Missouri Enacts Significant Utility/Regulatory Omnibus Bill
On April 9, 2025, Missouri Governor Mike Kehoe signed into law a comprehensive Utility Omnibus Bill – Senate Bill 4 (SB 4 or the Bill). Among other things, the Bill significantly changes the regulated electric utility landscape. SB 4 establishes a statutory integrated resource planning framework, requires electrical corporations to add schedules governing large load customers to their tariffs, authorizes recovery of construction work in progress for the development of new natural gas generation facilities and establishes new standards for decommissioning large thermal generation assets.
Integrated Resource Planning
The last section of SB 4 modifies the integrated resource planning (IRP) process under what will become Section 393.1900 RSMo. The Bill makes filing an IRP a statutory requirement, rather than the current IRP process, which is codified by regulations administered by the Missouri Public Service Commission (MPSC). Under the current regulations, utilities file a new IRP every three years with an informational-only “Preferred Plan.” Every year between the triennial filings, utilities provide annual updates. The MPSC does not “approve” the Preferred Plan, and the utility can deviate from the Preferred Plan as long as it provides notice within 60 days of the utility’s determination of the need to deviate. Under the current regulations, adherence to the Preferred Plan does not meaningfully streamline the utility’s need to file for a certificate of convenience and necessity (CCN) prior to beginning construction on a new generation facility.
By contrast, under SB 4, utilities will file its IRP every four years, and CCN approvals will be streamlined if the utility can show consistency with their Preferred Plan. After holding a public hearing, the MPSC is specifically required to determine if the Preferred Plan “represents a reasonable and prudent means of meeting the electrical corporation’s load serving obligations at just and reasonable rates.” If such a finding is made, it “shall constitute the commission’s permission for the electrical corporation to construct or acquire the specified supply-side resources.” Before issuing a CCN, the MPSC will still assess the utility’s qualifications to construct and operate the resources, their ability to finance construction or acquisition of the resources, and siting consideration. The CCN process will be vastly expedited, requiring Commission action in 120-180 days. The IRP requirements of SB 4 begin in August 2027. The MPSC is directed to promulgate rules to implement the new IRP requirements, and such rules will need to be in place prior to August 2027.
Large Load Tariff Schedules
SB 4 requires electric utilities to submit schedules that govern large load customers to the MPSC for inclusion in the utility’s service tariffs. This provision will be codified at Section 393.130(7) RSMo. Utilities with over 250,000 customers must submit schedules for customers who are reasonably projected to exceed 100 megawatts (MW) of annual peak demand. Utilities with fewer than 250,000 customers must submit schedules for customers reasonably projected to exceed 50 MW of annual peak demand. The schedules should be designed to reflect these customers’ representative share of the costs incurred to serve them, to prevent other customer classes’ rates from reflecting any unjust or unreasonable costs arising from service to such customers.
Recovery of Construction Work in Progress for New Natural Gas Generation Facilities
While Missouri law has prohibited electric utilities from charging customers for the costs of construction of new facilities prior to their becoming operational, SB 4 allows electric utilities to recover construction work in progress (CWIP) in its rate base for new natural gas generation units. This provision is codified in new Section393.135(2) RSMo. The amount of CWIP that a utility may recover is limited by the estimated cost of the project and project expenditures made during the estimated construction period for the project. Any recovery of CWIP is subject to refund with interest if the MPSC determines that construction costs were imprudently incurred or if the project is not placed in service within a reasonable amount of time.
Furthermore, the CWIP recovery provision replaces other allowances for recovery of funds used during construction that may have otherwise been recoverable in the rate base for an electric utility. The rate base used to determine a deferred return under Section 393.1400.3(2) RSMo. will now include an offset for the amount of CWIP included in the rate base under Section 393.135.2.
The CWIP recovery provision will sunset in 2035 unless, in a hearing conducted in 2035, the MPSC chooses to extend the provision through 2045 based upon a submission from an electric utility demonstrating good cause for such an extension.
Decommissioning & Replacement of Generation Facilities
SB 4 prescribes a new practice for decommissioning and replacing thermal generation assets. This will be codified in Section 393.401 RSMo. Before closing an existing electric generating power plant on or after January 1, 2025, the electric utility must certify to the MPSC that it has secured and placed an equal or greater amount of reliable electric generation on the grid as accredited power resources based on the relevant regional transmission organization’s resource accreditation for the technology at issue and any loss of load expected by the utility. An “existing electric generating power plant” is defined as a thermal power plant (or generating unit/combination of generating units within a thermal power plant) with over 100 MW of nameplate capacity. Concurrent with the closure of the existing generation asset, the electric utility must have adequate electric transmission lines in place and the replacement reliable electric generation shall be fully operational, unless the new facility uses some or all of the interconnection facilities of the existing asset or the existing asset is closed due to an “unexpected or unplanned event.”
Under SB 4, “dispatchable power resources” shall comprise at least 80 percent of the average of the summer and winter accredited capacity of the replacement reliable electric generation. Section 393.401.2 RSMo. Furthermore, if “existing electric generating power plant” capacity is replaced pursuant to Section 393.401, its capacity shall not be replaced by “replacement resources” as defined in Section 393.1705 RSMo., which includes wind and solar energy. It is unclear from the statute to what extent, if any, renewable energy resources may comprise up to 20 percent of the replacement reliable electric generation.
Renewable Portfolio Standards
SB 4 amended Missouri’s Renewable Portfolio Standard (RPS) statute: Section 393.1030 RSMo. Renewable energy generated by an electric utility with between 250,000 and 1,000,000 retail customers in Missouri and contracted for by an “accelerated renewable buyer” cannot have its renewable energy certificates (RECs) used to meet the utility’s RPS requirements, and the RECs shall be retired by the accelerated renewable buyer. Evergy is the only electric utility that will be affected by this provision. An “accelerated renewable buyer” is an electric utility customer with an aggregate load over 80 MW that contracts to obtain RECs — as defined in Section 393.1025 RSMo. — or energy and RECs from solar or wind generation located within the Southwest Power Pool and placed into service after January 1, 2020. SB 4 exempts “accelerated renewable buyers” from any RPS compliance costs established by utilities regulated by this section and approved by the MPSC associated with the amount of credits retired pursuant to new Section 393.1030.2.
Old North State Report – April 21, 2025
UPCOMING EVENTS
April 22, 2025
NC Chamber Spring Member Roundtable – Asheville
April 24, 2025
RTAC – Association of Corporate Counsel Spring Reception – (Raleigh)
April 28, 2025
Thinkers Lunch: Rob Christensen
May 13, 2025
NC Chamber Business Summit on Mental Health
June 5, 2025
Triangle Business Journal 2025 State of Health Care in the Triangle
LEGISLATIVE NEWS
SENATE PASSES BUDGET PLAN
On Monday, the North Carolina Senate unveiled Senate Bill 257, their budget plan for state spending, which includes raising pay for teachers and state workers, advancing income tax cuts, and allocating funds for future Hurricane Helene recovery efforts. The GOP’s budget plan, spanning 440 pages, promises to cut out “waste” and “bloated” spending. The proposed budget for the next two years totals $32.6 billion for 2025-26 and $33.3 billion for the following year.
The budget designates $700 million for Hurricane Helene response and an additional $1.1 billion for the state’s “rainy day fund,” which could be used for more Helene aid or other expenses. This adds to the $1.5 billion already spent on recovery since the storm occurred six months ago.
