Category: Tax

Cross-Border Catch-Up: EORs and Their Impact on Global Workforce Management [Podcast]

In this episode of our Cross-Border Catch-Up podcast series, Diana Nehro (New York/Boston), chair of the firm’s Cross-Border Practice Group, and Patty Shapiro (shareholder, San Diego) discuss the evolving legal landscape surrounding global Employer of Record (EOR) arrangements. Patty and Diana explore the concept of EORs and their implications for global employment, tax, and immigration policies. They highlight trends for employers to consider, such as the increasing assertion of jurisdiction by home countries over foreign companies hiring local talent through EORs, as well as the challenge that EORs face in sponsoring work visas. They also provide insights on recent and anticipated policy changes in Kenya, Canada, and Singapore.

Navigating the New Tariff Terrain: How Trump’s Latest Policies Impact Global Trade and Shipping

President Donald Trump issued an Executive Order (“EO”) on April 2, 2025, titled Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits. This EO introduces significant changes to the tariff landscape, imposing unprecedented tariff increases on most U.S. trading partners, which will have far-reaching implications for global trade and shipping. Below, we break down the key elements of the new tariff policies and their potential impacts. 
Key Elements of the Executive Order
Global Tariff Implementation. The EO imposes a 10 percent global tariff on all imports into the United States, which became effective on April 5, 2025. For 57 countries identified in Annex I of the EO, an additional increase in tariffs for these countries was initially scheduled to take effect April 9, 2025, and has since been put on pause as negotiations take place, but that pause will not apply to sector tariffs. For additional information on the impact of the new tariffs announced in the April 2, 2025, EO, check out Blank Rome’s Recent Alert: Liberation Day: President Trump Unveils Global, Reciprocal Tariffs – What You Need to Know.
Product Exemptions. Annex II of the EO outlines various tariff exemptions, including certain mineral commodities, petroleum products, and pharmaceuticals. Among others, it also exempts items subject to Section 232 tariffs of the Trade Expansion Act of 1962, including automobiles and automobile parts, and steel and aluminum goods, from both the global tariff and increased reciprocal tariffs. Goods from Canada and Mexico that meet the United States-Mexico-Canada Agreement (“USMCA”) requirements are also excluded from these tariffs. However, imports that fail to qualify for duty-free treatment under USMCA remain subject to the 25 percent tariffs introduced in March 2025 (10 percent for energy and potash) under the International Emergency Economic Powers Act (“IEEPA”).
End of De Minimis Exemption and Chinese Tariffs Generally. The EO ends the de minimis exemption for goods valued at less than $800 from China and Hong Kong, effective May 2, 2025. Following administration’s latest announcement on April 9, 2025, tariffs imposed on Chinese goods surged to 145 percent. (Click here for President Trump’s April 2 amendment to the de minimis EO on China.)
Impact on Freight Rates and Shipping Strategies
Reduced Import Volume and Surge Pricing on Alternative Routes. The imposition of tariffs increases the cost of importing goods, which may lead importers to reduce or cancel shipments to avoid tariff-related costs. This reduction in demand could lead to overcapacity on specific shipping lanes, driving freight rates down. 
Meanwhile, shippers may redirect cargo to tariff-free countries, increasing competition on less affected routes, which could lead to a spike in rates for these new trade lanes as carriers adjust to shifts in global trade flows. The net effect will be a rerouting of the world’s trade lanes to some currently unknown extent. 
Also, as new tariffs take effect, some importers may be unwilling or unable to pay the new duties, leading to delays in cargo pickup or increased cargo abandonment, especially in container terminals. In the short run, these issues could give rise to additional congestion and delays in container ports, before volumes begin to decline. 
Sector-Specific Pricing. Freight rates for diverse types of vessels, e.g., bulk carriers, container ships, and RoRo vessels, likely will experience varying impacts depending on the industries targeted by tariffs. For example, tariffs on high-value manufactured goods can reduce containerized cargo demand, affecting major shipping routes including the trans-Pacific, trans-Atlantic, and Asia-Europe corridors.
Real-World Strategies for Ship Owners
Diversification and Fleet Management. Shifting operations to tariff-free trade routes can help offset losses from lower rates on affected routes. For instance, previous U.S. tariffs on Chinese goods led businesses to relocate manufacturing to other Southeast Asian countries, including Vietnam, Thailand, and Malaysia, and more such shifts are expected. Maintaining ongoing discussions with key shippers and charterers, adjusting fleet deployments, and conducting fleet repositioning and sailing frequency assessments to align with high-demand routes can optimize utilization and profitability.
Outlook
It is unclear whether the tariffs represent a “new normal” for U.S. trade or whether bilateral agreements will be reached to provide significant tariff relief for impacted countries. The uncertainty makes it difficult for carriers, ports, and shippers to make investment decisions regarding redeployment of vessels and equipment and making capital investments in terminals and logistics infrastructure. 
In the United States Congress, bipartisan legislation has been proposed in the Senate regarding the president’s ability to impose tariffs, an authority specifically vested in Congress by the Constitution. However, congressional leaders have indicated that the legislation is unlikely to progress at this time. 
In addition, private litigants, including the New Civil Liberties Alliance, have brought lawsuits challenging the president’s unprecedented use of emergency declarations under IEEPA to impose tariffs and reshape foreign trade. In its nearly 50-year history, no other president has ever sought to use IEEPA, the statute that underpins most U.S. trade sanctions programs, as an authorization to impose tariffs on an emergency basis. 
Conclusion
A state of flux bests describes today’s global marketplace. Should these tariffs remain in place, trade lanes will evolve and manufacturing likely will shift to lower net production cost locations. The trade landscape demands vigilance, communication, cooperation, and adaptability from shippers and ship owners. Monitoring trade policy shifts, investing in emerging markets, and optimizing fleet deployment strategies are crucial steps to navigate the challenges posed by new tariff policies. By staying informed and proactive, stakeholders can position themselves to seize opportunities and mitigate risks in this dynamic global environment.

