Distracted Driving Laws and Penalties: What You Need to Know
As Distracted Driving Awareness Month approaches in April, we are reminded to adhere to distracted driving laws, aimed at making our roads safer for everyone year-round. With an increase in smartphone use and other distractions, it’s essential to be aware of the laws and penalties surrounding distracted driving. In this post, we’ll break down distracted driving laws and the consequences.
What is Distracted Driving?
Distracted driving is any activity that diverts attention from driving including texting, talking on the phone, eating, changing the radio, or even chatting with passengers. According to the Michigan Office of Highway Safety Planning, distracted driving is a factor in thousands of crashes each year.
The Laws
While distracted driving laws can vary by state, there are some common elements that many states share:
1. Texting While Driving
Most states have strict laws against texting while driving. The most dangerous form of distracted driving is texting, since it requires visual, manual, and cognitive attention.
Michigan has a primary enforcement law for texting, which means law enforcement can stop and ticket a driver solely for texting, even if no other traffic violation has occurred.
2. Use of Hands-Free Devices
While some states allow the use of hands-free devices, others have restrictions. It’s important to familiarize yourself with local laws regarding Bluetooth or other hands-free technologies to avoid fines.
3. Other Distractions
Driving while distracted by activities such as eating, grooming, or interacting with passengers can also be penalized, especially if these actions lead to dangerous driving behavior.
Penalties for Distracted Driving
The penalties for distracted driving can vary significantly depending on the specific violation. Common consequences include:
1. Fines
Many states impose fines for distracted driving offenses. These can range from $50 to several hundred dollars, depending on the severity of the violation.
2. Points on Your License
Distracted driving can lead to points being added to your driving record. Accumulating too many points can result in higher insurance rates and even license suspension.
3. Increased Insurance Premiums
Insurance companies often raise premiums for drivers with distracted driving citations. Over time, this can lead to a significant financial burden.
4. Potential Criminal Charges
In severe cases, especially if distracted driving leads to an accident with injuries or fatalities, the driver may face criminal charges. This can result in hefty fines, community service, or even jail time.
Stay Focused
Here are some tips to help minimize distractions and stay vigilant behind the wheel:
Put your phone away: Consider using “Do Not Disturb” mode while driving.
Plan ahead: Set your GPS and music before you start driving.
Avoid multitasking: Eat before you drive, and save interactions with passengers for when you’re parked.
Conclusion
Understanding distracted driving laws and their penalties is vital for all drivers. By staying informed and committed to safe driving practices, you contribute to safer roads for everyone
Arkansas Attorney General Sues GM and OnStar Over Alleged Privacy Violations
On February 26, 2025, the Attorney General of Arkansas filed a lawsuit against General Motors Co. (“GM”) and its subsidiary, OnStar LLC (“OnStar”), alleging deceptive trade practices related to the collection and sale of drivers’ data. The complaint alleges that GM and OnStar gathered detailed driving data (including precise geolocation data, GM app usage data, and information about consumers’ driving behavior (e.g., start time, end time, vehicle speed, high-speed driving percentage, late-night driving percentage, acceleration data, braking data, and distance driven)) from over 100,000 Arkansas residents without their consent and sold it to third-party data brokers. The data brokers then allegedly sold the data to insurance companies, which used the data to deny coverage or increase insurance rates for consumers. The complaint asserts that GM and OnStar collected and sold the consumer data to generate additional revenue for the companies. The Arkansas Attorney General is seeking monetary damages, injunctive relief, and attorneys’ fees and expenses.
This lawsuit follows actions by the FTC and the Texas Attorney General over similar data-sharing allegations, and is part of a larger trend of state regulators examining the privacy practices of connected vehicle manufacturers.
What Honda’s CCPA Penalty Means for Your Privacy Compliance
The California Privacy Protection Agency (CPPA) has reached a settlement with American Honda Motor Co., Inc. (Honda), as outlined in this Order of Decision. The Order is the CPPA’s first public enforcement action involving a significant monetary penalty of $632,500, arising from its investigation into the privacy practices of connected vehicle manufacturers that began in July 2023.