Most state employees would receive a raise of 1.25% next year, along with $3,000 in bonuses over two years. Some employees in specific roles, especially correctional staff and law enforcement, would receive even larger raises with average increases set at 3.3% for teachers, 8.9% for correctional officers, 9.2% for Highway Patrol, and 14.4% for Alcohol Law Enforcement and SBI officers. The budget plan would include a review of state government spending, led by State Auditor Dave Boliek.
Other highlights from the proposal include:
An overall increase in funding for health care, including sizeable investments in the Medicaid Contingency Reserve, reflective of Medicaid expansion.
A $535.5 million investment in a new 500-bed pediatric hospital with UNC Health and Duke Health.
$25 million to reinstate coverage of GLP-1 weight-loss drugs for certain state workers.
Overhauls to NCInnovation’s funding model, asking for the return of $500 million the organization received from the state in 2023.
Additional funds for teacher signing bonuses, mentorship programs, and initiatives to improve reading scores.
Doubling the tax rate for sports betting operators from 18% to 36%.
Allocating $3.5 billion over two years to the State Capital Infrastructure Fund, which finances construction initiatives at universities.
Reducing the income tax rate to 3.49% in 2027 and 2.99% in 2028, with potential for further reductions.
Increasing unemployment benefits to $400 per week.
Establishing a fund for state veterans’ cemeteries within the Department of Military and Veterans Affairs.
Restoring the “Rainy Day” reserves fund to $4.75 billion.
Allocating $110 million for PFAS monitoring through the Department of Environmental Quality.
Designating $1.5 billion in federal funds for rural broadband internet.
Would Repeal the state’s Certificate of Need Law
The Senate passed the budget proposal on Thursday morning with a vote of 30-15, which included four Democrats voting with the Republican majority. The House is expected to release their proposed budget in May, with negotiations between the chambers following thereafter.
Read more be NC Newsline
Read more by WRAL News (Doran) (4/15/25)
Read more by WRAL News (Doran) (4/17/25)
Read more by News & Observer (4/15/25)
Read more by News & Observer (4/16/25)
HOUSE PASSES REINS ACT
The North Carolina House of Representatives has passed House Bill 402, known as the “Regulations from the Executive in Need of Scrutiny (REINS) Act. ” This bill increases legislative control over state agency rulemaking, requiring approval from the North Carolina General Assembly for any regulation with economic impacts over $1 million. The House passed the bill with a 68-44 vote, gaining support from all Republicans and one Democrat.
Representative Allen Chesser (R-Nash) stated that the bill makes lawmakers accountable for significant regulatory decisions, providing citizens with someone to hold responsible. “Right now, we’ve got over 110,000 regulations on the books in North Carolina, and almost 100% of them pass through our current system,” Chesser explained on the House floor. “Very few would cross this threshold to where it comes into our body, where we get to get to review it. What we’re saying is that the people should have someone to hold accountable, and that should be us.”
Bill sponsors in the North Carolina General Assembly claim the REINS Act increases government accountability in regulatory reform, giving more power to the people and their representatives.
Chesser mentioned in committee that the final version is less intrusive than the original draft. However, Democrats opposing the bill raised concerns about possible constitutional issues regarding the separation of powers.
Read more by The Carolina Journal
MORE ACTION ON ENERGY POLICY
In 2021, the General Assembly required the Utilities Commission to take all reasonable steps to reach a 70% reduction in carbon dioxide emissions from electric public utilities in North Carolina by 2030 and carbon neutrality by 2050. Senate Bill 261, passed by the Senate on March 13, would eliminate the interim 70% goal. The bill would also allow public utilities to increase base rates to recapture costs for construction work in process outside the general rate case process. Language similar to Senate Bill 261 was included in the Senate’s proposed budget.
Read more by The Carolina Journal
Read more by NC Newsline
EMPLOYMENT PREFERENCE FOR MILITARY VETERANS COULD EXPAND
A bill to expand hiring preferences for military veterans, their spouses, and dependents in state government received a favorable hearing in the Committee on Homeland Security and Military and Veterans Affairs. House Bill 114 aims to improve current law by:
Removing the requirement that service must relate to a war period.
Including those on active duty.
Including members of the U. S. Armed Forces Reserve.
Including spouses or dependents of qualified individuals.
Representative Charles Smith (D-Cumberland), a co-sponsor, stated that the bill modernizes outdated laws, as veterans currently must have served during wartime, with the Vietnam War defined as the last such conflict. “Time has passed, and so to expand that preference to a greater pool of veterans, it strips away that language [defining the Vietnam War as the nation’s last],” Smith said.
Expanding preferences could help fill job vacancies in the state government. The veteran unemployment rate was 3.7% in March, with 84,900 civilian federal employees in North Carolina, including 28,000 veterans and 33,200 spouses of veterans or active-duty members. A quarter of the VA’s 482,000 employees are veterans.
The bill has been sent to the House Committee on Commerce and Economic Development.
Read more by NC Newsline
HOME GAMING LEGISLATION ADVANCES
House Bill 424 aims to make home card and dice games legal, although some critics worry it could lead to high-stakes gambling. The bill states that North Carolina’s gambling rules do not apply to recreational games in private homes or clubhouses.
The bill’s sponsor, Representative David Willis (R-Union), introduced it after a HOA board complaint about a card game at a public clubhouse. It allows people to play games for money in a private setting, but no mechanical devices can be used, and only personal winnings are allowed.
The bill, which passed a committee on April 1, has new restrictions for charitable game nights, limiting them to 24 per year and no more than two per week. An amendment was suggested to limit high-stakes gambling. The updated bill was approved and sent to the Rules Committee.
Read more by State Affairs Pro
BILL BANNING SOCIAL MEDIA FOR MINORS PASSES HOUSE COMMITTEE
A bill to ban social media for minors under age 14 has passed the House Commerce and Economic Development Committee. House Bill 301 requires parental consent for teens aged 14 and 15 to create social media accounts. The bill holds social media platforms accountable for removing unauthorized accounts and deleting personal data.
Platforms must verify user ages and can face fines up to $50,000 for violations. The NC Department of Justice can investigate and enforce compliance, with proceeds from penalties funding the state’s Civil Penalty and Forfeiture Fund.
The bill’s sponsor, Jeff Zenger (R-Forsyth), pointed out the strong support for the bill from parents of different political views. “One thing that’s been interesting is the overwhelming support from parents across the political spectrum. I didn’t expect such unanimous approval, but it’s been clear that parents are fully behind this.”
Some lawmakers are concerned about enforcement, but Zenger argues that action is necessary for children’s safety.
Read more by The Carolina Journal
Foley Automotive Update and the Latest Insights on Tariffs
Special Update — Trump Administration and Tariff Policies
President Trump on April 14 told reporters he was “looking at something to help some of the car companies” regarding tariffs, and noted “they’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here.” Further details have not been provided and it is unclear if the statements referred to aspects of the executive order imposing a 25% U.S. import tariff on fully assembled automobiles (effective April 3) or the 25% levies on certain major auto parts (scheduled to take effect no later than May 3).
The Canadian government on April 15 announced it will allow automakers to import certain U.S.-manufactured cars and trucks without tariffs, provided the vehicles are compliant with the Canada-U.S.-Mexico Agreement (CUSMA), and companies operating in the nation do not shift their vehicle production out of Canada. Canada had previously imposed a 25% retaliatory tariff on vehicles imported from the U.S. that are not compliant with the CUSMA.