Trump Administration Announces 90-Day Pause on Country-Specific Tariffs for All Countries Except China

On April 9, 2025, President Trump walked back his April 2, 2025 announcement of increased global tariffs (see our client alert here). Under the April 9 Executive Order, the country-specific tariffs — except those on the People’s Republic of China (PRC) — are suspended until 12:01am EDT on July 9, 2025. The new order does not modify the 10% minimum tariff on all imported goods that came into effect on April 5. 
Canada and Mexico remain exempt from both the country-specific and the minimum 10% tariff, but are subject to 25% tariffs if goods do not qualify as “originating” in Canada and Mexico under the USMCA; energy, energy resources, and potash from Canada remain subject to a lower product specific 10% tariff.
For all countries but China, the elimination of the de minimis exception for shipments valued at less than $800 remains in place and comes into effect on May 2, 2025. 
In the same order, President Trump increased tariffs on all goods from the PRC, including Hong Kong and Macau, to 125%, in response to retaliation by the PRC to the first round of tariffs. Because the tariffs on China are additive, the U.S. tariff rate on Chinese imports is now effectively 145%. For goods that qualify as de minimis coming from China, the duties have increased to 120%, or if sent via the international postal service, $100 per item until June 1, when they will increase to $200.
The administration has announced that it is entering into country-by-country bilateral negotiations to potentially reduce tariffs before the pause ends. Changes to the tariff rates are expected, but timing is unclear. The impact may vary depending on the product, the country of origin, and the terms of the governing contract. If you are affected by the ongoing tariff uncertainty, we encourage you to contact our Tariff Strategy team to discuss your specific circumstances.
Our Tariff Strategy team suggests that all companies, whether currently impacted or not, should take advantage of the 90-day pause to review their standard contracts and terms and conditions to ensure that they have language specifically addressing tariffs and duties (in addition to any clauses regarding taxes) and have strong force majeure clauses. Companies should also review what INCOTERMS govern their imports.

The Recently-Announced U.S. Tariffs Followed By a 90-Day Pause: Frequently Asked Questions

These “frequently asked questions” explain tariffs at a basic level, the Administration’s recently-announced new tariffs, its announced a 90-day “pause” on certain of the new tariffs, and how the new tariffs will impact U.S. companies.    
We start with the basics below, then address what we currently believe is happening and what the near-term future is likely to hold. 
Tariff Basics
What are Tariffs? 
Tariffs are taxes on goods imported into a country from another country, the way that cars on a highway might pay a toll.  Countries can vary these taxes depending on what country they come from, and what kinds of products they are. 
Who Pays the Tariffs? 
Tariffs are not paid by the “target” country, i.e., the country from which the products derive, nor by the manufacturer in that country.  Rather, they are typically paid by the distributor that transports the goods from the original country into the country that set and imposed the tariff, in this case the U.S.  The distributor, of course, normally can be expected to pass the additional cost onto the purchaser.   
What Is the Primary Impact of Tariffs? 
Tariffs can generate revenue for the country imposing the tariff, but they can also result in decreased demand for imported products due to the increased prices, and corresponding increased demand for products produced domestically, or produced by a third country that is subject to lower tariffs. 
Increases in tariff rates can also result in reciprocal countries raising their own tariffs in response, making goods produced in the U.S. more expensive, and less desirable, in the “target” country.   
Why Do Governments Impose Tariffs? 
Tariffs can play a role in protecting a local industry if businesses in other countries are able to operate at a lower cost, such as if wages are much lower in the other country.  They can also play a role in enforcing national policy.  For example, the Administration has stated that its current tariff changes with respect to certain countries are designed to encourage those countries to make a greater effort to prevent the importation of illegal drugs. 
Has the U.S. Had Tariffs In the Past ?
Yes, Tariffs have been around for a very long time.  The United States has had tariffs in place, despite a general policy of free trade since World War II. The tariffs are a hodge-podge of government policy, legislative mandates, and trade agreements with other countries. 
Countries around the world have had disputes over relative tariffs, including claims that a country may be violating whatever treaty or other rule governs the trade relationship between the countries.  Since 1995, these disputes have been adjudicated by the World Trade Organization, or WTO. 
The New U.S. Tariffs
What Tariffs Has the Administration Recently Announced ?
On April 2, 2025, the Administration announced an across-the-board “base” 10% tariff on imported goods from most countries, with even materially higher tariffs imposed many of them, although as noted below the Administration has since announced a 90-day suspension of the “higher” tariffs, i.e., those beyond the 10% base rate.  The countries subject to the higher tariffs are listed in Annex I to the Administrations announcement available at the following link.
There are exceptions under the new tariffs for certain products, including energy products like oil, copper, pharmaceuticals, semiconductors, and lumber, all of which may become subject to separate tariffs.  The Administration is already making public statements about ending the exemption for pharmaceuticals. 
Canada and Mexico were not included in the April 2 announcement because corresponding tariffs have subject to negotiations on separate tracks.  China was included in the April 2 announcement, but also appears to be on a separate track, and the Administration very recently substantially further increased tariffs on Chinese goods in what appears to be, at least for the time being, a trade war with that country.  On April 9th, the Administration announced a 90-day suspension of additional tariffs beyond the “base” 10% tariff applicable to all countries identified in the announcement on April 2, with the exception of China, with respect to which it actually further increased tariffs. 
What did the 90-day Suspension Include ?
According to the Administration, they have decided on a 90-day suspension of additional tariffs beyond the “base” 10% tariff applicable to the numerous countries identified in Annex II to the announcement on April 2nd.   As noted above, the announcement on April 2 imposed a “base” tariff of 10% on all affected countries, but most countries were slated to be subject to even higher tariff rates. 
Are The Tariff Rates Expected to Change Over the 90-day Period? 
The White House expressly worded its most recent announcement as the opening bid in a negotiation, and it recently announced a limited 90-day pause citing how many countries are negotiating without imposing retaliatory tariffs of their own. Accordingly, the tariffs are expected to change for many countries on a case-by-case basis, but the timeframe for such changes is unclear, and the results of negotiations will likely be publicly-announced in a staggered fashion.    
How The New U.S. Tariffs Impact Companies  
What will be the impact on companies that do business in the U.S.? 
Some companies will not be materially impacted because they do not use a material number of imported goods, do not sell goods abroad as a material part of their business, or have practical alternative sources for goods or markets in which to sell their products. 
Many companies, however, will be materially impacted, given the broad scope of countries impacted by the new tariffs, and the likelihood that other countries will in due course adopt retaliatory tariff increases.  In the medium and long term, the impact will depend on the results of the negotiations that are ongoing.  In the short term, the greatest impact may result from uncertainty about what will happen in the future. 
What about publicly-reporting companies?
Companies that are publicly-reporting in the U.S. will be under some pressure to provide information at their quarterly earnings conferences about the impact of the tariffs on their business.  If companies have earnings guidance for their 2025 fiscal years, they will have to address whether and how the tariffs impact the guidance. 
In addition, the MD&A section of a quarterly report on Form 10-Q must address known uncertainties that are reasonably likely to have a material impact on results of operations. The current uncertainty about ultimate tariff rates set by the U.S., and about potential retaliatory tariffs imposed by other countries, will make this a complex exercise for many public companies.  One option is to address multiple scenarios based on varying assumptions. 

