the metals, automotive, and energy sectors examined during the first Trump administration. These newer probes target industries and inputs considered vital for critical infrastructure, technological advancement, and supply chain security, reflecting the expansive interpretation of national security now prevalent in Section 232 considerations.
Overview of Initiated Investigations
The following table summarizes the Section 232 investigations initiated by the DOC since January 20, 2025, based on available information.
Table 1: Section 232 Investigations Initiated Since January 20, 2025
Investigation Name
Initiation Date (Approx.)
Product/Sector Focus
Stated National Security Rationale
Copper Imports
March 10, 2025
Copper (all forms: raw, concentrates, refined, alloys, scrap, derivatives)
Defense applications, infrastructure, emerging tech, supply chain vulnerabilities, dependence, import concentration
Timber and Lumber Imports
March 10, 2025
Timber and Lumber
(Not detailed; likely construction/ infrastructure resilience, supply chain)
Semiconductor & Equipment Imports
April 1, 2025
Semiconductors and Semiconductor Manufacturing Equipment
(Not detailed; likely tech leadership, critical infrastructure, defense, supply chain security)
Pharmaceutical & Ingredient Imports
April 1, 2025
Pharmaceuticals, ingredients (APIs, KSMs), medical countermeasures, derivatives
Supply chain security, dependence on foreign supply, public health security
Critical Mineral Imports
April 16, 2025 (Directive)
Critical Minerals
(Not detailed; likely energy transition, defense tech, supply chain dependence/ concentration)
Investigation Details
Copper Imports (Initiated March 10, 2025)
Products/Sectors: This investigation covers a wide range of copper products, including raw mined copper, copper concentrates, refined copper, copper alloys, scrap copper, and derivative products.
Stated National Security Concerns: The initiation order highlighted copper’s vital role in defense applications, critical infrastructure (like the electrical grid), and emerging technologies. Key concerns motivating the probe include significant vulnerabilities identified in the U.S. copper supply chain, increasing dependence on foreign sources, and the risks associated with import supply being concentrated among a small number of foreign suppliers. Global market dynamics impacting domestic industry health are also factors.
Targeted/Implicated Countries: While the investigation is product-focused, the emphasis on import dependence and concentration inherently implicates major global copper producers and exporters.
Copper Trends:
Chile remains the dominant copper supplier to the US, providing approximately 64% of imports throughout the period 2020-4.
All import quantities show a steady increase of about 5% annually, regardless of price fluctuations.
Copper prices peaked in 2021 at $9,322/ton, experienced a moderate decline in 2022-2023, then recovered to $9,500/ton in 2024.
The price volatility (55% increase from 2020 to 2021) did not significantly impact the steady growth in import volumes.
Timber and Lumber Imports (Initiated March 10, 2025)
Products/Sectors: The investigation focuses on imports of timber and lumber.
Stated National Security Concerns: Specific national security rationales were not detailed in the available announcement snippets. However, such an investigation likely relates to the importance of these materials for construction, critical infrastructure development and maintenance, housing availability, and the resilience of associated supply chains.
Targeted/Implicated Countries: Major suppliers of timber and lumber to the U.S., such as Canada, would likely be significantly implicated.
Semiconductor & Equipment Imports (Initiated April 1, 2025)
Products/Sectors: This probe examines imports of semiconductors (chips) and the specialized equipment required for their manufacture.
Stated National Security Concerns: The formal announcement snippets lack detail on the specific rationale. However, the investigation aligns with pervasive national security concerns regarding technological leadership, securing supply chains for components essential to defense systems, communications networks, advanced computing, critical infrastructure, and economic competitiveness. There is a potential overlap here with concerns about China’s role in the semiconductor supply chain, which is also being examined under Section 301 , suggesting a multi-faceted approach to addressing challenges in this strategic sector. The government may be using Section 232 to assess broad import dependence and supply chain risks, while Section 301 targets specific unfair practices by a particular country.
Targeted/Implicated Countries: The investigation would necessarily involve major semiconductor manufacturing centers, primarily in Asia (e.g., Taiwan, South Korea, China), as well as global suppliers of semiconductor manufacturing equipment.
U.S. Semiconductor & Equipment Imports by Country (2020-2024)
Semiconductor Trends:
Taiwan consistently leads as the dominant supplier of semiconductors and equipment to the US, representing approximately 33-34% of total imports throughout the period.
Overall semiconductor imports have grown substantially, increasing by nearly 60% from $42 billion in 2020 to $67.1 billion in 2024.• The semiconductor price index rose sharply between 2020-2022 (+37%), showing the impact of global chip shortages during this period.
Despite a brief price correction in 2023, the price index resumed its upward trend in 2024, reaching 142 (2020=100).
All major supplying countries maintained their relative market share positions throughout the period, suggesting stable trade relationships despite global supply chain challenges.
The data shows that semiconductor imports continued to grow even during periods of price increases, indicating the critical nature of these components for US manufacturing and technology sectors.
Pharmaceutical & Ingredient Imports (Initiated April 1, 2025)
Products/Sectors: The scope is comprehensive, covering finished pharmaceutical products (both generic and branded), medical countermeasures (like vaccines or treatments for specific threats), and critical inputs such as Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs), along with their derivatives.
Stated National Security Concerns: The investigation seeks to determine the effects on national security stemming from reliance on foreign supply chains for essential medicines and their constituent components. It examines the extent to which domestic production can meet U.S. demand and assesses vulnerabilities related to foreign supply, framing public health security and access to critical medicines as a national security imperative.
Targeted/Implicated Countries: The focus on foreign dependence points towards major global suppliers of APIs and finished drug products, particularly China and India, which play significant roles in the global pharmaceutical supply chain.
Critical Mineral Imports (Directive to Initiate April 16, 2025)
Products/Sectors: The investigation targets “Critical Minerals”. While a specific list was not provided in the snippets, this category generally includes minerals deemed essential for strategic sectors like defense, renewable energy technologies (batteries, solar panels, wind turbines), advanced electronics, and aerospace, and which are subject to potential supply disruptions. This follows previous Section 232 probes into related materials like Uranium and Neodymium-Iron-Boron magnets.
Stated National Security Concerns: The rationale was not detailed in the directive snippet. However, it aligns with widespread international concerns about the concentration of mining and processing for many critical minerals in a limited number of countries, particularly China. Ensuring reliable access to these materials is viewed as vital for national defense, economic competitiveness in high-tech industries, and the clean energy transition.
Targeted/Implicated Countries: The investigation would likely focus heavily on countries that dominate the global supply chains for specific critical minerals, both in extraction and processing, with China being a primary focus due to its significant market share in many of these areas.