China raised tariffs on all U.S. goods from 84% to 125% effective April 12, and stated that since “American goods are no longer marketable in China under the current tariff rates, if the U.S. further raises tariffs on Chinese exports, China will disregard such measures.” This follows the Trump administration’s implementation of a 125% “reciprocal” duty on many Chinese imports imposed on top of an existing 20% levy on goods imported from China.
China’s decision to impose export restrictions for certain rare earth minerals and magnets has caused shipments to halt at many Chinese ports pending the establishment of a new regulatory system for the materials. This development could impact automotive supply chains and a range of other sectors.
President Trump on April 15 issued an executive order launching a Section 232 national security investigation into the United States’ reliance on imports of processed critical minerals and derivative products. The U.S. is significantly reliant on China for the processing of many types of rare earth metals.
The Trump administration began investigations into imports of certain semiconductors, and the assessment could result in new tariffs.
The European Commission on April 10 announced a 90-day postponement of its plan to implement counter-tariffs on $23 billion worth of U.S. goods, noting the EU preferred negotiations to escalating trade wars.
Six Senate Democrats, along with Sen. Rand Paul (R-KY), on April 8 announced a privileged resolution to force a floor vote over whether to revoke the emergency declaration used as a basis for President Trump’s tariffs. A vote could occur sometime after the Senate returns from a two-week break, according to an update in POLITICO.
U.S. Senators Chuck Grassley (R-IA) and Maria Cantwell (D-WA) on April 4 introduced legislation that would require the President to notify Congress of coming tariffs within 48 hours of such an imposition and congressional approval within 60 days.
U.S. House Rep. Don Bacon (R-NE) on April 7 introduced legislation that would restrict President Trump’s authority to unilaterally impose tariffs. The bipartisan bill has two Republican co-sponsors.
Automotive Key Developments
Automotive News provided overviews of which auto parts and vehicles could be the most susceptible to U.S. import tariffs or Canadian counter-tariffs.
The Wall Street Journal provided updated analysis on the estimated impact of new tariffs on the revenues of the top automakers.
S&P Global Mobility on April 14 downgraded its U.S. new light-vehicle sales forecasts by 700,000 units in 2025, 1.2 million units in 2026, and 930,000 units in 2027 due to their expectation that “persistent, high tariffs” are the “next phase of normal.” Prior to the downgrade, S&P projections published on March 27 indicated U.S. light-vehicle sales could fall to a range of 14.5 and 15 million units annually if tariffs are maintained.
Goldman Sachs lowered its projection for 2025 U.S. new vehicle sales to 15.4 million units, from a previous forecast of 16.25 million units. New vehicle sales in 2026 were revised by 1.1 million units to 15.25 million units.
Anderson Economic Group estimated a U.S. consumer impact of $30 billion would result from the Trump administration’s 25% automotive import tariffs if the duties are maintained for a full year.
New vehicle sales in Canada could decline by 25% in 2025, according to revised projections from the Canadian Automobile Dealers Association (CADA).
The Wall Street Journal referred to Michigan’s economy as “the first victim of Trump’s trade war,” as the state ranks fifth in the nation measured by the size of its imports and exports.
First-quarter 2025 U.S. new light-vehicle sales increased 4.4% year-over-year, and EV sales rose by an estimated 11.4% YOY, as consumers accelerated purchases ahead of the expectation for higher prices due to tariffs.
First-quarter 2025 U.S. vehicle sales were up 17% YOY for GM, 10% for Hyundai, 7% for Volkswagen, 5.7% for Nissan, 5% for Honda, and 1% for Toyota. Sales declined 12% for Stellantis and 1% for Ford.
U.S. House lawmakers 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.
Governor Gavin Newsom and California Attorney General Rob Bonta announced they have filed a lawsuit to challenge President Trump’s authority to impose tariffs. The New Civil Liberties Alliance filed a separate suit that alleged the President illegally imposed certain tariffs on Chinese goods.
OEMs/Suppliers
Stellantis will temporarily lay off approximately 900 U.S. workers in Michigan and Indiana and idle certain plants in Canada and Mexico to evaluate the effects of the Trump administration’s automotive import tariffs.
Over 6,000 workers in Canada’s auto sector have received temporary layoff notices since President Trump’s tariffs on automobile imports took effect on April 3.
GM on April 3 announced plans to hire hundreds of temporary employees to support increased production of light-duty trucks at its Fort Wayne, Indiana, assembly plant.
Stellantis and Ford are offering employee discount pricing to U.S. consumers, and Hyundai has pledged to freeze its prices until June, amid expectations tariffs will raise prices for new vehicles.
Two European-headquartered suppliers will require upfront payment from their customers to cover the cost of import duties.
European automakers are exploring a range of responses to U.S. import tariffs such as pausing shipments of certain vehicles, shifting production, and raising prices.
BMW, Mercedes-Benz, and Volvo are among the automakers that have indicated they may consider increased production in the U.S. to mitigate the effects of import tariffs.
Nissan halted orders for sales of certain Mexican-built Infiniti SUVs in the U.S. market due to the Trump administration’s automotive import tariffs.
Continental is exploring a separation of its ContiTech industrial unit to focus on its more profitable tire business.
Infineon Technologies AG will acquire Marvell Technology’s automotive Ethernet business for $2.5 billion, in a deal that is expected to expand the German company’s automobile technology capabilities.
Toronto-based ABC Technologies Inc. completed its acquisition of U.K.-based TI Fluid Systems. Rebranded as TI Automotive, the combined entities will have a revenue of $5.4 billion and will be headquartered in Auburn Hills, Michigan.
Market Trends and Regulatory
President Trump directed the Committee on Foreign Investment in the United States (CFIUS) to conduct a review of Nippon Steel’s proposed acquisition of U.S. Steel to determine if “further action” is appropriate. This follows an order prohibiting the acquisition issued by President Biden on January 3, 2025.
Retail sales of passenger cars in China rose 14.4% in March 2025 from a year earlier, according to analysis from the China Passenger Car Association.
U.S. Senator Elissa Slotkin (D-MI) introduced the Connected Vehicle National Security Review Act “to establish a national security review process for imports of internet-connected vehicles and components made by companies from China or other countries of concern.” Slotkin introduced a similar proposal as a member of the U.S. House in 2024, and she indicated the Senate bill would expand upon a Commerce Department final rule that prohibits the import and sale of connected vehicles and related components linked to the People’s Republic of China (PRC) and Russia.
A bipartisan “right to repair” bill was introduced in the U.S. Senate this month, and this follows similar legislation presented in the U.S. House in February 2025.
The cost of car repairs has increased by an estimated 27% in the last three years, and consumers could be impacted by higher repair costs if tariffs on auto parts are imposed in the coming weeks.
Autonomous Technologies and Vehicle Software
Autonomous trucking developer Kodiak Robotics plans to go public in a SPAC deal valuing the company at $2.5 billion.
Self-driving startup Nuro Inc. raised $107 million in a Series E funding round in a deal that is intended to help scale its autonomous driving technology and establish commercial partnerships.
Autonomous tech company Aurora Innovation intends to launch in Texas this month its first self-driving tractor-trailer without an operator.
China may prohibit the terms “smart driving” and “autonomous driving” in certain types of vehicle advertisements amid increased scrutiny in the nation over the safety of advanced driving assistance systems (ADAS), according to a report in Reuters.