New Tariffs, Old Issues: Post-Liberation Day Advisers Act Considerations for Private Fund Managers

Markets remain exceptionally volatile following the announcement of the U.S. “Liberation Day” tariffs and retaliatory measures from other countries. While the ultimate path of policy remains uncertain, recent developments are likely to exert continued pressure on valuations and liquidity across private fund portfolios (even if certain policies are paused or rolled back). Historically, in the wake of major market events, the U.S. Securities and Exchange Commission (SEC) has closely examined fund sponsors’ compliance with applicable laws and regulations and adherence to guidance in core SEC focus areas, including valuations, investor disclosures, investor liquidity and borrowing activities, as sponsors navigate unusual circumstances. These are long-standing areas of regulatory concern, and the SEC has repeatedly emphasized (including during the first Trump administration)[1] the importance of maintaining robust compliance controls during periods of market stress. Given the heightened likelihood of SEC focus, sponsors should remain vigilant, ensuring that decision-making processes are well-documented and demonstrably aligned with the best interests of investors, with special attention paid to these perennial areas of focus. In particularly sensitive cases, it may be helpful to confer with legal counsel in deciding the best path forward.
Valuation Practices
The tariff announcements and recent market volatility complicate the valuation of portfolio assets, particularly in proximity to the quarter-end valuation date for Q1 2025. Sponsors, especially those with illiquid or difficult-to-value assets, should ensure that their valuation methodologies are consistently applied, appropriately calibrated to current conditions and clearly documented. Deviations from prior valuation practices may be justifiable, but should be carefully assessed for consistency with fund documentation and potential conflicts of interest. Where changes are made, sponsors should clearly document the changes, explain how they serve the interests of investors and confirm that the changes are not inconsistent with the fund’s governing documents. Sponsors should also expect scrutiny of any such changes in their next SEC exam.[2] Private fund valuation practices have also drawn commentary from other global financial regulators in recent years, such as the U.K. Financial Conduct Authority.[3] Sponsors regulated by those regulators should take those concerns into account as well.
Portfolio Impacts and Alignment with Investor Disclosures and Governing Documents
The recently imposed 10% universal tariff on imports, coupled with higher tariffs affecting numerous countries, has caused many sponsors to reassess risk exposure and adjust portfolio strategy, particularly for funds, portfolio companies or other portfolio investments that are sensitive to cross-border trade flows. Sponsors should consider whether any pivots in a fund’s investment focus, portfolio composition or investment structures are consistent with prior investor disclosures, including offering documents, marketing materials and investor communications. The fund’s governing documents (e.g., the partnership agreement) should also be reviewed to ensure that any material changes are consistent with any applicable contractual limitations. If any gaps are identified, sponsors should consider whether to take any additional actions (such as providing an update to existing investors, updating marketing materials for prospective investors and/or seeking any necessary amendments to the fund’s partnership agreement) as well as the timing for any such actions.
Liquidity Management
For hedge funds and other funds that provide investors with periodic redemption rights, increased market volatility may create liquidity constraints. Determining the appropriate response greatly depends on the facts of the particular situation, but the response should take into account the SEC’s longstanding focus on liquidity issues, particularly its focus on preferential liquidity terms that create conflicts of interest. The now-voided private fund adviser rules contained an express prohibition on providing preferential liquidity terms in ways that could harm other investors. Though the rules were struck down last year, they were based on fiduciary principles long applied by the SEC staff in this context (including during the first Trump administration),[4] and since the rules were vacated the SEC has continued to pursue these cases using its general antifraud authority. Sponsors of funds that permit redemptions should bear these fiduciary principles in mind when managing redemption requests.
Borrowing Considerations
Current market conditions may present cash-flow challenges to a sponsor’s private funds, or to the sponsor-controlled portfolio companies or vehicles in which those funds invest, as fund sponsors seek to manage liquidity and operational challenges. This in turn may drive a need for increased borrowing by these funds, portfolio companies or other vehicles. These extensions of credit can provided a much-needed lifeline, although sponsors should ensure that any such borrowing does not contradict the fund’s governing documents or disclosures to investors.[5] Given potential regulatory scrutiny (as well as potential investor scrutiny), sponsors should maintain records demonstrating adherence to established borrowing limits, purposes and approval processes outlined in governing documents, and should ensure consistency with investor disclosures.
Choosing the Best Path Forward
Sponsors navigating this evolving landscape must weigh their options carefully; particularly in sensitive cases, appropriately calibrating the legal risk can be a challenging task. While decision-making within sponsor firms often involves complex trade-offs between competing legal and commercial needs, the SEC has historically taken the position that fiduciary and disclosure obligations are heightened — not diminished — during periods of market stress.