Analysis of Section 232 Investigations
The selection of these sectors – copper, timber, semiconductors, pharmaceuticals/APIs, and critical minerals – signals a strategic focus under Section 232 on foundational inputs and technologies. These materials and components are essential building blocks across a wide array of downstream industries, critical infrastructure, and defense applications. This focus reflects the broader interpretation of national security to include economic security, technological leadership, and overall supply chain resilience for the U.S. economy, potentially representing a deeper level of intervention into industrial supply chains compared to earlier Section 232 actions focused on primary metals like steel and aluminum.
Section 301 Unfair Trade Practice Investigations (Since Jan 20, 2025)
Activity under Section 301 since January 20, 2025, has maintained a significant focus on the trade practices of China, launching new actions targeting specific sectors where state intervention is alleged to distort markets and harm U.S. interests. This includes concluding investigations initiated prior to this period and potentially initiating new ones.
Overview of Initiated Investigations/Actions
The following table summarizes key Section 301 investigations or actions involving USTR since January 20, 2025.
Table 2: Section 301 Investigations/Actions Since January 20, 2025
Investigation/ Action Name
Date(s)
Target Country
Foreign Practice/ Sector Focus
Status/ Proposed Remedy
China: Maritime, Logistics, Shipbuilding
Petition March 2024; Proposed Action February 21, 2025; Final Action Apr 17, 2025
China
State targeting for dominance, non-market policies, subsidies, displacing foreign firms
Action Taken: Phased-in fees on vessel calls (tonnage/ container based); future restrictions on LNG transport via foreign vessels
China: Legacy Semiconductors
Investigation Initiated Jan 2025
China
Non-market practices, state support, impact on critical downstream industries, supply chain
Investigation Ongoing; Potential Remedies: Tariffs on chips; potential “component tariffs” on downstream products
China: Tech Transfer, IP, Innovation (Ongoing Review)
Statutory Review ongoing; Tariff modifications announced February 2025
China
Forced tech transfer, IP theft, cyber theft, discriminatory licensing, state investment
Existing tariffs maintained/ modified; rates increased on semis, critical minerals, solar; potential new tariffs floated
Investigation Details
China: Maritime, Logistics, and Shipbuilding Sectors (Action Announced April 2025)
Foreign Practices: Following a petition filed by five U.S. national labor unions in March 2024, USTR investigated China’s alleged “unreasonable” acts, policies, and practices aimed at dominating the maritime, logistics, and shipbuilding sectors. These practices included non-market policies, extensive state support and subsidies, and explicit market share targets designed to displace foreign competitors.
Affected U.S. Commerce/Sectors: USTR concluded that China’s targeting strategy burdens or restricts U.S. commerce by undercutting business opportunities and investment for U.S. firms in these sectors, reducing competition and choice, creating dependencies on China, and increasing supply chain risks and vulnerabilities. The action aims partly to support the U.S. commercial shipbuilding industry.
Targeted Country: China.
Status/Outcome: USTR determined China’s practices were actionable under Section 301(b). On April 17, 2025, USTR announced responsive actions, implemented in phases. Phase 1 includes fees imposed on vessel owners/operators based on net tonnage per U.S. voyage for China-flagged ships, fees on operators of Chinese-built ships (based on tonnage or containers), and fees on foreign-built car carriers to incentivize U.S.-built alternatives. Phase 2 actions, deferred for three years, involve restrictions on transporting Liquefied Natural Gas (LNG) via foreign vessels, increasing incrementally over 22 years.
China: Legacy Semiconductors1 (Initiated January 2025)
Foreign Practices: USTR initiated an investigation into China’s alleged non-market practices, including government subsidies and other forms of state support, related to the manufacturing of foundational or “legacy” semiconductors (older generation chips). The probe examines the production of these chips, the wafers used to make them, and their integration into downstream products across critical industries.
Affected U.S. Commerce/Sectors: The investigation focuses on how China’s practices burden U.S. commerce, potentially through market distortions that harm U.S. producers or by creating dependencies and supply chain risks in critical sectors that rely heavily on these ubiquitous chips, such as defense, automotive, medical devices, telecommunications, and power infrastructure.
Targeted Country: China.
Status/Outcome: The investigation is ongoing as of the latest available information. Potential remedies, should USTR make an affirmative finding, could include tariffs imposed directly on imports of legacy semiconductors from China. Significantly, USTR may also consider “component tariffs”—duties levied on finished downstream products imported from any country if those products are found to contain China-origin legacy chips. This novel approach could dramatically expand the scope and complexity of the remedy.
China: Technology Transfer, IP, and Innovation (Ongoing Review/Tariff Modifications)
Foreign Practices: This relates to the continuation and statutory review of the Section 301 action initiated during the first Trump administration targeting China’s practices related to technology transfer, intellectual property (IP), and innovation. USTR’s review, mandated by statute, examined whether China had eliminated the problematic acts, policies, and practices, which included requirements for U.S. companies to transfer technology, discriminatory licensing terms, state-supported investment aimed at acquiring U.S. technology, and state-sponsored cyber intrusions to steal IP and trade secrets. The review concluded that China persisted in these practices and may have even expanded cyber theft activities.
Affected U.S. Commerce/Sectors: The practices continue to burden U.S. commerce across numerous technology-intensive sectors by undermining IP rights, creating unfair competitive advantages for Chinese firms, and restricting market access.
Targeted Country: China.
Status/Outcome: Following the review, the Biden-Harris administration largely maintained the existing Section 301 tariffs on lists of Chinese goods, which range from 7.5% to 25%. However, modifications were announced or proposed. February 2025 updates indicated significant tariff rate increases on certain strategic goods effective in 2025, including semiconductors (to 50%), certain critical minerals (to 25%), and solar components (to 50%). Additional tariffs were also potentially planned for other goods like coal, crude oil, LNG, agricultural machinery, and large-engine vehicles. Furthermore, President Trump, prior to the hypothetical start of the second term, had floated proposals for much broader tariff increases on Chinese goods (e.g., an additional 10% across the board, or rates exceeding 60%). The product exclusion process, allowing importers to request temporary relief from the tariffs for specific items, remains a feature of this action.
Analysis of Section 301 Investigations
The drivers for initiating Section 301 actions vary. Some arise directly from petitions submitted by affected domestic stakeholders, such as the labor unions in the shipbuilding case. Others are self-initiated by USTR, reflecting broader strategic objectives identified by the administration, as was the case with the original China IP investigation and likely the legacy semiconductor probe. This flexibility allows the tool to be responsive both to specific industry grievances and overarching policy goals.