Electric Vehicles and Low-Emissions Technology
To align production with demand, GM will temporarily lay off roughly 200 workers at its Factory Zero EV plant in Detroit, and the automaker will pause production of the BrightDrop electric van at its CAMI plant in Ontario.
Tesla stopped accepting orders in China for certain EV models imported from the U.S. following the imposition of China’s retaliatory 125% import tariff on American goods.
Atlas Public Policy estimated that over $7 billion in clean manufacturing projects in the U.S. were canceled in the first quarter of 2025, including over $2 billion for plants dedicated to EV supply chains.
The U.S. is projected to have at least 200,000 high-speed public chargers in place by 2030, down from previous expectations of 400,000, due to the Trump administration’s suspension of federal funding for the installation of charging stations.
Kia is developing an electric pickup truck for the North American market, with a goal of selling 90,000 units annually. The automaker hopes to sell 1.26 million EVs globally by 2030, down from a previous target of 1.6 million.
A Delaware bankruptcy judge approved the sale of Nikola’s Arizona factory and headquarters to Lucid Motors for $30 million.
The European Union is assessing options to replace recently imposed tariffs on Chinese-made EVs with minimum prices for the imported vehicles, according to an update from the European Commission.
Powering Africa’s Digital Future: The Challenge of Energy for Data Center Development
As the global economy increasingly digitizes, the infrastructure supporting this shift must evolve accordingly. In Africa, where the demand for digital services is surging — fueled by mobile penetration, fintech innovation, and a young, connected population — the case for expanding data center capacity is clear. However, the continent’s potential is hindered by underdeveloped energy infrastructure, presenting a significant bottleneck.
Why Data Centers Matter
Data centers form the backbone of digital transformation, underpinning cloud storage, AI applications, e-commerce platforms, and digital government services. According to the International Energy Agency (IEA), global electricity consumption by data centers is projected to exceed 800 TWh by 2026, up from 460 TWh in 2022. A significant portion of this demand comes from generative AI and machine learning applications, which consume up to 10 times more energy than traditional searches.
Africa, despite being one of the fastest-growing regions for digital adoption, accounts for less than 1% of the world’s data center capacity. The Africa Data Centres Association estimates that the continent requires at least 1,000 MW of new capacity across 700 facilities to meet demand. Yet, meeting this need will depend not only on digital infrastructure investments but also on solving a persistent and costly energy challenge.
The Energy Challenge: Costs, Capacity, and Volatility
Data center development will play a pivotal role in ensuring digital sovereignty and fostering a resilient, domestically-driven digital economy in Africa.
Sub-Saharan Africa exemplifies both the promise and the challenges of this transformation. While demand for digital services is accelerating, access to reliable energy remains a major obstacle. Many countries across the region grapple with limited energy access, high electricity costs, and outdated infrastructure characterized by frequent outages and heavy reliance on imported fuel sources.
This interplay of costs and reliability poses significant challenges for energy-intensive data centers. According to recent industry analysis, energy supply has emerged as the single most critical issue facing digital infrastructure investors. As demand for electricity rises—driven by AI, cloud computing, and the digitization of public services—grid expansion is struggling to keep pace. As a result, securing reliable, affordable power is now a top strategic priority for data center developers and investors alike.
Despite these challenges, several sub-Saharan countries—including Côte d’Ivoire, Gabon, and Senegal—are making significant progress. While legacy grid issues persist, these countries are actively investing in renewable energy projects that could create the enabling environment needed for sustainable data center growth.
Côte d’Ivoire: In June 2023, the country launched its largest solar power plant in Boundiali, delivering 37.5 MWp of capacity with an expansion target of 83 MWp by 2025. This project aligns with Côte d’Ivoire’s national goal to source 45% of its electricity from renewable energy by 2030.
Senegal: The Taiba N’Diaye Wind Farm, commissioned in 2021, is West Africa’s largest wind energy project, with a total capacity of 158 MW. It plays a central role in Senegal’s broader strategy to diversify its energy mix and reduce dependence on imported fossil fuels.
Gabon: Though less frequently spotlighted, Gabon is actively positioning itself as a renewable energy leader in Central Africa. In 2021, the government launched a hydropower development strategy to boost clean energy capacity. Notably, the Kinguélé Aval Hydroelectric Project, co-financed by the African Development Bank and IFC, will add 35 MW of capacity upon completion and help stabilize electricity supply in the Estuaire province, home to Libreville—the capital and potential hub for digital infrastructure. Gabon has also attracted investment in solar hybrid systems for rural electrification, aiming to reduce diesel reliance and support the decentralization of energy access. These initiatives create a more stable power framework suitable for future data center deployment.
Lessons from Leading Data Center Markets
Morocco is emerging as a pivotal player in North Africa’s data center market, driven by international energy investments and its strategic position connecting Europe, Africa, and the Middle East. Major global tech companies, including Oracle, Microsoft, Google, and Amazon Web Services (AWS), are drawn to Morocco’s rapidly expanding digital economy and its modern infrastructure. The country is fostering a favorable environment for data center growth through government-backed initiatives that enhance ICT infrastructure, making Morocco an attractive destination for both local and international data center operators.
The country’s stability and investments in renewable energy further position it as a sustainable choice for data center operations. With projects like those from Africa Data Centres, Gulf Data Hub, and N-ONE Datacenters, Morocco’s growing data center ecosystem is poised to meet the increasing demand for cloud computing and data storage across North Africa and beyond. By 2028, Morocco is expected to be a key hub for digital services, offering world-class data center facilities.
Looking to other pioneers in the continent, countries like Kenya and South Africa offer valuable lessons. Kenya, rich in geothermal resources, has attracted significant investments such as a $1 billion geothermal-powered data center from Microsoft and G42. This clean, non-intermittent energy solution provides a reliable power source for data centers. Similarly, South Africa is leading solar integration, with projects like the 12 MW solar farm being developed by Africa Data Centres and Distributed Power Africa, designed to power critical centers like Johannesburg and Cape Town. Such initiatives showcase the potential for public-private partnerships to address challenges of grid unreliability and position Africa as a growing leader in sustainable data center infrastructure.
These examples underscore the importance of strategic planning, infrastructure investment, and the integration of renewable energy sources in building resilient, sustainable data centers.
Policy and Legal Implications
From a legal perspective, developing a data center project requires meticulous contractual structuring. Long-term Power Purchase Agreements (PPAs) and Behind-the-Meter (BtM) agreements introduce project-specific risks — notably, the risk that delays in one part of the project (either the power plant or the data center) could lead to disruptions. Legal advisors must anticipate and address potential regulatory challenges, grid permitting complexities, and the need for future-proofing clauses to safeguard the project’s viability.
A comprehensive review of existing legislation, identification of key obstacles, and potential time-consuming issues (such as securing land) are crucial steps in ensuring the project’s success. Moreover, structuring energy supply projects to support data center operations is fundamental for ensuring the project’s bankability.
Conclusion: A Call to Action
Africa stands at a crossroads: with the right investments in both digital and energy infrastructure, the continent could leapfrog into a new era of economic autonomy and technological resilience. However, if energy bottlenecks are not addressed head-on, Africa risks falling behind just as the world accelerates into a data-driven future.
The roadmap is clear: invest in renewables, embrace innovative models like BtM PPAs, partner across sectors, and establish clear regulatory frameworks. Energy is no longer a background concern for digital infrastructure investors — it is the cornerstone. Data center growth and power sector development must now proceed hand-in-hand.
For Africa, this is not just a technical challenge — it is a strategic imperative.