[1] See, e.g., SEC Office of Compliance Inspections and Examinations, “Risk Alert: Select COVID-19 Compliance Risks and Considerations for Broker-Dealers and Investment Advisers” (Aug. 12, 2020), and “Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds” (June 23, 2020).
[2] Valuations are a key component of nearly every SEC exam. Because overvaluing an asset may increase the management fee due to a fund sponsor (in the case of hedge funds and other liquid strategies with NAV-based fee structures) and/or may boost the investment performance used in investor marketing (in the case of most strategies whether liquid or illiquid), overvaluations frequently result in enforcement action as well because the SEC is able to point to direct investor harm or clear likelihood of investors being misled. But overconservative valuations are not a panacea, and even undervaluinga fund’s assets has resulted in enforcement action. Valuation has remained an important topic for the SEC regardless of which political party is in power.
[3] The UK FCA recently published the findings of a multi-firm review of valuation processes for private market assets and recommendations for creation of a robust valuation framework. UK Sponsors should review the findings closely as they may represent the FCA’s expectations going forward. Non-UK sponsors may also wish to take the findings into account as peer regulators at the SEC and on the European continent may be influenced by the FCA’s findings.
[4] See “Risk Alert: Observations from Examinations of Investment Advisers Managing Private Funds” (June 23, 2020) (highlighting, among other things, preferential liquidity rights as a risk area).
[5] Fund sponsors relying on the “venture capital fund” adviser exemption from SEC registration (under Investment Advisers Act Sec. 203(l) and Rule 203(l)-1) should also bear in mind that the exemption contains a leverage limitation that caps each fund’s total permitted leverage at no more than 15% of the fund’s aggregate capital contributions and uncalled committed capital. Fund sponsors seeking to retain this exemption should therefore avoid causing any fund to exceed this threshold.

Increase of Certain Reciprocal Tariffs Paused, While China Duties Ratchet Higher

On April 9, President Trump issued an executive order pausing certain new reciprocal tariffs announced last week while simultaneously substantially increasing tariffs on Chinese imports subject to those reciprocal tariffs. This was prompted by outreach from countries to negotiate the planned tariff increases and follows on changes announced April 8, increasing duties owed on Chinese origin imports and altering payments for de minimis shipments of Chinese origin goods.
Last week, on April 2, President Trump announced 10% reciprocal tariffs on the vast majority of imports from the vast majority of countries effective April 5. For certain countries, those 10% tariffs increased to higher country-specific rates at 12:01 am ET on April 9, 2025.
President Trump’s April 9 action notes that since his April 2 executive order, “more than 75 other foreign trading partners … have approached the United States to address the lack of trade reciprocity in our economic relationships and our resulting national and economic security concerns,” and therefore pauses the increase of reciprocal duties above 10% for all countries other than China through July 9, 2025. Shipments with an April 9 entry date may still be subject to the higher country-specific reciprocal tariffs unless qualifying for the “in transit” provision of the April 2 executive order. The higher country-specific reciprocal tariff rates will snap back into effect at 12:01 a.m. ET on July 9, 2025, absent additional executive action.
With regard to shipments from China, President Trump announced on April 8 an increase from the original 34% reciprocal tariff to 84%, effective April 9. The action yesterday, April 9, further increases the 84% reciprocal tariff rate to 125%, effective 12:01 am ET on April 10, 2025. In addition, the April 9 action, further increases the costs for de minimis shipments of Chinese origin products.
The scope and application of the reciprocal tariffs otherwise is unchanged. The following are excluded from any of the above tariffs regardless of country of origin:

Donations intended to relieve human suffering, informational materials, importations ordinarily incident to travel to or from any country (such as personal luggage) and any other articles subject to 50 USC 1702(b);
steel and aluminum articles and autos and auto parts already subject to Section 232 tariffs;
all articles that may become subject to future Section 232 tariffs; and
copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals and energy and energy products, as set out in Annex II.

For goods of Canada and Mexico, the existing February/March International Emergency Economic Powers Act (IEEPA) orders and exclusions are unaffected by these announcements. United States-Mexico-Canada Agreement (USMCA) eligible goods will continue to enter free of the newly announced reciprocal tariffs, and non-USMCA eligible goods will be subject to the same 25% IEEPA tariff as has been in place since March 4, 2025 (other than Canadian energy and potash, which will continue to be subject to a 10% IEEPA tariff that has been in place since March 4, 2025).
Customs guidance implementing the above was issued late April 9, 2025.

Tariff-Driven Cost Increases: Can Federal Contractors Recover Through REAs?

Introduction
Federal government contractors operating in today’s volatile global trade environment are no strangers to sudden and sometimes dramatic shifts in material costs. With tariffs periodically imposed or adjusted by executive action, contractors frequently find themselves grappling with unexpected increases in the cost of steel, aluminum, electronics, and other imported goods. A natural question arises: Can contractors recover these increased costs under a Request for Equitable Adjustment (REA)?
This post explores the legal framework for seeking recovery of tariff-related cost increases through REAs.