The CPPA asserted that Honda violated the California Consumer Privacy Act (CCPA) by requiring consumers to undergo an extensive identity verification process, including for requests where verification is not permitted under the CCPA. Honda’s process for accepting data subject requests through authorized agents also included unnecessary and non-permitted steps.
Additionally, the CPPA asserted that Honda’s cookie management platform violated the CCPA, as it required a two-step process for opting out of advertising cookies and tracking technologies while consenting (or reconsenting) to cookies required just a single click, making it more burdensome to opt out of, rather than consent to such data processing. Honda was also unable to produce any of its contracts with third party advertising vendors to show that they were implementing the required contractual provisions under the CCPA.
To resolve the CPPA’s allegations, Honda has agreed to pay $632,500 in monetary penalties and revise its privacy practices, including implementing a simpler process for consumers to exercise their privacy rights, minimizing data collection for verification purposes and modifying its contract management and tracking processes.
The CPPA’s Order signals an intent to hold businesses accountable for their data subject request processes. Below are some steps you can take to ensure compliance and mitigate the risk of similar penalties:
Revisit your process for responding to data subject requests and ensure that your verification process is appropriately tailored.
Review (or implement) a process for receiving, verifying and responding to data subject requests.
Review your contracts with vendors to confirm they include the required provisions.
Assess (or implement) your cookie management platform to ensure opt-out processes are simple and symmetrical.
New U.S. Regulations on Vehicle Connectivity and Automated Driving Systems: Compliance Starts Now!
Starting today, March 17, 2025, new U.S. regulations impose sweeping restrictions on the importation and sale of connected vehicles (CV) and related components with ties to China and Russia. Issued by the Bureau of Industry and Security (BIS), the Connected Vehicles Rule (CV Rule) aims to curb potential national security threats posed by foreign-made vehicle connectivity and automated driving systems. These restrictions, which will be phased in over the coming years, require businesses to conduct rigorous supply chain assessments and file compliance declarations. Importers and manufacturers must act now to ensure compliance and avoid steep penalties for violations.
Key components of the CV Rule are as follows:
Controls. The CV Rule focuses on two main categories: vehicle connectivity systems (VCS) and automated driving systems (ADS). VCS includes hardware and software that “directly enables” the transmission, reception, or processing of radio frequencies over 450 MHz. ADS encompasses hardware and software capable of performing the entire dynamic driving task for a connected vehicle.
Scope. Consistent with the Notice of Proposed Rulemaking published in September 2024 (NPRM), the CV Rule prohibits the import or sale of CVs and VCS hardware or ADS with a defined nexus, significant connection, or association to the People’s Republic of China (PRC) and Russia. This means the CV, VCS, or ADS was either (i) manufactured in the PRC or Russia, (ii) developed by companies based in the PRC or Russia, or (iii) supplied by entities with substantial ties to the PRC or Russia.
Implementation. Starting with Model Year (MY) 2027 for covered software and MY 2030 for VCS hardware, the CV Rule will be gradually implemented over the next several years to minimize supply chain disruptions. Specifically, the CV Rule will not apply to legacy software and components designed, developed, manufactured, or supplied in or from the PRC or Russia prior to March 17, 2026.
Declarations. Importers should conduct a supply chain assessment to document the origin of all hardware and software used in a connected vehicle. This supply chain assessment will allow for the identification and mitigation of risks while forming the basis for the BIS Declarations of Conformity (Declarations). BIS will require Declarations from importers and CV manufactures to certify compliance annually prior to importing or selling CVs with VCS hardware or covered software in the US.
Declarations may be filed using forms to be made available on the BIS website and should include:
Confirmation that the VCS hardware or covered software is not designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia.
The importer has conducted due diligence to inform the Declaration and maintains supporting documents.
The importer has taken all possible measures to ensure all information is furnished to the BIS upon request.
The importer will submit material changes to Declarations within 60 days.