However, the potential use of novel and complex remedies, such as the service fees implemented in the shipbuilding case and particularly the contemplated component tariffs in the semiconductor investigation, poses significant challenges for international businesses. Component tariffs, especially, would impose substantial compliance burdens, requiring importers of finished goods from potentially any country to trace the origin of embedded components – a task many firms currently find difficult or impossible. This represents a potential escalation in the practical complexity and administrative difficulty of Section 301 enforcement.
Key Trends
Sustained Unilateralism: There is a clear continuity in the willingness to employ unilateral trade measures under domestic law, sometimes bypassing or acting parallel to multilateral frameworks like the WTO.
Expansive National Security Definition: Section 232 is increasingly utilized to address economic vulnerabilities and supply chain risks in sectors deemed critical, moving beyond traditional defense procurement needs.
Systemic Focus on China: Section 301 actions concentrate heavily on challenging China’s state-directed economic model, industrial policies, and alleged non-market practices across various strategic sectors.
Remedy Innovation and Complexity: There is an exploration of remedies beyond traditional tariffs, including fees on services and potentially complex component-level tariffs, which could significantly increase compliance burdens and broaden the impact of trade actions.
For additional historical and theoretical context explaining these key trends, see the linked article written by one of our team members.
1“Legacy Semiconductors” refer to older generations of semiconductor chips, typically manufactured using processes at 28 nanometers (nm) and above, in contrast to the cutting-edge 5nm or 3nm (“advanced node”) technologies prominent today.
Top Ten Regulatory and Litigation Risks for Private Funds in 2025
Confession: writing this in May 2025, we cannot predict with confidence what the rest of 2025 will bring. The year has already seen four months of change and upheaval – political, regulatory, and economic. The new US administration has touted a business-friendly regulatory environment, with actual and promised tax cuts and deregulation. However, geopolitical tensions, tariff trade wars and political instability have introduced new risks and created a climate of extreme unpredictability. We should expect 2025 to hold several surprises still, whether that is a breakout of peace or new political themes obtaining prominence in one or more jurisdictions.
Against this backdrop, it can be tempting to adopt the view of legendary film writer William Goldman declaring that “nobody knows anything” and that publishing our annual “Top Ten Litigation and Regulatory Risks for Private Funds” is simply a fool’s errand. We have, after all, already rewritten this introduction multiple times before new developments make it out of date again. However, whatever happens, sponsors with strong foundations and nimble mindsets will be best placed to take advantage of any new opportunities that arise and be able to pivot as needed in new, more promising directions.
We have therefore focused on two sub-themes to support those strong foundations:
Topics to ensure “your house is in order” to give those strong foundations (e.g., how to navigate ESG in 2025, the use of insurance products by sponsors, best practice with MNPI, dealing with whistleblowers and global anti-corruption compliance)
Risks arising now from the trends of 2024 (e.g., risks from the growth of the private credit market, the rise in earn out disputes in portfolio companies and navigation of end-of-life funds)
To complete our list of ten, we will engage in some tentative crystal ball gazing, including the role of the SEC in a non-regulatory environment and outward investment restrictions and tariffs, but will, like our clients and readers, seek to remain “nimble” to ensure we remain relevant.
With this backdrop, we are pleased to present the Top Ten Regulatory and Litigation Risks for Private Funds in 2025.
ESG in 2025: Finding the Sweet Spot in a Complex World
Regulatory Scrutiny on Potential MNPI in the Credit Markets
SEC Regulation in a Non-Regulatory Environment
Global Trade in 2025: Tariffs and Outbound Investment Restriction
Three Risks to Monitor in Private Credit
End Of (Fund) Life Issues and Zombies
Navigating Earn-Out Disputes: Key Considerations for Portfolio Companies
Why the DOJ’s New Whistleblower Program Remains Relevant
Protecting Sponsors from Emerging Portfolio Company Risks through Insurance
FCPA & Anti-Corruption Enforcement: Shifting Global Dynamics in Light of New US Regime
Additional Authors: Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Robert Pommer, Seetha Ramachandran, Nathan Schuur, Bryan Sillaman, Robert Sutton, John Verwey, Jonathan M. Weiss, William D. Dalsen, Rachel Lowe, Adam L. Deming, Adam Farbiarz and Hena M. Vora
Washington’s Digital Ad Tax: A Lawsuit Waiting To Happen?
On April 27, 2025, the Washington Legislature delivered to Governor Bob Ferguson’s desk Senate Bill (SB) 5814, a sweeping tax bill that, among other changes, would expand the state’s retail sales and use tax to sales of digital advertising services and a range of high-tech and IT services. The bill now awaits the governor’s signature, with a decision due by May 20, 2025.
If enacted, the changes would take effect October 1, 2025, marking a significant expansion of Washington’s tax base into areas that have long been exempt, particularly intermediate business services such as digital marketing, data processing, and custom software support.
WHAT THE BILL DOES
SB 5814 amends RCW 82.04.050 by redefining “sale at retail” to include a broad range of services previously excluded from the sales tax. Specifically, it adds “advertising services,” defined as:
All digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements including, but not limited to: layout, art direction, graphic design, mechanical preparation, production supervision, placement, referrals, acquisition of advertising space, and rendering advice…
The definition also expressly includes:
Online referrals
Search engine marketing
Lead generation optimization
Web campaign planning
The acquisition of advertising space in the internet media
Website traffic analysis for determining the effectiveness of an advertising campaign.
However, the bill expressly excludes advertising services rendered in connection with newspapers (as defined in RCW 82.04.214); printing or publishing (RCW 82.04.280); radio and television broadcasting; and out-of-home advertising such as billboards, transit displays, and signage at events.
With that list of exclusions, it’s hard to imagine what advertising services other than internet advertising services are left to tax. This focus on internet advertising creates a prima facie discriminatory tax on electronic commerce barred by the federal Internet Tax Freedom Act (ITFA).
ITFA AND THE CERTAINTY OF A LEGAL CHALLENGE
ITFA prohibits states from imposing “discriminatory taxes on electronic commerce.” A tax is discriminatory if it applies to digital services but not similar offline equivalents.
While SB 5814 expressly includes both digital and non-digital advertising services, the carve-outs for traditional formats such as print, TV, and radio effectively leave out non-digital advertising. As the bill itself states, services connected to newspapers, publishing, and broadcast media are not taxable. This distinction creates a classic ITFA problem:
A digital banner ad campaign will be taxed.
A newspaper ad or radio spot promoting the same product will not.