Understanding the REA Mechanism
An REA is a request by a contractor to increase the contract price, extend the performance period, or both, due to a change in the contract’s terms or circumstances that increases the cost or time of performance. REAs are generally based on:

Government-directed changes (express or constructive),
Differing site conditions,
Suspension of work, and/or
Delays not caused by the contractor.

While REAs are typically associated with physical or logistical changes, economic shifts like tariff increases may also justify an adjustment — if the underlying contract and circumstances support it.

The Tariff Challenge: Is It a “Change”?
Tariff increases pose a unique challenge. They are typically imposed by the U.S. government —often after a contract has been awarded — and they raise the cost of imported materials. But unless a contractor can tie these cost increases to a government-directed change or a clause in the contract that allocates risk, recovery may be difficult.
This is where FAR 52.229-3 and FAR 52.229-6 enter the conversation.

FAR 52.229-3: Federal, State and Local Taxes
FAR 52.229-3 addresses how taxes imposed after contract award are treated. The key language provides that: “The contract price includes all applicable Federal, State, and local taxes and duties.”
However, if after the contract is awarded, the contractor becomes liable for an increase (or receives a reduction) in a federal excise tax or duty “which was not otherwise anticipated,” the contract price may be adjusted accordingly.
This clause potentially provides a path for recovery when tariffs (which are essentially federal duties) are imposed or increased after the contract award date.
To recover under FAR 52.229-3, the contractor generally must show that:

The tariff was not in effect or anticipated at the time of award;
The tariff is a federal duty or tax covered by the clause;
The tariff directly increased the contractor’s cost of performance;
The contractor timely notifies the contracting officer of the change; and
The contractor can substantiate the increased costs attributable to the tariff.

FAR 52.229-6: Taxes – Foreign Fixed-Price Contracts
Another relevant clause in this context is FAR 52.229-6, which addresses foreign taxes and duties. This clause can potentially offer a path to recovery for tariffs imposed by a foreign government, in certain international contract settings, or where foreign supply chains are impacted.
Under FAR 52.229-6(c), if the contractor is required to pay or bear the burden of any “new or increased taxes or duties,” and those costs are due to changes in applicable laws or regulations of a foreign jurisdiction after the contract date, the contractor may be entitled to an equitable adjustment in the contract price.
Here’s what contractors need to show to trigger relief under FAR 52.229-6:

The tariff qualifies as a “duty” or similar charge imposed by a foreign government (or potentially, in some interpretations, by the U.S. when operating abroad).
The tariff was imposed or increased after the contract was awarded.
The contractor notified the contracting officer promptly, as required under the clause.
The additional costs are allocable and reasonable, and directly traceable to the tariff.

While FAR 52.229-6 may have limited application to purely domestic contracts, it remains highly relevant for contracts involving foreign performance or procurement, and those with heavy foreign supply chains, particularly those impacted by shifting international trade policy.
Timing and Notice Are Critical
FAR 52.229-3 includes a notice requirement. The contractor must notify the contracting officer promptly after becoming aware of the change in duty or tax. Failing to do so could waive the right to an adjustment. Ideally, notice should be provided within 30 days.

Proving the Cost Impact
To prevail on an REA based on the FAR or a constructive change theory, contractors should:

Maintain detailed cost records;
Segregate tariff-related cost increases from other pricing components;
Show that the tariff was not foreseeable at the time of the contract award; and
Demonstrate that the contractor took reasonable steps to mitigate the impact.

Other Potential Theories of Recovery
Besides FAR 52.229-3 and FAR 52.229-6, contractors may explore:

Constructive change – If the government required compliance with a specification or sourcing decision that made tariffs unavoidable.
Economic price adjustment clause (FAR 52.216-4) – Under this clause, a contractor may use an REA to recover increased costs if those costs are tied directly to the escalation of prices outlined in the clauseand meet the procedural requirements.
Changes clause (FAR 52.243-1/-4/-5) – If the contract’s scope or specifications changed, resulting in exposure to tariffs.
Commercial impracticability or force majeure – These are less commonly successful but may be considered in extreme cases.

Key Takeaways

Tariff-related cost increases may be recoverable under an REA, but success depends heavily on contract terms and timing.
FAR 52.229-3 and FAR 52.229-6 offer a path for recovery where post-award tariffs increase the cost of imported goods.
Prompt notice and clear documentation are essential.
Contractors should evaluate their supply chains during bidding and consider including tariff-related risk in pricing or negotiating tailored clauses.

Conclusion
While not all tariff-driven cost increases are compensable, federal contractors should not assume they must absorb these costs without recourse. Understanding the interplay between REAs, the FAR, and changes in federal and international duties is essential to preserving rights and maintaining profitability in uncertain times.
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Arbeitsrechtliche Elemente im Koalitionsvertrag