The importer will maintain records for 10-years.
Authorization. The BIS will issue general authorizations for parties to engage in otherwise prohibited transactions, provided the party meets certain conditions. The general authorizations and conditions will be published on the BIS website. Expected general authorizations include exemptions for (i) small businesses, (ii) CVs not used on public roads, (iv) CVs imported for display, testing, or research, and (iv) CVs imported for repair. Specific authorizations may also be provided by the BIS following an application and approval process. These specific authorizations may be granted for higher-risk transactions, where importers and manufacturers apply to the BIS for permission to engage in transactions that would otherwise be prohibited.
Advisory Opinions. Importers and manufacturers that remain unsure whether a transaction is subject to a prohibition or requirement under the CV Rule may request an Advisory Opinion from the BIS’s Office of Information and Communications Technology and Services.
Penalties. Persons who violate, attempt to violate, conspire to violate, or knowingly cause a violation of the CV Rule may be subjected to civil and/or criminal penalties under the International Emergency Economic Powers Act. The maximum civil penalty is currently $368,136 per violation with the maximum criminal penalty of $1,000,000. If the BIS has reason to believe a violation has occurred, then BIS will inform the alleged violator with a written notice of the intent to impose a penalty. Alleged violators will then have 30 days to respond in writing and provide additional information to contest the penalty.
For importers of CVs, VCS, or ADS planning and supply chain due diligence will be critical in adapting to this new final rule.
EPA Announces Expansive Deregulatory Plan
On March 12, 2025, U.S. Environmental Protection Agency Administrator Lee Zeldin announced a sweeping plan to “undertake 31 historic actions in the most consequential day of deregulation in U.S. history.” The announcement states that the deregulatory plan is intended to “advance President Trump’s Day One executive orders and Power the Great American Comeback.” EPA states that these actions “will roll back trillions in regulatory costs and hidden ‘taxes’ on U.S. families,” making it “more affordable to purchase a car, heat homes, and operate a business.”
The ambitious plan identifies numerous past EPA regulations or actions that will be reconsidered or reviewed. The regulations identified in the deregulatory plan, which were promulgated under the Clean Air Act, Clean Water Act, and the Resource Conservation and Recovery Act, apply to a wide range of industrial sectors and regulated parties. Although described as “31 actions,” the EPA’s primary announcement lists 22 different items, with some mentioning more than one regulation or past action set to be reconsidered or otherwise addressed as part of the plan. EPA’s list is also separated by headings that appear to correspond to separate Day One executive actions by President Trump. For each of the planned deregulatory actions, EPA issued an accompanying press release providing additional information, including, in a few cases, anticipated timelines for completing the deregulatory actions and planned interim actions.
The Babst Calland team has summarized the identified deregulatory actions and information provided by EPA in the table below:
EPA’s Description
Key Points from EPA Press Release
EPA’s Target Timeline
Unleashing American Energy
EPA Announces Reconsideration of Clean Power Plan 2.0
Reconsidering the “Clean Power Plan 2.0” based on the Biden administration’s rule requiring “unlawful fuel-shifting” and “overreaching”
Citing U.S. Supreme Court’s stay of the Clean Power Plan and subsequent decision overturning it in West Virginia v. EPA
No stated timeline
EPA Announces Reconsideration of OOOO b/c
Reconsidering regulations for the oil and gas industry under Clean Air Act (CAA) § 111 (40 CFR Part 60, Subparts OOOOb/c) and revisions to 40 CFR Part 98, Subpart W of the Greenhouse Gas Reporting Program as “ideologically driven regulations” that prevent U.S. “energy dominance”
Referring to “major recent Supreme Court precedent” related to federal agencies’ interpretation and implementation of governing statutes
No stated timeline
EPA Announces Reconsideration of Mercury and Air Toxics Standards (MATS)
Reconsidering the MATS rule based on noted costs for compliance, past mercury emissions reductions, and significant regulatory uncertainty for coal plants in several states, including Pennsylvania and West Viriginia
Considering 2-year compliance exemption via CAA § 112(i)(4) for affected power plants during EPA’s rulemaking process