This kind of structural bias has been challenged before. Maryland’s Digital Advertising Gross Revenues Tax (the first of its kind in the United States) was enacted in 2021 and quickly faced multiple lawsuits on ITFA and other grounds. In 2022, a Maryland trial court struck down the law as unconstitutional, citing ITFA violations and federal preemption (although the decision was later reversed on procedural grounds). That litigation continues while the stack of taxpayer refund claims on the Maryland Comptroller’s desk grows taller.
Washington faces a similar outcome. SB 5814’s facial discrimination against digital advertising is precisely the kind of unequal treatment ITFA was designed to prohibit.
HIGH-TECH AND IT SERVICES ARE NOW TAXABLE
High technology is a bread-and-butter industry for Washington. Remarkably, SB 5814 also extends the sales tax base to a host of high-tech services that are the core of its economy. Newly taxable categories include:
Custom website development
IT technical support (e.g., help desk and network operations)
In-person or live virtual IT training
Data processing and data entry.
These services are often purchased by businesses (not end consumers), which raises concerns about tax pyramiding (i.e., the compounding of sales tax on intermediate services before the final product reaches consumers). This hidden cost is typically passed on to customers, increasing prices and embedding inflationary pressure in the state’s economy.
Local advertisers and businesses that rely on digital marketing and high-tech services will see these costs rise, which will lead to higher prices for consumers and make it more difficult to operate competitively in Washington.
OUTLOOK
If enacted, SB 5814 will face legal challenges, particularly under ITFA, in due course. The bill’s structure – taxing digital ad services while exempting traditional media – invites litigation that will tie up the state’s Revenue Department in court for years and expose Washington to refund liability with interest and make future tax revenue illusory.
At the same time, the bill’s economic impact is highly uncertain. While projected to raise new revenue, it may instead undermine Washington’s own digital economy, pushing business out of state, inflating the cost of advertising and IT services, and burdening consumers with hidden costs.
The state is gambling with legal exposure and economic disruption to chase speculative revenue. Like Maryland, Washington may find that taxing digital advertising is far easier to legislate than to defend or enforce. If SB 5814 becomes law, the real verdict may come not from Olympia, but from the courts.
IRS Roundup April 1 – April 17, 2025
Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for April 1, 2025 – April 17, 2025.
April 4, 2025: The IRS issued Notice 2025-19, inviting the public to submit recommendations for items to include in the IRS’s 2025-2026 Priority Guidance Plan. The IRS uses the Priority Guidance Plan to identify and prioritize the tax issues that should be addressed via regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance. A list of factors the IRS considers when selecting projects for inclusion is outlined in the notice.
April 9, 2025: The US Department of the Treasury (Treasury), along with the IRS and the Financial Crimes Enforcement Network, eliminated 15 rules and guidance materials, in addition to two rules already rescinded by the Office of the Comptroller of the Currency. The stated purpose of these actions was to remove rules that the government says are now obsolete and hamper the growth of US small businesses. These actions were some of the many that the Treasury says it will take over the next several months to eliminate unnecessary IRS rules and to “unleash the regulated banking sector.”
April 10, 2025: US President Donald Trump signed legislation blocking an IRS reporting rule that would have required decentralized digital asset platforms to report statistics showing customers’ gross sales on their platforms.
April 11, 2025: The IRS issued Notice 2025-24, providing penalty relief under Section 6707A(a) of the Internal Revenue Code to participants in micro-captive reportable transactions that fail to timely file (i.e., by April 14, 2025) certain disclosure statements as required under Section 6011; Treas. Reg. §§ 1.6011-10(h)(2) or 1.6011-11(h)(2); Section 6111; and Treas. Reg. §§ 1.6011-10(h)(3) or 1.6011-11(h)(3)). Participants will only qualify for relief if they file the required disclosure statement with the Office of Tax Shelter Analysis by July 31, 2025.
April 14, 2025: The IRS issued Notice 2025-22, providing for the elimination of extraneous and unnecessary Internal Revenue Bulletin guidance. This notice was prompted by the issuance of Executive Order 14219 on February 19, 2025. The purpose of Executive Order 14219 is to focus the IRS’s limited enforcement resources on regulations “squarely authorized by constitutional Federal statutes” while eliminating “overbearing and burdensome” regulations and “ending Federal overreach.” In Notice 2025-22, the IRS eliminated several current sources of guidance and stated that it anticipates revoking or obsoleting hundreds of similar guidance documents in the near future.
April 15, 2025: The IRS issued Notice 2025-21, providing updates on the corporate bond monthly yield curve, spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Code. This notice also provides guidance on the interest rates for 30-year Treasury securities and the 30-year Treasury weighted average for plan years beginning before 2008.
April 17, 2025: The IRS issued Notice 2025-23, announcing its intent to publish a notice of proposed rulemaking, proposing the removal of Treas. Reg. § 1.6011-18 (Basis Shifting TOI Regulations) from the Income Tax Regulations. As of January 14, 2025, the Basis Shifting TOI Regulations identified certain partnership-related-party basis adjustment transactions as transactions of interest. Since becoming effective in January, taxpayers have criticized the Basis Shifting TOI Regulations as imposing complex, burdensome, and retroactive disclosure obligations on ordinary activities, rendering compliance costly and creating uncertainty for business activities. Thus, pursuant to Executive Order 14219, directing agencies to remove certain regulations through the Department of Government Efficiency initiative, the Treasury identified this as a burdensome regulation that should be removed. Moreover, given the Treasury’s intent to remove the Basis Shifting TOI Regulations, Notice 2025-23 states that the IRS will waive penalties under § 6707A(a) for any failure to file a Form 8886, § 6707(a) for any failure to file a Form 8918, and § 6708 for any failure to maintain a list under § 6112.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
Simpson Thacher Advises Capital Group, KKR on Interval Funds
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IRS and Treasury Announce Withdrawal of Related Party Basis Shifting Regulations
On April 17, 2025, the U.S. Internal Revenue Service (the “IRS”) issued Notice 2025-23 (the “Notice”), announcing its intention to withdraw the recently released final regulations final regulationsthat classify certain partnership related party basis shifting transactions and substantially similar transactions as “transactions of interest”. The Notice provides taxpayers and their material advisors with immediate relief from penalties imposed for non-compliance with the disclosure requirements under the final regulations, and effectively eliminates immediately the reporting obligations that were imposed under the final regulations.
The Notice also announced that Notice 2024-54 (in which the IRS announced its intention to publish proposed regulations on basis-shifting transactions) is withdrawn. Therefore, at the current time, no proposed regulations on this topic are anticipated. However, the Notice did not withdraw Revenue Ruling 2024-14, which states that the “economic substance” doctrine applies where a basis shifting transaction among related parties does not have economic purpose or substance.