Gestern haben sich die Spitzen von CDU/CSU und SPD auf den Abschluss eines Koalitionsvertrages geeinigt. Dieser muss nun noch von den jeweiligen Parteigremien abgesegnet werden, bevor er unterzeichnet werden kann. Wir haben die wichtigsten arbeitsrechtlichen Themen herausgefiltert und kommentiert.
1. Mindestlohn von 15 EUR
Im Jahr 2026 soll „ein Mindestlohn von 15 Euro […] erreichbar“ sein. Hierbei handelt es sich nur um einen Wunsch, denn gleichzeitig betonen die zukünftigen Koalitionäre, dass sie an „einer starken und unabhängigen Mindestlohnkommission“ festhalten wollen. Über die Anpassung des allgemeinen gesetzlichen Mindestlohns entscheidet nach der Konzeption des MiLoG alle zwei Jahre eine unabhängige Kommission der Tarifpartner, die sich aus Vertretern der Arbeitgeberverbände sowie den Gewerkschaften zusammensetzt und außerdem von Wissenschaftlern beraten wird. Dies ist damit eine Absage an rein gesetzliche Erhöhungen des Mindestlohns, die die Ampel in 2022 (auf 12 EUR) letztlich entgegen der gesetzlichen Systematik auf den Weg gebracht hat.
2. Höherer Grad der Tarifbindung
Weiteres Ziel soll eine „höhere Tarifbindung“ sein, so dass „Tariflöhne […] wieder die Regel werden und […] nicht die Ausnahme bleiben“. Hierbei soll ein Bundestariftreuegesetz helfen, das für Auftragsvergaben auf Bundesebene ab EUR 50.000 Euro (und für Startups mit innovativen Leistungen in den ersten vier Jahren nach ihrer Gründung ab 100.000 Euro) eine Tarifbindung voraussetzt.
3. Flexibilität bei der ARbeitszeit
Zur Erhöhung der Flexibilität der Arbeitswelt („auch und gerade im Sinne einer besseren Vereinbarkeit von Familie und Beruf“) soll im Einklang mit der europäischen Arbeitszeitrichtlinie die Möglichkeit einer wöchentlichen anstelle einer täglichen Höchstarbeitszeit geschaffen werden. Dieser Punkt ist sehr interessant und könnte in der Tat ein großes Maß an Flexibilität schaffen. „Zur konkreten Ausgestaltung“ soll es allerdings zunächst einen „Dialog mit den Sozialpartnern“ geben. Ob dies dann bedeutet, dass die Flexibilisierungen nur für tarifgebundene Unternehmen gelten (ganz im Einklang mit dem Ziel unter Ziffer 2) und damit an den stark kritisierten Entwurf für die Anpassung des Arbeitszeitgesetzes aus dem BMAS aus 2023 angeknüpft wird, bleibt abzuwarten.
Darüber hinaus soll „die Pflicht zur elektronischen Erfassung von Arbeitszeiten unbürokratisch“ geregelt werden und „dabei für kleine und mittlere Unternehmen angemessene Übergangsregeln“ vorgesehen werden. Diese Formulierung spricht vor allem nicht dafür, dass kleine und mittlere Unternehmen beim Thema Arbeitszeiterfassung gänzlich mit einer Ausnahmeregelung rechnen können. Interessant ist aber das Bekenntnis der Verhandler, dass die „Vertrauensarbeitszeit […] ohne Zeiterfassung im Einklang mit der EU-Arbeitszeitrichtlinie möglich“ bleiben soll. Vor dem Hintergrund der bekannten höchstrichterlichen nationalen und unionsrechtlichen Argumentation zu diesem Thema ist es höchst interessant, wie diese Absicht rechtlich (und rechtssicher) umgesetzt werden soll. Würde dann der Wortlaut des Koalitionsvertrages tatsächlich gelten, dürften wir bundesweit die Renaissance der Vertrauensarbeitszeitregelungen erleben. Wehrmutstropfen könnte dann hier wieder die Absicht aus Ziffer 2 sein und dies möglichweise nur für tarifgebundene Arbeitgeber gelten.
4. Mehrarbeit, Überstunden & „Vollzeit-Prämien“
„Zuschläge für Mehrarbeit, die über die tariflich vereinbarte beziehungsweise an Tarifverträgen orientierte Vollzeitarbeit hinausgehen“ sollen „steuerfrei gestellt“ werden. Als Vollzeitarbeit soll dabei für tarifliche Regelungen eine Wochenarbeitszeit von mindestens 34 Stunden, für nicht tariflich festgelegte oder vereinbarte Arbeitszeiten von 40 Stunden gelten (wieder eine Referenz an das Ziel der Ausweitung der Tarifbindung). Details sollen abermals durch die Sozialpartner entwickelt werden. Dieser Punkt orientiert sich an der politischen Forderung, dass sich Überstunden mehr lohnen müssen und ist volkswirtschaftlich grundsätzlich zu begrüßen. Wird dies wie beabsichtigt umgesetzt, ist infolge des erheblichen finanziellen Anreizes eine Ausweitung der Überstunden in den Unternehmen zu erwarten. Bekanntermaßen entstehen diese nicht stets auf Verlangen des Unternehmens und so enthält eine solche Regelung durchaus Konfliktpotenzial für die Betriebe und Unternehmen (wer darf Überstunden leisten?).
In diese Richtung geht ein weiterer Aspekt, der vorsieht, dass eine Prämie, die Arbeitgeber zur Ausweitung der Arbeitszeit an Teilzeitbeschäftigte zahlen, steuerlich begünstigt wird. Hier ist zunächst unklar, ob es sich dabei um eine einmalige Zahlung oder dauerhafte Zulalge handeln soll. Eine einmalige Zahlung wird den gewünschten Effekt wahrscheinlich nur eingeschränkt erreichen können.
5. Sonstiges
Darüber hinaus finden sich noch einige andere arbeitsrechtlich relevante Themen im Koalitionsvertrag:

„Für die steigenden Herausforderungen der Digitalisierung und der Künstlichen Intelligenz in der Arbeitswelt“ sollen „die richtigen Rahmenbedingungen“ gesetzt werden, „damit diese sozialpartnerschaftlich gelöst werden“. Hierzu soll

Die Mitbestimmung weiterentwickelt werden (zur Erinnerung: der reine Einsatz von KI ist mitbestimmungsfrei);
Online-Betriebsratssitzungen und Online-Betriebsversammlungen sollen zusätzlich als gleichwertige Alternativen zu Präsenzformaten möglich sein (das ist bei der Betriebsversammlung derzeit nicht möglich).
Die BR-Wahlen sollen ebenfalls online möglich werden.
Für den Einsatz von KI im Unternehmen soll eine „Qualifizierung der Beschäftigten“ (die KI-Verordnung lässt grüßen) und „die faire Regelung des Umgangs mit den Daten im Betrieb“ geregelt werden (bei dieser Querschnittsmaterie ist die Umsetzung besonders kompliziert und trägt damit das Risiko, dass diese auf der Strecke bleibt).