No stated timeline for completing reconsideration
EPA is considering 2-year compliance exemption
EPA Announces Reconsideration of Greenhouse Gas Reporting Program
Reconsidering the mandatory Greenhouse Gas Reporting Program based on noted costs of calculating and submitting annual emissions reports
Noting that mandatory GHGRP is “not directly related to” developing regulations and could be better used to drive improvements at reporting facilities
No stated timeline
EPA Announces it Will Reconsider 2024 Water Pollution Limits for Coal Power Plants (ELG: Steam Electric)
Revising 2024 wastewater regulations for coal burning power plants on flue gas desulfurization wastewater, bottom ash transport water, combustion residual leachate and legacy wastewater
Reconsidering technology-based ELGs and evaluating immediate relief from leachate requirements
Stating that EPA will consider how it might provide “immediate relief from some of the existing leachate requirements,” and “in a series of related actions,” EPA will provide clarifying updates on leachate requirements and reevaluate availability and cost of membrane technology
No stated timeline
EPA Will Revise Wastewater Regulations for Oil and Gas Extraction
Modernizing regulations on wastewater discharges for oil and gas extraction facilities to “provide regulatory flexibility” and support environmentally sustainable water reuse with “modern technologies and management strategies”
Reviewing and evaluating technologies and strategies for produced water to be treated for beneficial reuse, including for AI and data center cooling, rangeland irrigation, fire control, power generation, and ecological needs
Considering expanding the geographic scope of where treated wastewater can be used and discharged in the U.S.
No stated timeline
EPA Announces Reconsideration of the Risk Management Plan
Reconsidering 2024 Risk Management Plan (RMP) rule due to “significant concerns relating to national security and the value of the prescriptive requirements within the rule”
Stating that the 2024 RMP rule makes oil and natural gas refineries and chemical facilities less safe and less competitive
No stated timeline
Lowering The Cost of Living for American Families
EPA Announces Action to Implement POTUS’s Termination of Biden-Harris Electric Vehicle Mandate
Reconsidering Model Year 2027, Later Light-Duty, Medium-Duty, and Heavy-Duty Vehicle regulations based on noted regulatory and compliance costs and effort to bring back American auto jobs
Reevaluating Biden administration’s “Clean Trucks Plan” and “2022 Heavy-Duty Nitrous Oxide (NOx) rule”
No stated timeline
EPA Kicks Off Formal Reconsideration of 2009 Greenhouse Gas Endangerment Finding with Agency Partners
Reconsidering the 2009 Greenhouse Gas Endangerment Finding in collaboration with Office of Management and Budget and other agencies based on costs of regulations that flow from the finding
Reconsidering all of EPA’s prior regulations and actions that rely on the 2009 Endangerment Finding
Stating that “EPA will follow the Administrative Procedure Act and Clean Air Act, as applicable, in a transparent way for the betterment of the American people and fulfillment of the rule of law”
Stating in a separate one-page document that “EPA does not prejudge the outcome” of the reconsideration
No stated timeline
EPA Announces Reconsideration of the Technology Transition Rule
Reconsidering the technology transition rule based on noted costs of refrigerant systems required under rule
Stating that the rule harms semiconductor manufacturing and raises the cost of food at grocery stores
No stated timeline
EPA Announces Path Forward on NAAQS for PM2.5 to Aid Manufacturing, Small Business
Reconsidering the PM2.5 National Ambient Air Quality Standards (NAAQS) based on “serious concerns” from states and the standards serving “as a major obstacle to permitting”
Releasing guidance “soon” to increase flexibility on NAAQS implementation, reforms to New Source Review, and direction on permitting obligations
No stated timeline for completing reconsideration
Guidance to be released “soon”
EPA Announces Reconsideration of Air Rules Regulating American Energy, Manufacturing, Chemical Sectors (NESHAPS)
Reconsidering initially the National Emission Standards for Hazardous Air Pollutants (NESHAPS) for integrated iron and steel manufacturing, rubber tire manufacturing, synthetic organic chemical manufacturing industry, commercial sterilizers for medical devise and spices, lime manufacturing, coke ovens, copper smelting, and taconite ore processing
Considering a 2-year compliance exemption via CAA § 112(i)(4) for affected facilities during EPA’s rulemaking process