For more information about the final regulations and examples of the common transactions they could have applied to, please see our prior blog post here.
Stuart Rosow & Rita N. Halabi contributed to this post.
Clifford Chance Names 31 New Partners in Latest Promotion
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False Claims Act Whistleblowers Poised to Combat Customs and Tariff Fraud
As the Trump administration implements increased tariffs, U.S. authorities will continue to crack down on companies who seek to evade customs duties. In recent years, the Department of Justice (DOJ) has increasingly used the False Claims Act (FCA) to go after companies committing customs and tariff fraud, and, as with all areas of FCA enforcement, qui tam whistleblowers play a critical role in these efforts.
Customs Fraud and the False Claims Act
Companies can be liable under the FCA for so-called “reverse” false claims when they knowingly conceal and improperly avoid an obligation to pay or transmit money to the U.S. government. Thus, when an individual or company knowingly evades paying custom duties on goods it knowingly violates the FCA.
For example, on April 1, the DOJ reached a $8.1 million settlement with Evolutions Flooring Inc., an importer of multilayered wood flooring, and its owners over allegations that the company knowingly and improperly evaded customs duties on imports of multilayered wood flooring from China.
“Import duties provide an important source of government revenue and level the playing field for U.S. manufacturers against their global competitors,” said Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division. “The department will pursue those who seek an unfair advantage in U.S. markets, including by evading the duties owed on goods imported into this country from China.”
Types of customs duties fraud which individuals and companies can be found liable for under the FCA include:
Underreporting of Value – importers may undervalue goods to reduce the amount of import duties or taxes payable. By declaring a value lower than the actual transaction value, they can evade the rightful amount of customs duties and taxes.
Misclassification – goods may be classified under a tariff code that attracts a lower rate of duty than the actual code applicable to those goods. For example, an importer might declare a luxury item as a basic item to benefit from a lower tariff rate.
False Country of Origin – importers may falsely declare the country of origin for goods to benefit from preferential duty rates or to avoid anti-dumping duties. This is especially pertinent when certain goods from particular countries are subjected to higher duties or restrictions.
Overstatement of Quantity – importers might declare a higher quantity of low-value items and hide high-value items among them, thereby evading the correct duty on the high-value items.
False Documentation – using forged or altered documents, like fake invoices or certificates of origin, to deceive customs officials.
Transshipment Deception – goods might be rerouted through third countries to conceal their true origin, especially if the goods’ actual country of origin faces trade restrictions or higher duties.
DOJ Promises Aggressive Enforcement on Trade and Tariffs
On February 20, Deputy Assistant Attorney General Michael Granston gave a keynote address at the Federal Bar Association’s annual qui tam conference. In addition to promising that under the Trump administration the DOJ “plans to continue to aggressively enforce the False Claims Act,” Granston specifically touched on aggressive enforcement of customs and tariff fraud.
“The False Claims Act has also proven to be a powerful tool for combatting those who seek to avoid the payment of customs duties on imported goods, including goods subject to anti-dumping or countervailing duties, which are intended to protect the American economy against illegal foreign trade practices,” Granston stated.
“You can therefore expect the department to continue to use the False Claims Act to help enforce these trade laws,” Granston added.
Tariffs are particularly vulnerable to fraud schemes. For example, where tariffs on products from countries, like China, are extremely high compared with other countries, there will be temptation for companies to cheat the system by claiming products were produced in a country with lower tariffs.
The Role of Whistleblowers
Under the False Claims Act’s qui tam provisions, whistleblowers with knowledge of customs fraud may file a lawsuit on behalf of the U.S. government. Regardless of whether the government decides to intervene and take over the suit, a whistleblower is eligible to receive between 15-30% of recoveries in a successful qui tam suit.
Whistleblowers have proven to be the bedrock of FCA enforcement. Since the FCA was modernized in 1986, it has allowed the government to recover over $78 billion from fraudsters. More than $55 billion of these recoveries stemmed from qui tam whistleblower lawsuits.
The need for insiders with direct knowledge of fraud is particularly acute in regards to customs duties fraud. A Government Accountability Office report details how Customs and Border Protection “faces several external challenges in attempting to gather conclusive evidence of evasion and deter parties from evading duties.”
A look at recent customs fraud settlements highlights the central role whistleblowers often play in successful enforcement actions. For example, the $8.1 million settlement with Evolutions Flooring stems from a qui tam whistleblower lawsuit filed by Urban Global LLC, who is set to receive $1.2 million of the settlement.
To prove tariff fraud, the government will depend on whistleblowers who have inside information about companies cheating the government out of tariff funds by, among other schemes, falsifying import and export forms and knowingly concealing the country of origin of products.
Conclusion
As tariffs become more widespread and tariff rates increase under the Trump administration, more and more individuals and companies will seek to evade payments through customs fraud. False Claims Act whistleblowers will thus be critical to ensure compliance with any tariffs.
Individuals considering blowing the whistle on customs or tariff fraud should first consult an experienced FCA whistleblower attorney to help ensure they file an effective qui tam suit and that they are protected from retaliation.
Geoff Schweller also contributed to this article.
Supreme Court Clarifies ERISA Prohibited Transaction Pleading Standards
On April 17, 2025, the U.S. Supreme Court, in a unanimous opinion, resolved a circuit split and established a plaintiff-friendly pleading standard for ERISA prohibited transaction claims in Cunningham v. Cornell University, No. 23-1007.
Background
The plaintiffs in Cunningham accused Cornell’s retirement plans of engaging in prohibited transactions by paying excessive fees for recordkeeping and administrative services, among other claims. The university contended that these transactions were exempt under ERISA Section 408(b)(2), which permits certain transactions with parties in interest if the compensation is reasonable. The Second Circuit had previously affirmed the district court’s dismissal of the participants’ prohibited transaction claims, ruling that plaintiffs must plead and prove the absence of such exemptions to state a claim under ERISA Section 406(a)(1)(C).
Supreme Court’s Ruling
In a decision authored by Justice Sonia Sotomayor, the Supreme Court reversed the Second Circuit’s ruling. The Court held that plaintiffs are not required to preemptively allege that ERISA’s exemptions do not apply. Instead, the burden is on the plan fiduciaries to raise and prove these exemptions as affirmative defenses. The Court reasoned that:
Affirmative defenses, such as the exemptions at issue, must be plead by the defendant seeking to benefit from them.
It is an undue burden to require plaintiffs to plead the non-application of exemptions since these facts are typically within the defendant’s knowledge and control.
Such preemptive requirement could unfairly force plaintiffs to engage in discovery before having the necessary information.