Commission Proposes to Provide Flexibility for Manufacturers in Meeting 2025 CO2 Emission Targets for Cars and Vans
As anticipated in the Industrial Action Plan for the European Automotive Sector, the European Commission has proposed a targeted amendment to Regulation (EU) 2019/631 on CO₂ emission performance standards for new vehicles through the submission, on the 1st of April 2025, of a Proposed Regulation “to introduce additional flexibility in the calculation of manufacturers’ compliance with CO₂ emission performance standards for new passenger cars and light commercial vehicles for the calendar years 2025 to 2027.”
Regulation (EU) 2019/631 was recently amended by Regulation (EU) 2023/851, which established new specific CO₂ emissions targets for new passenger cars (category M1) and new light commercial vehicles (category N1) starting in 2025, modifying Point 6.3 of Parts A and B of Annex I of Regulation (EU) 2019/631. Under the current regulatory framework, specific emissions targets, as outlined in Article 4(1)(c) of Regulation (EU) 2019/631, are set annually.
With this new proposal, compliance with these specific emissions targets would instead be measured using an average value over the three-year period (2025, 2026, and 2027), rather than requiring manufacturers to meet distinct annual targets. This aggregated compliance approach would allow manufacturers to offset excessive emissions in one year by outperforming the target in another, providing greater flexibility while still maintaining the 2025 target and keeping the industry on track for future reductions. The automotive manufacturing sector has been a strong advocate for this amendment, citing its importance in ensuring continued investment in the clean transition while managing operational and technological constraints.
Following the proposal by the EU Commission, the file was sent to the EU co-legislators, i.e., the European Parliament and the Council of the European Union, both of which will now proceed to develop their negotiating mandates prior to initiating the interinstitutional negotiations (commonly referred to as the “trilogue”). This process ultimately leads to the adoption of the final legislative text, as agreed upon by both the Council and the Parliament. Upon introducing the proposal, the Commission urged the co-legislators to provide regulatory certainty for the automotive industry and investors.
What Every Auto-Sector Company Should Know About … the New Automotive Tariffs
On April 3, 2025, President Trump issued the full details of the automotive tariffs, including the exact Harmonized Tariff Schedule (HTS) subheadings to which the automotive tariffs apply. This completed the implementation of the automotive tariffs, first announced on March 26, 2025, which established comprehensive 25% tariffs on imported automobiles (sedans, sport utility vehicles, crossover vehicles, minivans, and cargo vans) as well as light trucks. A review of the subheadings contained in the newly announced Annex to the proclamation shows that it also covers over 150 auto parts categories, including most of the parts and components used in automobile production. The Annex includes tariff codes for electrical automotive parts, engines, transmissions, power trains, lithium-ion batteries, and other major components, along with commonly imported parts such as tires, shock absorbers, and brake hoses.
These tariffs took effect on April 3, 2025 for completed automobiles; for automobile parts, the tariffs will start collection on May 3, 2025 (with a carveout for USMCA-certified parts, which will be exempt until a collection mechanism is finalized). The one-month delay is intended to give the U.S. government time to work out rules to exempt the value of automotive parts that contains U.S.-made materials, which will not be subject to the tariffs.
These new automotive tariffs are not occurring in a vacuum. Indeed, they come at the same time as the implementation of expanded 25% Section 232 duties on steel and aluminum (which are widely used in automobiles); global and reciprocal tariffs on nearly all countries worldwide of between 10% and 49% (since paused for 90-days, but still applied at 10%); additional China-specific tariffs of 145% (on top of early Section 301 tariffs of up to 25%, thus implementing tariffs starting at to 170% for China); and 25% duties on Canada and Mexico (partially suspended for USMCA-compliant goods). Although the automotive tariffs are specifically exempted from the global and reciprocal tariff measures, in all other cases the duties “stack,” adding to the cumulative financial burden on importers.
The net result is a massive increase in tariffs for automotive goods imported into the United States, which will have a major impact on the entire automotive sector, which is an industry dependent on a complex international supply chain. To help automotive companies understand the impact of these tariffs, we are presenting a summary of the current status of the tariffs, as well as Frequently Asked Questions that we are receiving from various clients.
Automotive Tariffs: What We Know So Far
As a starting point, it is important to understand how the automotive tariffs fit into the overall tariff structure that has grown up over the last two months. Here are the groupings of tariff announcements to understand the context of tariffs:
Chapter 1-97 Pre-Existing Tariffs: These are the tariffs that have existed for decades, generally in the range of 0%–7%. These tariffs continue to apply, as all tariffs “stack” on top of the normal tariffs.
Section 301 Tariffs: These tariffs were imposed just on Chinese-origin goods in the first Trump administration. About half of trade with China is exempt from these tariffs (the so-called “List 4B”); the other half of imports from China pay a tariff of between 7.5% and 25%. These tariffs lasted through the Biden administration and stack on top of the Chapter 1-97 tariffs for China alone.
Section 232 Sectoral Tariffs: The third set of tariffs are the sectoral tariffs imposed under Section 232 on specific products. These sectoral tariffs fall into three buckets:
First, there are 25% tariffs imposed on steel and aluminum, payable on products from anywhere in the world. The tariffs extend to certain identified steel and aluminum derivative products (i.e., products in identified Harmonized Tariff Schedule (HTS) subheadings that contain a lot of steel or aluminum). The only carveout here is for products that use steel and aluminum that are “melted and poured” or “smelted and cast” within the United States. For derivative products, only the value of the steel or aluminum is subject to the additional 25% tariff.
Second, there is a 25% tariff imposed on automobiles and most automotive parts. For the automotive tariffs, there currently is a pause in their implementation for parts and components that are USMCA-compliant. By May 3, 2025, the Department of Commerce will establish a system to calculate non-U.S. content, which will be subject to the 25% tariff rate for both automobiles and automotive parts.
Third, certain sectors will be subject to forthcoming sectoral tariffs. The U.S. government already has initiated investigations into copper and lumber. President Trump has indicated there is a strong likelihood that the same will occur for semiconductors and pharmaceutical products.
IEEPA 25% Canada and Mexico Tariffs: The fourth set of tariffs are the 25% tariffs imposed on Canada and Mexico relating to what President Trump characterizes as their role in not exerting sufficient efforts to halt the flow of fentanyl and unauthorized immigrants int to the United States. These tariffs are suspended for any goods that are USMCA-compliant.
IEEPA 20% China Tariffs: This fifth set of 20% tariffs is related to what President Trump characterizes as the Chinese government’s failure to halt the shipment of fentanyl precursors into the United States.
IEEPA Global and Reciprocal Tariffs: The final set is the largest set of tariffs by far, which include (1) 10% global tariffs imposed on the entire world and (2) reciprocal tariffs, which are calculated based mostly on the level of the trade deficit with each country. The calculated ranges for these tariffs go from 10% (countries subject only to the global tariffs, like Singapore and the United Kingdom), up to 49%. Due to the Trump administration’s response to China’s retaliatory tariff, the current level of these tariffs against China is 125%, which when combined with the IEEPA 20% tariffs gives China a net increase of 145%, over and above pre-existing Section 301 tariffs that were imposed in the first Trump administration.