Evaluating other NESHAPs and New Source Performance Standards to determine whether they should be reconsidered
No stated timeline
Administrator Zeldin Begins Restructuring Regional Haze Program
Reconsidering implementation of program based on noted significant costs to power plants in the past
Reviewing Regional Haze Program regulations “to ensure that it fulfills Congressional intent, is based on current scientific information, and reflects recent improvements in air quality”
No stated timeline
EPA Announces Action to Address Costly Obama, Biden “Climate” Measurements (Social Cost of Carbon)
Revisiting Biden administration’s “social cost of carbon” based on “significant regulatory costs”
Executive Order requires guidance issued within 60 days of order
Administrator Zeldin Directs Enforcement Resources to Align with Executive Orders and EPA’s Core Mission
Immediately revising National Enforcement and Compliance Initiatives “to ensure that enforcement does not discriminate based on race or socioeconomic status” or “shut down energy production”
Stating that enforcement discretion will provide predictability “as EPA considers changes to regulations” and “cost savings”
EPA states it “will immediately revise” initiatives
EPA Terminates Biden’s Environmental Justice, DEI Arms of Agency
Terminating DEI and Environmental Justice arms of EPA
No stated timeline
Advancing Cooperative Federalism
EPA Announces Plan to Work with States on SIPs and Reconsider “Good Neighbor Plan”
Tackling “troubled” “Good Neighbor Plan” to advance cooperative federalism and work with states on Statement Implementation Plans to improve air quality
No stated timeline
Administrator Zeldin Takes Action to Prioritize Cooperative Federalism, Improve Air Quality Faster
Announcing commitment to address backlog of State/Tribal Implementation Plans
Noting EPA will assist states to ensure air quality is protected while growing economy
Referencing states’ concerns “related to being punished for emissions” outside of their control and “air quality monitors not being located in most logical locations”
Specifically mentioning development of semiconductor manufacturing and artificial intelligence
EPA’s goal to clear backlog “as soon as possible”
Administrator Zeldin Takes Action to Decrease Risk of Future Catastrophic Wildfires
Prioritizing allowance of prescribed fires within State/Tribal Implementation Plans to decrease risk of future wildfires
No stated timeline
EPA to Accept Nominations for Science Boards
Reconstituting Science Advisory Board and Clean Air Scientific Advisory Committee
Stating changes are critical to EPA receiving scientific advice “consistent with its legal obligations to advance core mission of protecting human health and the environment”
Accepting nominations for 30 days following publication in Federal Register
EPA Announces Action on Coal Ash Program
Prioritizing a number of “timely” actions on coal ash, “including state permit program reviews and update to coal ash regulations”
Reviewing Legacy-Coal Combustion Residuals Management Units Rule (CCRMU Rule) and “evaluating whether to grant short- and long-term relief such as extending compliance deadlines”
EPA will propose determination on North Dakota program within 60 days
EPA aims to complete CCRMU Rule changes within “a year”
EPA Announces Use of Enforcement Discretion to Further North Carolina’s Recovery from Hurricane Helene
Granting an extension of the no action assurance that North Carolina requested to “use large air curtain incinerators to clear debris without Title V permits to allow more efficient burning of debris with lower emissions”
Immediate
Administrator Zeldin Announces EPA Will Revise Waters of the United States Rule[1]
Revising Clean Water Act (CWA) Waters of the United States definition to reduce red tape, cut permitting costs and lower costs of doing business
Undertaking rulemaking process guided by Sackett and providing guidance to states while rulemaking proceeds
EPA will “move quickly” on review and “expeditiously” obtain input from stakeholders
With limited exceptions, EPA provides few details on the timing and steps it will take for each of the identified actions. In multiple announcements, EPA states or implies that it will undertake notice and comment rulemaking under the Administrative Procedure Act. Notably, EPA does not address steps it may take in pending litigation regarding several of the identified regulations. Nor does EPA mention whether the planned deregulatory actions satisfy directives under President Trump’s other Executive Orders, such as the “Ensuring Lawful Government and Implementing the President’s ‘Department of Government Efficiency Regulatory Initiative’” and “Unleashing Prosperity Through Deregulation” orders.