Darüber hinaus kommen die zukünftigen Koalitionäre erneut auf eines ihrer Hauptanliegen (siehe oben Ziffer 2) zurück und bekräftigen am Ende:

Das Zugangsrecht der Gewerkschaften in die Betriebe soll um einen digitalen Zugang, der ihren analogen Rechten entspricht, ergänzt werden; und
Die Mitgliedschaft in Gewerkschaften soll durch steuerliche Anreize für Mitglieder attraktiver werden.

Fazit
Die Absicht zur Flexibilisierung der Arbeitszeit und Erleichterungen bei deren Erfassung sind aus Perspektive der Unternehmen ebenso zu begrüßen, wie steuerliche Anreize für Überstunden und eine Ausweitung der Arbeitszeit für Teilzeitbeschäftigte. Im Übrigen atmet der Abschnitt zum Arbeitsrecht den Geist des Junior-Koalitionspartners SPD, der ja auch wieder das Arbeitsressort übernehmen wird. Spannend dürfte hier die Frage werden, inwieweit die verfassungsrechtlich geschützte „negative Koalitionsfreiheit“ ausreichend beachtet wird. Übermäßig viele Themen haben sich die Koalitionäre in diesem Bereich für die 21. Legislaturperiode aber nicht gesetzt, so dass durchaus mit einer umfassenden Umsetzung gerechnet werden kann.

GeTtin’ SALTy Episode 50 | Sine Die: Maryland Legislative Session Wrap-up [Podcast]

In this episode of GeTtin’ SALTy, Nikki Dobay and DeAndré Morrow dive into the Maryland’s legislative session, which adjourned this week. Specifically, they unpack key tax provisions that were proposed and ultimately passed.
From new personal income tax brackets targeting high earners to the controversial 3% tech tax on digital services, they explore the measures passed in the Budget Reconciliation and Financing Act (BRFA) and their potential impact on businesses and consumers. They also discuss some key Maryland politics regarding certain tax policies that keep coming up and whether they expect to see those policies in the future.
DeAndré also highlights other developments like increased taxes on recreational cannabis and sports betting, the removal of IP taxation proposals, and the ongoing discussions surrounding Maryland’s digital advertising tax. 
They wrap up the episode with a lighthearted discussion on birthday celebrations.

An Updated Outlook for Private Equity in 2025

This year is off to a bumpy start in terms of dealmaking. A multitude of factors, including tariff-a-geddon, supply chain disruption, stubbornly high long-term interest rates (not coming down as expected), deregulation (not yet commenced, much less bearing any fruit), and an increasingly volatile stock market, have together summarized in the now ubiquitous term “market uncertainty” and have slowed the pace of dealmaking significantly. The impact of market uncertainty has been especially pronounced in the Private Equity (PE) space. In this context, PitchBook analysts have revised their outlook for the PE landscape for the balance of 2025.
Their new US PE Pulse report highlights the fast evolving picture for PE in 2025 in the face of what they term “meaningful macroeconomic threats.” In just December of 2024, their expectation was for stronger exit opportunities, along with some challenges related to capital deployment as the projection was for valuations to rise. They have now reversed that position, with an expectation of tougher exit conditions, coupled with more attractive capital deployment as sellers become more motivated.
One significant factor at play here is what they call “high-impact policies” from the new administration that stand to create “substantial economic effects.” These are leading to a wave of uncertainty for PE firms, and they must reconsider their strategies as conditions shift and regulatory uncertainty persists.
As of late 2024, their data shows that exits were surging (79% YoY in Q4). However, the introduction of tariffs and the onset of market volatility is no doubt impacting exit planning, particularly for those industries that will be most affected such as manufacturing, industrials, and consumer goods.
In the most recent Deal Flow Predictor from SS&C Intralinks, they also consider the delay in interest rate reductions as a contributing factor that could prolong the stall in M&A activity. Everyone is watching to see what the Fed will do in the face of rising economic pressures. But the report also points to the significant pressure on PE firms to execute deals and the expectation of eventual rate cuts that, when combined, could lead to “pockets of activity in strategic sectors.”
As this time of uncertainty does not seem to be ending any time soon, some exit windows might be closed or suboptimal for the foreseeable future. This is a time when PE firms can pivot to value creation mode, taking a strategic and proactive approach to protecting and growing value for their portfolio companies. This could mean looking at operational improvements or optimization of balance sheets, or even bolt-on acquisitions to buy smaller, synergistic companies at more attractive valuations that will boost value when exit conditions improve.
Even if a full exit is not feasible, there are also partial or structured exits to consider, including dividend recapitalizations, minority sales or spin-offs to continuation funds, or other vehicles. And there is always the option to reposition portfolio companies, whether that means reducing geographic or regulatory risks, or even pivoting toward a sector that is more insulated from volatility. No matter how firms choose to use this time, it is important to be strategic so they are ready when the exit window opens again, as it no doubt will.
We believe there is much reason to be optimistic for the balance of this year, despite the many challenges the private equity world is facing. Pitchbook’s report cites approximately 3,800 US PE-backed companies that have been held between five to 12 years and are waiting for their exit opportunities. And with close to $1 trillion of dry powder sitting on the shelf, PE firms are going to be looking to deploy that capital as conditions make putting that cash to work more and more attractive.