Importantly, although the reciprocal tariffs are currently paused for 90 days, this pause does not impact the automotive tariffs, which remain in place. This new round of automotive tariffs isn’t based on fresh findings; instead, as a way to implement these tariffs quickly, the Trump administration is leaning on the Section 232 auto-sector investigation and report produced during President Trump’s first term. While that investigation concluded that automotive imports were “weakening our internal economy” and posed a threat to national security, President Trump directed the USTR to pursue trade deals to mitigate the threat rather than imposing tariffs. Now, in his second administration, President Trump is carrying through on the tariffs that he did not impose in his first administration.
Here’s how the new tariff regime is structured:
25% tariffs apply to automobiles and automotive parts listed in Annex A to the Federal Register order.
USMCA-eligible automobiles and automotive parts qualify for a reduced tariff, as the tariff only applies to non-U.S. content. Importers may submit documentation to the Commerce Department detailing the value of U.S. content, which is defined as parts that are wholly obtained, entirely produced, or substantially transformed in the United States. The 25% tariff applies only to what remains (i.e., the non-U.S. portion).
USMCA-eligible parts are not subject to the new tariffs until a method is established (by Commerce and CBP) for applying the duty to the non-U.S. content value. This mechanism must be in place by May 3, 2025. Thus, tariffs on USMCA-eligible parts are currently set to zero.
Knock-down kits and parts compilations are excluded from the tariff.
The 90-day pause will allow domestic producers and industry groups to petition the Commerce Department to include additional auto parts under the tariff regime, citing rising import levels and national security concerns. Commerce will create a process within 90 days for domestic automakers or industry groups to request that additional auto parts be brought under the tariff umbrella, where there is an argument that rising import levels pose a threat to national security.
Any autos or parts entering foreign-trade zones (FTZs) on or after April 3, 2025, must enter under privileged foreign status unless eligible as domestic status. This locks in the dutiable classification of the goods in the form in which they were imported. In effect, this means that any such products would have to pay any automotive duties even if processed into a different good in the FTZ.
Consistent with the other special tariffs imposed during the current Trump administration, no duty drawback will be available for the automotive tariffs.
Customs and Border Protection (CBP) is directed to closely monitor U.S. content claims closely. If CBP determines that an importer has overstated the U.S. content, the full 25% tariff will apply to the entire value of the vehicle or part model, retroactive to April 3, 2025, and prospectively, until the issue is resolved and verified.
The proclamation does not include any information on treatment of goods in transit, goods imported using Temporary Importation under Bond (TIB), or the impact or application of temporary duty exemptions. The Department of Commerce and/or CBP may likely issue additional implementing instructions to cover these gaps.
Although coverage of the automotive proclamation extended to automotive parts, it was not until April 2, 2025, that the critical Annex listing the automotive was released, along with CBP guidance regarding the fully assembled automobile provisions. The Annex provides three new elements to the Presidential Proclamation:
The Annex expands the list of automobiles and automobile parts that fall within the scope of the automotive tariffs.
The Annex confirms the USMCA exemption for parts until a process is finalized for applying the tariff to non-U.S. content.
The Annex confirms the Section 232 automobile and automobile parts tariffs do not stack with the global and reciprocal tariffs.
The list of automobiles covered is all inclusive, and covers automobiles falling within the following HTS subheadings:
8703.22.01
8703.23.01
8703.24.01
8703.31.01
8703.32.01
8703.33.01
8703.40.00
8703.50.00
8703.60.00
8703.70.00
8703.80.00
8703.90.01
8704.21.01
8704.31.01
8704.41.00
8704.51.00
8704.60.00
To accommodate the additional duties, new Chapter 99 subheadings have been introduced in the HTS for different classifications of vehicles and parts, including passenger vehicles and light trucks from all countries:
The HTS is expanded to include a new Chapter 99 subheading of 9903.94.01 for all entries of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks from all countries.
A new Chapter 99 subheading of 9903.94.02 is established for all entries covered in the above codes that are not passenger vehicles or light trucks, or where the “U.S. content” of passenger cars and light trucks are exempt from tariffs eligible for preferential treatment under the USMCA. Use of this second subheading requires prior approval by the Secretary of Commerce to take advantage of the preferential tariff treatment.
A new Chapter 99 subheading of 9903.94.03 applies 25% tariffs to the non-U.S. content for USMCA-certified passenger vehicles and light trucks.
A new duty-free Chapter 99 subheading of 9903.94.04 is created for exempt passenger vehicles and light trucks manufactured “at least 25 years prior to the year of the date of entry from the tariffs.”
The list of automotive parts and components also is very broad, basically covering nearly all automotive parts and components, covering HTS subheadings under Chapters 40, 70, 73, 83, 84, 85, 87, 90 and 94. Entries subject to these automotive tariffs are to be filed under new Chapter 99 subheading 9903.94.05. Importers should use subheading 9903.94.06 for all entries of articles classifiable under these HTSUS subheadings that (i) are eligible for special tariff treatment under the USMCA (other than automobile knock-down kits or parts compilations) or (ii) are not parts of passenger vehicles and light trucks. While USMCA-certified passenger vehicles and light trucks remain in the scope of the new automotive tariffs for non-U.S. content, USMCA-certified automobile parts receive a full exemption from the scope of the tariffs. The full list of HTS subheadings is found in the published Annex.
It can be difficult to parse how the various tariffs work together, as well as when they take effect. To aid importers in understanding these two issues, a summary of the operation of the tariffs is as follows. In each case, the “total duty amount” assumes that the normal Chapter 1-97 tariffs (i.e., tariffs existing before President Trump took office) are at the 2.5% standard duty rate.
Automotive Tariff Summary
Source
Part Status
Automotive Tariff
Implementation
Total Duty Amount
Canada / Mexico
USMCA Compliant
In Annex
+25%, but reduced by U.S. content
Temporarily duty-free until Commerce establishes U.S.-origin process
0% today; will become 25%, but only on non-US-origin content value
Not in Annex
No change
No change
0%
Non-USMCA Compliant
In Annex
+25% tariff
Mary 3, 2025
52.5% (as written) (27.5% previously)
Not in Annex
No change
No change
27.5%
China
In Annex
+ 25% tariff
May 3, 2025
72.5% (as written) (47.5% previously)
Not in Annex
No change
No change
81.5% (47.5% previously)
Korea
In Annex
+ 25% tariff
May 3, 2025
25% (2.5% previously)
Not in Annex
No change
No change
2.5% + reciprocal tariff rate
Rest of World
In Annex
+ 25% tariff
No change
27.5% (2.5% previously)
Not in Annex
No change
No change
2.5% + reciprocal tariff rate
Automotive Tariffs: Open Questions
The one thing that is clear is the automotive tariffs are not impacted by the 90-day pause; they are moving ahead along the schedule announced in the original automotive tariff proclamation. Beyond that, just as is true with the other new tariffs, the automotive tariffs leave a lot of open questions, including the following:
The auto parts tariffs begin on May 3, 2025, but USMCA-compliant parts are exempt until the Secretary of Commerce, in consultation with CBP, establishes a process to apply tariffs to non-U.S. content. Will the calculation of the U.S.-origin content for partial tariff relief use the USMCA rules of origin or establish a new set of calculations?
What type of documentation will importers need to provide to support the U.S.-origin calculation? Will it involve a certification process like the USMCA regional content calculations?
How is the U.S.-origin content to be calculated when goods cross the border multiple times?
The Federal Register notices states companies or importers will need to submit documentation directly to the Secretary of Commerce that identifies the amount of U.S. content in each vehicle for approval. How will this process work? How quickly will that review take given the large number of applications that are likely to flood in from automotive companies?