The deregulatory plan will require significant resources and time to implement at a time when EPA’s new political leadership is seeking to drastically cut costs and staff. Although several of the identified deregulatory actions may take years to complete, stakeholders subject to the identified deregulatory actions must evaluate and consider developing strategies for productively engaging with EPA during the expected rulemakings and related actions. Major environmental groups have denounced EPA’s deregulatory plan and are vowing to challenge the EPA.
CPPA Fines Honda $632,500 for CCPA Violations
On March 12, 2025, the California Privacy Protection Agency (“CPPA”) announced that it reached a settlement with American Honda Motor Co. (“Honda”) in which Honda will pay a $632,500 fine to resolve claims that the company violated the CCPA. The enforcement action comes as part of the CPPA’s ongoing investigation into connected vehicle manufacturers, which began in 2023.
Specifically, the CPPA alleged that Honda violated the CCPA’s privacy rights provisions by:
requiring California consumers to provide excessive personal information to exercise their rights, including the opt-out of sale/sharing right (which is not a right that must be verified with consumers’ personal information);
using an online privacy rights management platform that did not offer consumers their privacy choices in a symmetrical or equal way (in violation of the requirement in Section 7004(a)(2) of the CCPA Regulations to provide symmetry in choice when offering consumers more privacy-protective options, and not create a more difficult path for consumers to exercise such options); and
not providing a user-friendly method for authorized agents to submit privacy rights requests on consumers’ behalf.
The CPPA also alleged that Honda failed to provide to the CPPA copies of its contracts with ad tech providers containing the required CCPA contract provisions.
As part of the settlement Honda agreed to (1) pay the $632,500 fine, (2) implement a new and simpler process for consumers to submit privacy rights requests, (3) consult a user experience (UX) designer to evaluate its methods for submitting privacy requests, (4) train employees on CCPA compliance, and (5) change its contracting process with recipients of consumer personal information to ensure compliance with the CCPA.
The Long-Standing Waiver for Manufactured Products from FHWA’s Buy America Requirements is Phasing Out
Amidst the flurry of tariff threats swirling around the world, the Federal Highway Administration (FHWA) is terminating the waiver known as the Manufactured Products General Waiver from the Buy America requirements found in 23 U.S.C.A § 313. The Buy America regulation requires all federal-aid projects to use only steel, iron, and manufactured products that are produced in the United States. Since 1983, these requirements have been waived for manufactured products that were permanently incorporated into federal-aid projects by not requiring such products to be produced domestically, apart from predominantly iron or steel components of manufactured products. This waiver is being phased out in 23 C.F.R. 635.410, an amendment to the Buy America regulation which establishes new standards that will apply to manufactured products on federal-aid projects. The final rule was published in the Federal Register on January 14, 2025 (Vol. 90, No. 8, pp. 2932-58).
The new rule, 23 C.F.R. 635.410, defines “manufactured products” as “articles, materials, or supplies that have been processed into a specific form and shape, or combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.” A manufactured product does not include an article, material, or supply if it is “classified as an iron or steel product, an excluded material, or another product category as specified by law or in 2 C.F.R. part 184” or “mixtures of excluded materials delivered to a work site without final form for incorporation into a project.” However, “an article, material, or supply classified as a manufactured product may include components that are iron or steel products, excluded materials, or other product categories as specified by law or in 2 C.F.R. part 184.”