Implications for ERISA Litigation
The Cunningham decision resolved a circuit split and aligned with the Eighth and Ninth Circuits to treat ERISA exemptions as affirmative defenses rather than necessary elements of the claim to be initially plead by plaintiffs. This standard seemingly makes it easier for plaintiffs to state a prohibited transaction claim and may increase the number of lawsuits surviving motions to dismiss, as plaintiffs are no longer required to anticipate and address potential exemptions. An overall uptick in 401(k) fee litigation is also possible.
The Cunningham court acknowledged that defendants may feel increased pressure to engage in expensive discovery and settlement talks — even in cases they believe are meritless — and pointed to tools to help screen meritless claims, including:
Dismissing claims where Plaintiffs do not have Article III standing;
Limiting discovery;
Rule 11 sanctions;
Cost shifting under ERISA Section 1132(g)(1); and
Using Fed. R. Civ. P. 7(a) to order plaintiffs to address exemptions by filing a reply to answers raising this issue.
Justice Alito’s concurrence echoed the importance of such safeguards while highlighting that Rule 7(a) may be the most promising tool. Still, Justice Alito recognized that Rule 7(a)’s reply mechanism is not a “commonly used procedure,” and thus its effective usage “remains to be seen.”
Ultimately, employers and plan fiduciaries should take note of the Supreme Court’s clarified pleading standard for prohibited transaction claims. Employers should review service provider fee arrangements for reasonableness and confirm that policies are in place to maintain detailed records of fiduciary decision-making.
Navigating the 2025 Tariff Landscape: A Practical Guide for Small and Midsize Business Owners
Big Picture Messages from the Panel
The U.S. has entered a new era of trade protection with significant tariffs now in place:
Tariff application has “paused” for 90 days, but consensus was that the trade agreement process could take six to 18 months, rather than 90 days. There’s a lot of complexity to trade negotiations.
The U.S.-China process of de-coupling started well before the change in tariff policy and will likely be a long-term trend. Tariffs are merely playing a part in accelerating or shaping the evolution. Plan accordingly.
Don’t be afraid to negotiate better terms with suppliers. They usually don’t want to lose your business and can help play a part in a cost-management solution.
Better managed companies are taking advantage of the uncertainty. Never waste a good crisis!
They are using the cover of tariffs to raise prices 5% to 10%, to extend payment terms to net 60 or even 90 days, and to use their capital resources flexibly (factoring, use of revolving credit, etc.).
They are also using the cover of tariffs to improve internal performance, such as trimming unproductive staff or divesting from underperforming product lines.
Healthy balance sheets also are allowing them to make favorable acquisitions, sometimes at favorable multiples.
Our panelists estimated that about 20% of the small/midsized businesses they see are in a position to act proactively. They put themselves in this position intentionally, to be ready for a downturn. That’s a good position to be in!
As a businessowner, you’re likely feeling the effects already. Costs are up, supply chains are strained, and planning for the future has become more challenging. While there are hints of potential de-escalation, for now these tariffs are a business reality you need to navigate.
Why Your Business Is Particularly Vulnerable
Small and midsized businesses face unique challenges in this environment:
Less negotiating power with suppliers
Tighter financial resources to absorb higher costs
Limited capacity to quickly change supply chains
The impacts you’re likely experiencing include:
Higher costs for imported materials and goods
Supply chain disruptions and inventory problems
Pressure on your competitive pricing
Difficulty making long-term business plans
Potential loss of export markets due to retaliatory tariffs
Practical Strategies to Protect Your Business
1. Make Your Supply Chain More Resilient
Find alternative suppliers
Look for options in countries not heavily affected by tariffs.
Understand Country of Origin (COO) rules when evaluating new suppliers.
Consider that the lowest price may not mean the lowest total cost when tariffs are added.
Consider moving production closer to home
Evaluate if moving production to nearby countries (Mexico, Canada) makes financial sense.
Look into bringing some manufacturing back to the U.S.
Be realistic about challenges like finding skilled workers and higher costs.
Use Foreign Trade Zones (FTZs) strategically
These special zones let you store, modify, and re-export goods without immediate tariff payments.
Decide whether you can improve cash flow by deferring or eliminating tariffs on goods you’ll eventually re-export.
Explore “tariff engineering”
Minor modifications to your products or component sourcing might qualify for lower tariff rates.
Work with experts (customs brokers, trade attorneys) to do this properly.
2. Strengthen Your Financial Position
Cut costs where possible
Look for efficiencies throughout your business to offset tariff-related expenses.
Focus on areas that won’t impact your product quality or customer experience.
Protect against currency swings
If you do international business, consider currency hedging strategies.
Talk to your financial advisor about extending hedging timeframes given the current volatility.
Manage your cash flow aggressively
Keep enough cash reserves to handle unexpected cost increases.
Try to negotiate better payment terms with suppliers.
Use data to optimize your inventory levels.
3. Navigate the Legal and Regulatory Landscape
Partner with experts
Work with experienced customs brokers to ensure accurate product classification.
Consider consulting with a trade attorney to understand your options.
Stay informed about International Emergency Economic Powers Act (IEEPA) developments.
Monitor policy changes
Keep an eye on updates from U.S. Customs and Border Protection.
Watch for rulings from the Court of International Trade, which handles tariff disputes.
Join industry associations that track and advocate on trade issues.
4. Adapt Your Market Strategy
Diversify your markets
Reduce dependence on regions affected by retaliatory tariffs.
Research and develop new domestic and international opportunities.
Emphasize your unique value
Double down on what makes your business special beyond just price.
Highlight quality, service, innovation, or expertise to maintain customer loyalty despite price adjustments.
Consider ethical sourcing as a differentiator
If relevant to your industry, emphasize fair trade and ethical practices.
This can attract customers willing to pay more for responsibly sourced products.
Get involved in advocacy
Join with others in your industry to voice concerns to policymakers.
Collective efforts can sometimes influence policy adjustments.
Plan for different scenarios
Develop contingency plans for various possible changes in tariff policies.
This preparation allows you to react quickly when the situation evolves.
Moving Forward
The current tariff environment is challenging but navigable. By implementing these strategies, your business can become more resilient and potentially find new opportunities amid the disruption. Stay vigilant, be proactive, and remember that adaptation is key to sustainability in today’s evolving trade landscape.