The Annex covers automotive computers that fall under the four-digit heading associated with general computer products such as laptop computers. How will this tariff be implemented for automotive computers, when there is no separate code for “automotive” computers?
The proclamation directs the Commerce Department to establish a process within 90 days for domestic producers to request that other parts imported be targeted. How will this process work?
Will importers have to apply both the substantial transformation test and the USMCA rules to demonstrate compliance? That dual-track approach of applying both rules regarding imports from Canada and Mexico already has arisen for Section 301 duties, as importers have had to apply USMCA rules for Chapter 1-97 tariffs and marking requirements, while applying substantial transformation rules to determine the country of origin for purposes of Section 301 tariffs. A similar outcome could occur here.
Will negotiations by other countries impact the scope of the automotive tariffs? How will such changes be reflected in the automotive tariffs?
What will happen at the end of the 90-day reciprocal tariff pause?
Customs has been issuing new Cargo System Message Service messages to give updates to the importing community regarding how to handle import-related issues flowing out of the new tariffs. We expect the same to happen with the new automotive tariffs. We will continue to update our tariff FAQs to provide timely answers as new information becomes available.
Distracted Driving Awareness Month Tips
April marks Distracted Driving Awareness Month, a reminder to understand the importance of staying focused on the road. In the U.S., one of every ten fatal crashes involves distraction, resulting in over 3,000 deaths per year, according to the NHTSA.
Raising awareness about the dangers of distracted driving can help save lives. We’ve put together some key tips to help you steer clear of distracted driving and stay safe on the road.
1. Put Down the Phone
One of the leading causes of distracted driving is phone use. Whether it is texting, scrolling on social media, or making a quick call, your attention should always be on the road. Consider turning on “Do Not Disturb” mode while driving or take advantage of voice-activated features to keep your hands on the wheel and your eyes on the road.
In Michigan, it is illegal to hold or use a cell phone or other mobile electronic device while driving, except for hands-free use or in emergencies to reach 911.
Hands-free features, such as Bluetooth or voice-activated systems within the vehicle, are allowed as long as they can be operated with a single touch. Anything beyond a single touch is against the law, even if a cell phone is mounted on your dashboard or connected to your vehicle’s integrated system.
2. Plan Ahead
Make sure to plan your route and set up the radio or any music before you hit the road. If you need to adjust your route mid-drive, pull over safely to make changes or ask a passenger for assistance. GPS and music can be major distractions, so it is important to be prepared before you start driving.
3. Limit Passengers
Having too many passengers can lead to distractions, especially if they’re loud. Keep the number of passengers to a minimum and remind everyone to respect your focus while you’re driving.
4. Avoid Eating and Drinking
It is easy to think you can multitask while eating or sipping your morning coffee, but these can divert your attention. Try to eat before you get behind the wheel or save snacks for when you’re parked.
5. Educate Others
Talk to friends and family about the importance of avoiding distractions while driving and encourage them to make safe driving a priority. The more we all understand the risks, the better we can work together to create safer roads.
Conclusion
Distracted driving is a serious issue that affects everyone on the road. By following these simple tips, you can help reduce distracted driving accidents and contribute to safer driving conditions for everyone. This April, let’s commit to making our roads safer.
Court Relies on Contractual Terms to Dismiss Dealership Suit Against Auto Manufacturer
Decozen Chrysler Jeep Corp. (“Decozen”), a New Jersey-based automobile dealership, filed a lawsuit against Fiat Chrysler Automobiles, LLC (“FCA”), in U.S. District Court for the District of New Jersey alleging that FCA engaged in unfair business practices that disadvantaged Decozen compared to other dealerships. Decozen claimed that FCA’s incentive and allocation programs created an uneven playing field, favoring larger dealerships and those in different geographic regions. FCA moved to dismiss the complaint, arguing that the claims failed to state a legally actionable cause of action. On March 13, 2025, the court issued its ruling on FCA’s motion.
Holdings
Breach of Contract: The court examined whether FCA’s incentive programs violated any contractual obligations owed to Decozen. The court found that Decozen failed to identify a specific contractual provision that FCA breached leading to the dismissal of this claim.
Violation of Franchise Laws: Decozen alleged that FCA’s practices violated New Jersey’s Franchise Practices Act. The court determined that while franchise laws protect dealerships from unfair terminations and discriminatory practices, Decozen did not sufficiently demonstrate that FCA’s actions constituted an unlawful franchise violation.
Unfair Competition and Antitrust Claims: Decozen argued that FCA’s actions harmed competition. The court ruled that Decozen failed to establish antitrust injury and that the allegations were more aligned with competitive disadvantages rather than anti-competitive conduct. The court dismissed these claims as well.
Fraud and Misrepresentation: The court dismissed Decozen’s fraud claims, noting that the allegations lacked specificity regarding false statements made by FCA.
Lessons Learned for Manufacturers
Clarity in Incentive Programs: Manufacturers should ensure that incentive structures and allocation programs are transparent and consistently applied to avoid potential legal challenges.
Contractual Precision: Franchise agreements should explicitly outline obligations and rights to minimize ambiguity in disputes.
Compliance with Franchise Laws: While manufacturers retain discretion in business decisions, they must be cautious not to create the appearance of discrimination or unfair treatment that could trigger legal scrutiny under franchise laws.
Avoiding Antitrust Risks: Manufacturers should evaluate incentive programs to ensure they do not inadvertently create antitrust concerns by favoring certain dealers over others in a way that could be deemed anti-competitive.
This ruling underscores the importance of clear contractual terms and well-structured incentive programs to mitigate legal risks for manufacturers in franchise relationships.
Lay of the Land: Challenges to Data Center Construction—Past, Present and Future [Podcast]
In this episode of Lay of the Land, we are joined by Paul Manzer, principal and data center market leader with Navix Engineering, to explore the evolving landscape of data center construction. We dive into the unique civil engineering challenges—from site selection to due diligence—and trace the evolution of these challenges from past limitations to present-day complexities like supply chain issues and legal hurdles.
Looking ahead, we discuss future trends driven by AI and emerging technologies, examining how legal strategies and engineering innovation can address these challenges. We provide key takeaways for developers and investors, emphasizing the critical collaboration between legal and engineering teams.
President Trump’s Tariffs Announcement and their Impact on Mexico
On April 2, 2025, U.S. President Donald Trump announced his tariff policy for numerous countries. In the case of Mexico, exported products that comply with the USMCA regulations are exempt from tariffs, which are approximately half of Mexico’s exports to the United States.
Products exported from Mexico that do not qualify as originating under USMCA provisions will be subject to a 25% tariff. Previously, these products were subject to a 2.5% tariff rate. The 25% tariff on products not protected under the terms of the USMCA, which account for half of Mexico’s exports to the U.S., and have an estimated value of US$300 billion, was enacted by Trump to press Mexico on preventing fentanyl trafficking and undocumented migration. If Mexico continues working with the U.S. on issues of fentanyl and unauthorized immigration, products not protected by the USMCA will be lowered to a 12% tariff rate. Manufacturers and other producers may address compliance with USMCA regulations, but this will not be simple and in the process, could become less competitive and lose market share.
Mexico had a slightly better outcome as it relates to tariffs in comparison with other countries. President Trump’s announcement could potentially usher in new investment opportunities for Mexico, particularly by international companies involved in the export of manufactured products to the U.S. severely affected by tariffs. Countries such as Taiwan (32% tariff), Vietnam (46% tariff), and South Korea (25% tariff), among others, which export approximately US$380 billion in products to the U.S. could potentially look to relocate manufacturing operations to Mexico to bypass tariffs for exporting to the U.S. under the USMCA rules.