What Every Multinational Company Should Know About … Customs Enforcement and False Claims Act Risks (Part I)

As detailed in our prior article on “What Every Multinational Company Should Know About … The Rising Risk of Customs False Claims Act Actions in the Trump Administration,” the Department of Justice (DOJ) is encouraging the use of False Claims Act (FCA) claims to address the underpayment of tariffs by importers. In addition, many of President Trump’s new tariff proclamations have directed Customs to prioritize enforcing the new tariffs while also stating that Customs should assess the maximum penalties for underpayments without considering any mitigating factors. This article is the first in a series that highlights the heightened risks of importing in a high-tariff, high-penalty environment based on a comprehensive review of all prior FCA enforcement actions based on underpayment of tariffs.
As detailed in other articles in this “What Every Multinational Company Should Know” series, Customs has full access to electronic data from every importer for every entry through the Automated Commercial Environment (ACE) portal. This gives Customs the ability to run sophisticated algorithms, to find anomalies and ferret out potential underpayments. This includes comparing importers’ import patterns and entry-specific information (valuation, country of origin, etc.) not only against their own prior entries but also those of competitors bringing in similar merchandise. Much of this data also is available publicly, and the FCA permits private relators to file qui tam suits in the government’s name. The end result is that Customs and relators have the unparalleled ability to find underpaid tariffs.
There are five elements working to create a sharply increased risk profile for importers:

Heightened tariff levels, which make it possible to run up tariff underpayments and associated penalties very quickly.
Customs’ increased attention to tariff underpayments, particularly for the new Trump tariffs.
The threatened use of alternative enforcement tools on top of normal Customs penalty procedures, including the FCA and potential criminal penalties.
The increasing incentives for employees, competitors, and other potential relators to become whistleblowers.
The enhanced ability of Customs and plaintiff law firms to target and identify tariff underpayments.

The Customs enforcement and FCA risks are especially high for declaring the correct country of origin. This risk is encapsulated by the March 25, 2025 settlement of a Customs FCA action for $8.1 million. According to the DOJ, the importer misrepresented the country of origin of certain wood flooring imports by declaring them to be a product of Malaysia instead of the proper country of China, thereby paying the far-lower tariff rates levied on products of Malaysia.
Several aspects of this settlement are especially notable in the current high-tariff environment:

The underlying qui tamcomplaint did not contain specific evidence of scienter beyond the allegedly inaccurate statements on customs documents, although the government’s investigation likely uncovered such evidence because the FCA requires that false statements be made “knowingly.”
The settlement amount was based on unpaid duties from three different types of tariffs: antidumping duties, countervailing duties, and section 301 tariffs, all of which simultaneously applied to imports of wood flooring manufactured in China. While this type of multiple-tariff importation used to be rare, many of the new tariffs announced by the Trump administration “stack,” which means it will be common for entered products to be subject to multiple tariff regimes. This increases the chances of errors quickly multiplying and creating a much higher risk exposure.
In its press release, the DOJ highlighted the role that CBP played in the case, including how it made factory visits, detained shipments, analyzed import records, and conducted witness interviews. We expect this type of cooperation will become a regular feature of Customs FCA actions, as Customs has long-established expertise in identifying tariff underpayments.
The settlement states that the relator was a competitor of the importer, which ended up receiving $1,215,000 of the settlement proceeds. This is a reminder that FCA risks can arise from employees, former employees, suppliers, competitors, or even customers who could file qui tam suits as relators. Further, because services exist that gather import-related data and sell it to the general public, all of these parties — or relator-side law firms — could data mine this information to look for opportunities to file qui tam actions in hopes of achieving a similar payday. This also serves as a reminder that it is important for importers to file manifest confidentiality requests every two years, to minimize the amount of such information released to the public.
The allegations of underpaid duties were all related to the alleged failure to declare the correct country of origin. With the announcement of the new “reciprocal tariffs,” the country of origin generally will be the primary determinant of the amount of tariffs due. We accordingly expect Customs to focus heavily on whether importers are correctly declaring the country of origin, particularly when importers declare the country of origin to be low-tariff countries like the United Kingdom or Singapore.

Indeed, we expect that this specific fact pattern of misrepresenting the country of origin on goods will lead to numerous FCA actions. That fact pattern was present in one of the largest FCA cases, which resulted in the importer of printer ink paying $45 million in 2012 to resolve allegations that it misrepresented the country of origin on goods to evade antidumping and countervailing duties. In that settlement, the DOJ stated that although the printer ink “underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin.”
Preventing and Remediating Customs and FCA Enforcement Risk
The combination of increasing Customs FCA activity and sharply increasing tariff levels leads to the following corollaries that every importer should know:

Corollary #1: In a high-tariff environment, errors in Customs compliance can lead to quickly mounting underpayments of tariffs, thereby sharply increasing the risk profile of acting as the importer of record.
Corollary #2: In a high-tariff environment, Customs compliance is thus more important than ever.
Corollary #3: In a high-penalty environment, the aggressive and consistent use of post-summary corrections to fix import-related errors before they become final is also more important than ever.
Corollary #4: In an environment where Customs assesses penalties without considering mitigating factors, making voluntary self-disclosures is an essential tool to minimize Customs penalty risks, because Customs does not assess penalties for voluntarily disclosed conduct without analyzing aggravating and mitigating factors.
Corollary #5: In an environment of enhanced FCA actions, taking steps to minimize the risk of qui tamrelators is essential for all tariff-related issues.

These realities and recent enforcement cases underscore the importance of importers carefully reviewing areas where Customs is focusing its enforcement attention, which undoubtedly will include any shipments from low-tariff countries in light of the global and reciprocal tariff announcement. If the third-country processing or manufacturing is not enough to support an argument that the inputs were substantially transformed into a product with a different name, character, or use, thereby essentially changing its identity, then the importer could be accused of making a false statement by declaring an improper country of origin.
In sum, the combination of the new high-tariff environment, the heightened ability of Customs (and the general public) to data mine, and the stated emphasis of the DOJ to focus on and encourage the use of the FCA substantially increases import-related risks. In subsequent articles, we will highlight additional areas where we see heightened enforcement risk so that importers can take proactive steps to avoid Customs and FCA penalties.