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Quick Reference: Key Trade Terms
Baseline Tariff: The standard 10% tariff now applied to most imports (effective April 5, 2025)
Reciprocal Tariffs: Higher, country-specific tariffs imposed based on perceived trade imbalances
Country of Origin (COO): Rules determining where a product is considered to be made, affecting which tariffs apply
Customs Broker: Licensed professional who helps navigate import/export regulations
Automated Commercial Environment (ACE): The electronic system used by U.S. Customs for import/export processing
Court of International Trade (CIT): Federal court that handles disputes related to tariffs and trade
Foreign Trade Zones (FTZs): Designated areas where goods can be stored or modified without immediate tariff payment
Nearshoring: Moving operations to nearby countries (like Mexico or Canada)
Onshoring/Reshoring: Bringing production back to the United States
Changes to US Energy and Trade Policy Could Trigger Contractual Relief Mechanisms
The Trump Administration has issued several executive orders and made numerous policy pronouncements that could alter the economics of existing contracts and cause parties to explore new risk sharing mechanisms for future contracts. The primary area of uncertainty relates to tariffs due to their direct impact on the price of materials and equipment. Other US policy changes, such as federal funding freezes and the potential repeal of Inflation Reduction Act tax credits, could also impact deals, with outsized effects in the renewable energy industry.
Due to the effects these policy changes may have on the costs and benefits of existing and future contracts, parties should be aware of potential contractual relief clauses in those agreements. What follows is a discussion of contract clauses that might serve as a basis for relief under existing contracts, or as a risk sharing tool for future contracts. Energy transactions are used for specific context. However, many different types of transactions might be impacted by US policy changes, particularly for imports. In light of these policy changes, parties should carefully consider whether to include contractual relief clauses in future contracts aimed at excusing performance or altering the price of the bargain. For existing contracts, parties should closely review their rights and determine whether they have additional contractual rights because of changes to laws and policies.
Force Majeure
Force majeure clauses are provisions that excuse a party from performance, sometimes temporarily, where extraordinary events occur, beyond a party’s control, that prevent or delay a party from performing a contractual obligation. The prevention or delay of performance must be without the fault or negligence of the non-performing party. Increased difficulty or increased cost of performance is typically not enough to sustain a force majeure defense. Even where a party’s performance becomes unduly expensive, force majeure is not usually implicated. Whether force majeure applies depends heavily on the wording of the particular contract clause. Some US jurisdictions interpret force majeure clauses narrowly and only excuse performance if the specific event preventing or delaying performance is stated in the force majeure clause.
In the current environment, parties may want to explore the applicability of force majeure where government actions operate to terminate contracts, leases, permits, or other rights necessary to the performance of the contract. The repeal or elimination of subsidies and tax credits might also constitute an event of force majeure, depending on the specific contract language, although change in law or price adjustment clauses might be a better mechanism to capture situations amounting to changed deal economics.
Change in Law
A change in law clause is designed to address any unexpected change in the legal or regulatory landscape that has a substantial impact on the obligations of a party. Such clauses are designed to offset the losses/damage due to changes in the law applicable at the time of contract execution.
Where the change is captured by the change in law clause and hinders a party’s performance, that party can claim relief in accordance with the terms of the clause. Foreseeable costs are ordinarily not included in such provisions.
In the energy industry, we have seen change in law clauses related to duties and tariffs on key equipment. The uncertain nature of import duties on solar panels has been a popular area to use this type of risk allocation tool. Changes or adjustments to production and investment tax credits under the Inflation Reduction Act are also areas where parties have liberally utilized change in law provisions to account for this risk.
Material Adverse Change/Material Adverse Effect
Material adverse change (MAC) clauses are intended to protect parties from substantial unanticipated events that adversely affect the financial or operational conditions of a business. Usually used in Mergers and Acquisitions agreements, MAC clauses allow the buyer to avoid closing where a significant decline in the target’s value occurs or is reasonably anticipated. MAC clauses are often heavily negotiated, with sellers seeking narrow exceptions and buyers seeking wide protection. Like other contractual relief mechanisms discussed herein, whether a MAC clause is enforceable and will provide relief is dependent on the specific contractual language to which the parties have agreed. It is therefore critical to carefully identify and allocate potential risks and to address those risks directly in the contract wording. MAC clauses have infrequently been held to apply. However, there is precedent within the past 10 years of courts enforcing such provisions. See, e.g., Akorn, Inc. v. Fresenius Kabi AG, C.A. No. 2018-0300-JTL, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018).
Purchase Price Adjustment
A purchase price adjustment clause is a tool intended to alter the contract price in response to one or more triggering events. Triggering events often involve factors that are beyond the parties’ control. They can be anything that the parties deem likely to have a substantial or material impact on the value of the asset being purchased or the services being rendered. These clauses are often triggered post-closing. They allow parties to account for changing circumstances over the term of the agreement.
Purchase price adjustments are used frequently in the acquisition of power generation assets. Changes to subsidies, feed-in-tariffs, increased import duties, revision to amounts available for tax credit financing, plant capacity, and other events that alter the value of the project or project company are often the subject of price adjustment clauses.
There may also be individual commodity or equipment price adjustments for items that are critical to a project. Those are more likely to be seen in a construction or EPC contract. Adjustments based on currency fluctuations are also sometimes utilized.
Other Theories of Contractual Relief
Parties may look to other theories for contractual relief. The concepts of frustration of purpose, commercial impracticability and impossibility of performance are three examples of such theories. Frustration of purpose may lie where an unforeseen event alters a party’s main purpose for entering a contract, making the performance of the contract dramatically different from the performance originally anticipated. Importantly, both parties must have known of the principal purpose at the time the contract was made. Impracticability excuses a party from a specific duty outlined in a contract when that duty has become unreasonably difficult or too expensive to perform. Impossibility refers to a case where a specific contractual obligation becomes reasonably impossible to fulfill.
Frustration of purpose, impracticability, and impossibility are not easy theories to prove. The set of circumstances to which these concepts may apply are unusual and increased expense is typically not enough to sustain such a claim in most instances.
Conclusion
The changing US policy landscape, particularly with respect to imports and domestic energy regulations, could cause the cost to perform the contract and the expected benefits of the contract to be different than originally contemplated. For future contracts, parties should carefully consider whether to include contractual relief clauses aimed at excusing performance or altering the price of the bargain. For existing contracts, parties should review their rights carefully and determine whether they have additional contractual rights because of changes to laws and policies.
Due to the changing US policy landscape and the effects these changes may have on the costs and benefits of existing and future contracts, parties should be aware of potential contractual relief clauses in those agreements.
Foley Automotive Update and the Latest Tariff Developments
Trump Administration and Tariff Policies
The U.S. Commerce Department initiated a Section 232 investigation into imports of medium- and heavy-duty trucks and parts, in a development that could serve as a basis for future tariffs. Public comments must be received by May 16, 2025.