The current trade landscape is highly complex. Multinational companies will need to find ways to remain competitive and keep market share while assessing what their global operations may look like in the future.
Auto Tariffs: Pumping the Brakes on Imports
On or after April 3, 2025, all foreign automobiles imported into the U.S. will be subject to a 25 percent tariff. The new auto tariff will be applied in addition to the general tariff rate of 2.5 percent, plus any applicable steel derivative tariff. President Donald Trump issued a proclamation implementing the new tariffs on March 26, based upon a 2019 report under Section 232 of the Trade Expansion Act of 1962, which concluded that “automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States.”
The new auto tariffs will apply to automobiles from all countries. However, importers of autos that qualify for the tariff benefits of the U.S.-Mexico-Canada Free Trade Agreement (USMCA) will be permitted to subtract the value of the U.S. content of the autos from the full value of the vehicle for purposes of applying the 25 percent tariff.
The proclamation also provides that if U.S. Customs and Border Protection (CBP) determines that the U.S. content has been overstated, the 25 percent tariff will be applied to the full value of the auto without any exclusion of U.S. content. The 25 percent tariff would be applied retroactively (from April 3 to the date of inaccurate overstatement) as well as prospectively. Thus, significant enforcement efforts by CBP are anticipated.
The proclamation also covers certain auto parts in a yet-to-be published Annex. Because the 2019 Section 232 report specifically identified imported engines and engine parts, transmissions and power train parts, and electrical components of vehicles as a threat, it is anticipated that such parts will be subject to the tariffs. Moreover, within 90 days, the proclamation requires the Secretary of Commerce to establish a process for adding additional parts to the Annex.
Today, only about half of the vehicles sold in the United States are manufactured domestically, a decline that jeopardizes our domestic industrial base and national security, and the United States’ share of worldwide automobile production has remained stagnant since the February 17, 2019, report.
www.whitehouse.gov/…
New-Aged Automakers Beware: CPPA’s Enforcement Action Against Honda Results in the Agency’s First Settlement
Key Takeaways:
CPPA launched its first major enforcement action in targeting connected vehicle-maker Honda.
Connected vehicles often collect various kinds of sensitive driver information, including geolocation, biometric and behavioral data.
After the CPPA found Honda in violation of several CCPA provisions, the company agreed to settle the enforcement action for approximately $650,000 while also agreeing to adopt certain remedial measures.
Other Connected vehicle-makers have also experienced a spike in regulatory scrutiny, signaling rising enforcement pressure and growing expectations for privacy-by-design.
CPPA’s Investigation into Connected Cars
In 2023, the California Privacy Protection Agency (“CPPA”) commenced a formal investigation into the data privacy practices of vehicle manufacturers (the “Investigation”), focusing primarily on the collection, use, and disclosure of personal information by “connected vehicles.”
Connected vehicles are vehicles equipped with technologies able to capture, among other kinds of consumer information, geolocation, biometric and behavioral data, including global positioning systems (“GPS”), telematics sensors, onboard cameras and smartphone integrations. With over 35 million registered vehicles in California and the rapid growth of these technologies in newer vehicles, automakers must educate themselves about the growing privacy concerns presented by these connected vehicles, especially where these technologies are still linked to third party service providers.
The Investigation marks the CPPA’s first formal inquiry since gaining full enforcement authority on July 1, 2023, and seeks to determine whether automakers were complying with key provisions of the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”). Specifically, the agency is examining whether these vehicle manufacturers: (i) provide sufficient notice; (ii) obtain valid consent; (iii) limit data collection consistent with data minimization principles; and (iv) maintain transparency around third-party data sharing practices. See Cal. Civ. Code § 1798.
CPPA’s inquiry underscores the agency’s intent to promote accountability among manufacturers and to ensure consumers retain meaningful control over their personal data.
Honda’s Privacy Violations and Settlement Terms
On March 12, the CPPA announced its first public enforcement action based on the Investigation[FAM3]. The action stemmed from a series of purported CCPA violations regarding American Honda Motor Co., Inc. (“Honda” or the “Company”)’s handling of consumer privacy rights. The CPPA found that:
Honda unlawfully interfered with consumers’ ability to exercise their data rights. For example, Honda required consumers to provide excess personal information even when such verification was not legally necessary. The CPPA determined that these burdensome conditions discouraged or delayed valid privacy requests, violating the CCPA’s intent to grant consumers meaningful control over their personal information without unreasonable obstacles.
Honda’s interface steered users toward surrendering their privacy rights. For example, Honda’s online privacy rights platform was designed in a way that made it easier for consumers to opt in to the sale of their personal information, while creating friction for those attempting to opt out. This unequal treatment of consumer choices violated CCPA’s requirement that options be presented in a fair and neutral manner.
Honda did not provide clear or accessible methods for consumers to authorize third-party representatives (i.e., “authorized agents”) to act on their behalf. The CPPA determined that this omission weakened an essential mechanism intended to support the exercise of privacy rights, which limited consumers ability to benefit from guaranteed privacy protections.
Honda failed to produce contracts with its advertising technology vendors that included the required privacy safeguards, raising serious concerns about whether the Company had properly limited how third parties could use, retain, or disclose consumer information as required under California law.
The CPPA enforcement action against Honda concluded with a settlement order (the “Order”) in which the Company agreed to pay $632,500 in monetary penalties and undertake significant reforms to its data privacy practices, including (i) creating a streamlined process for privacy rights requests, (ii) engaging a user experience designer to ensure the system meets CCPA fairness standards, (iii) training employees on proper handling of privacy requests, and (iv) revising contracts with third-party data recipients to include all required privacy protection clauses.
The Order also mandates several technical upgrades to Honda’s privacy infrastructure. For instance, Honda must establish separate processes for verifiable and non-verifiable privacy requests to reduce barriers to opting out. It must also add a “Reject All” button to its cookie management tool to ensure that privacy-protective choices are as accessible as opt-in options.
Broader Privacy Concerns in the Automotive Industry
Federal regulators and certain states, like Texas, have launched investigations into the data privacy practices of automakers, focusing on how personal information, such as driving behavior, is collected and shared with third party insurance companies. Recently Ford, Hyundai, Toyota and Fiat Chrysler Automobiles, were sent letters by the Texas Attorney General’s Office demanding sworn answers about how they collect, share and sell consumer data.
Other major automakers have also faced privacy controversies. Earlier this year, Tesla was sued over allegations that employees accessed and shared images and videos recorded by customers’ vehicles without their consent. Yeh v. Tesla, Inc.
California lawmakers are taking action to regulate in-vehicle data collection, including, for example, by restricting the collection and use of images and videos captured by in-car cameras.
Looking Ahead: CPPA’s Growing Role in Consumer Privacy
The CPPA is actively enforcing its authority across all industries, with penalties ranging from $2,500 to $7,500 per violation. The Honda settlement marks a clear warning: as connected devices like vehicles continue to harvest large volumes of personal data, the cost of noncompliance will continue to rise. In today’s fragmented U.S. privacy landscape, businesses must ensure they offer consumers clear, meaningful choices around data use. Working closely with legal counsel is essential to stay ahead of regulatory changes — because in this new era of enforcement, transparency and trust are no longer best practices; they’re legal imperatives.