Bloomberg Law provided an explanation of the legal arguments in certain lawsuits that have been filed to challenge the Trump administration’s authority to impose tariffs. Most recently, a dozen states filed a lawsuit on April 23 over tariffs that were allegedly imposed without congressional authority. This follows suits over the legality of the tariffs filed by the New Civil Liberties Alliance, as well as California Governor Gavin Newsom and Attorney General Rob Bonta.
U.S. House Representative Mike Lawler (R-NY) on April 25 stated Congress “will likely exert more authority” if the White House does not make “significant progress” in ongoing tariff negotiations in the coming weeks.
President Trump warned he would veto a bipartisan Senate resolution led by Senator Ron Wyden (D-OR) and Senator Rand Paul (R-KY) that seeks to terminate the emergency declaration used as a basis for the president’s tariffs. A vote on the resolution could occur in the coming days.
A proposal by the U.S. Trade Representative’s office could impose fees on ships built, owned or operated by Chinese entities that dock at U.S. ports. If the proposal is implemented, the fees would begin in six months based on the volume of goods carried, on a per-voyage basis. The proposal intends to restore the U.S. maritime industry and it follows an investigation ordered under the Biden administration into whether Chinese shipbuilding threatens national security.
Automotive Key Developments
In an April 21 letter to the Trump administration, trade groups including MEMA, the Alliance for Automotive Innovation and the National Automobile Dealers Association outlined their concerns over the impact of import tariffs on automotive parts.
The Wall Street Journal and Bloomberg reported the Trump administration could ease the impact of certain automotive tariffs in ways that include temporary partial reimbursements and preventing certain auto levies from stacking on other duties.
Automotive News provided an overview of the opportunities and barriers involved in major production shifts to underutilized U.S. auto plants.
Many auto suppliers are encountering challenges regarding the complexities of calculating U.S. import tariffs on steel and aluminum, according to a report in Automotive News.
U.S. new light vehicles are projected to reach a SAAR of 17.9 million units in April 2025, representing a 10.5% year-over-year increase, according to a joint forecast from J.D. Power and GlobalData. The anticipated volume increase was attributed to consumers that have been accelerating purchase decisions due to expectation tariffs will lead to higher prices.
The National Highway Traffic Safety Administration’s (NHTSA) new Automated Vehicle (AV) Framework will expand the Automated Vehicle Exemption Program (AVEP) to include domestically produced vehicles, and streamline rules in regard to the reporting of safety incidents. The framework also intends to facilitate efforts to modernize the Federal Motor Vehicle Safety Standards.
The U.S. House could vote in the coming days on a measure to revoke a Biden-era Environmental Protection Agency waiver that allowed California to require increasing thresholds of zero-emissions vehicle sales between 2026 and 2035 in the state. U.S. House lawmakers previously introduced several Congressional Review Act resolutions that intend to repeal certain clean-vehicle waivers issued for California under the Biden administration. Senate Republicans are pursuing similar measures.
OEMs/Suppliers
Following a two-week shutdown to assess the impact of U.S. automotive import tariffs, Stellantis resumed production at its Windsor Assembly plant in Ontario, Sterling Stamping in Michigan and two transmission plants in Kokomo, Indiana. The automaker’s Jeep plant in Toluca, Mexico, is expected to remain idle through the end of April.
Volvo Group is preparing to lay off up to 1,000 workers at its North American truck operations in the coming months, amid uncertainty over how President Trump’s tariff policies will affect demand.
Ford halted exports to China of models that include the F-150 Raptor pickups and Bronco SUVs in response to the nation’s retaliatory import tariffs, according to a report in The Detroit News.
Volkwagen and Nissan expect to avoid tariff-related increases on U.S. vehicle prices through the end of May, and Ford indicated its vehicles will have higher prices by July or sooner as a result of the levies.
Hyundai intends to shift an unspecified volume of production of Tucson crossovers from Mexico to the U.S., and the automaker established a tariff task force to mitigate the effects of import duties on its finances.
GM plans to remove certain equipment for EV drive system production at its Toledo Propulsion Systems plant to increase capacity for gas-powered truck transmissions.
Toyota is reported to be considering a buyout of its parts supplier Toyota Industries, at an estimated valuation of $42 billion.
Nissan expects to incur a net loss of up to $5.3 billion for the fiscal year ended March, due to impairments and restructuring expenses, as well as declining sales.
Volkswagen’s Audi brand is reported to be close to a decision on whether to establish its first U.S. production site.
GM’s executive vice president of global manufacturing resigned after just over a year in the role.
Market Trends and Regulatory
The Federal Communications Commission on April 21 dismissed “as unnecessary the remaining cellular vehicle to everything (C-V2X) early transition waivers and confirm[ed] that each of the applicants may now seek a C-V2X authorization under the new rules.”
The U.S. Department of Transportation (USDOT) and Federal Highway Administration (FHWA) repealed a Biden-era rule that would have required state transportation departments to measure and establish declining targets for carbon dioxide emissions on federally supported highways.
The California New Car Dealers Association filed a lawsuit against Volkswagen Group and its affiliate Scout Motors over the brand’s plans to sell directly to consumers in violation of the state’s franchise laws.
Autonomous Technologies and Vehicle Software
Alphabet reported its autonomous vehicle unit Waymo is booking over 250,000 paid robotaxi rides weekly in San Francisco, Los Angeles, Phoenix, and Austin.
California’s Department of Motor Vehicles announced proposed regulations for the testing and deployment of self-driving heavy-duty vehicles on the state’s public roads.
Volkswagen will partner with Uber Technologies to launch autonomous rides with the electric ID. Buzz van beginning in Los Angeles next year.
Huawei Technologies Co. is a leading provider of intelligent driving software in China’s EV market, according to a report in Automotive News.
Electric Vehicles and Low-Emissions Technology
Automotive News assessed the ramifications of the Trump administration’s tariffs and trade policies on the U.S. EV industry.
BYD reported its first quarter 2025 revenue rose 36% YOY, supported by strong growth within China and overseas.
China’s Contemporary Amperex Technology Co. (CATL) debuted a next-generation battery that can reach up to 520 kilometers (323 miles) of range from five minutes of charging time. Competitor BYD recently developed batteries for certain models in China that would enable up to 400 kilometers (249 miles) of range with five minutes of charge time.
First quarter 2025 registrations of new battery-electric vehicles (BEVs) in the European Union increased 24% YOY for a 15% share of the total EU market. New EU registrations of hybrid-electric vehicles rose 21% YOY for a 35% share of the EU market. New car registrations across all powertrains declined 1.9% YOY in the region.