Manufactured products must be manufactured in the United States effective for federal-aid projects obligated on or after October 1, 2025. The Manufactured Products General Waiver will remain in place until then. The additional requirement to have greater than 55% of the manufactured product’s components, by cost, be mined, produced, or manufactured in the United States becomes effective for federal-aid projects obligated on or after October 1, 2026. For all federal-aid projects obligated on or after October 1, 2026, all manufactured products permanently incorporated into the project must both be manufactured in the United States and have the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States be greater than 55% of the total cost of all components of the manufactured product.
Under the new rule, an article, material, or supply is generally only subject to one set of requirements. The classification of an article, material, or supply is made based on its status at the time it is brought to the work site for incorporation into an infrastructure project. The work site is the location of the infrastructure project at which the iron or steel product or manufactured product will be incorporated. The new rule also provides additional clarifications for precast concrete products and enclosures of electronic hardware systems classified as manufactured products, as well as, how to determine whether the cost of components for manufactured products is greater than 55% of the total cost of all components.
Tariff Whiplash in North America
On March 4, 2025, and pursuant to President Donald Trump’s authority under the International Emergency Economic Powers Act (IEEPA), the U.S. proceeded with imposing IEEPA tariffs of 25 percent on products of Canada and Mexico, while also increasing IEEPA tariffs to 20 percent on products of China. Yet, in the two days that have passed since these IEEPA tariffs went into effect, we have already seen dramatic changes with respect to Canada and Mexico, exemplifying the fast-changing nature of negotiations between the U.S. and its North American trading partners.
Here are the key aspects of these tariffs as originally imposed on March 4, their limited exemptions, and the latest announcements from the White House pausing certain IEEPA tariffs.
IEEPA Duty Rates and Rules of Origin (Effective March 4, 2025)
Mexico: 25 percent on all imports
Canada: 25 percent on all imports, except on Canadian energy or energy products, which are subject to a lower 10 percent tariff.
China: 20 percent on all imports (previously 10 percent)
These tariffs apply broadly to most imported goods that are “products of” those three countries. For Canada and Mexico, the determination of whether merchandise is a “product of” those countries is based on two rules of origin: 1) United States-Mexico-Canada Agreement (USMCA) origin rules and 2) “substantial transformation,” which often involves a complex case-by-case analysis. For China, the non-preferential rules of origin apply, which includes the substantial transformation analysis. Thus, importers need to be wary that even imports coming from outside of Canada, Mexico, or China can be subject to these IEEPA tariffs, e.g., an unassembled Chinese-origin product that undergoes only simple assembly in a third country would remain subject to China tariffs.
Importers should also keep in mind these tariffs are additive, and can stack on top of other existing tariffs, such as Section 301 and Section 232 duties.
Limited Exemptions
Should all tariffs snap back into place in one month, importers should be aware that there are currently very few and limited exemptions from IEEPA tariffs. For instance, exemptions remain for certain “Chapter 98” importations, such as for temporary importations under bond (TIB) or goods that are exported and subsequently returned. And at the moment, the U.S. continues to allow shipments valued at or under the $800 de minimis threshold to avoid IEEPA tariffs, pending the Commerce Department’s report that “adequate systems” are in place to collect duties on these de minimis entries.
Aside from Chapter 98 and de minimis shipments, the published instructions explicitly rule out the use of drawbacks and foreign trade zones (FTZ) to obtain refunds or avoid the tariffs. There is also no process established to request product-specific exclusions.
One-Month Pause for Certain Imports from Mexico and Canada
On March 5, 2025, the White House announced a one-month delay on the 25 percent tariffs for automotive imports from Canada and Mexico. To date, the White House has not published details regarding the scope of this pause, such as whether it would apply to all automotive-related goods including parts and components. It is also unclear whether the pause would apply only to certain U.S.-based automakers or if all automakers importing into the U.S. from Canada and Mexico would receive tariff relief for one month.
On March 6, 2025, President Trump further announced in the media that he had reached an agreement with Mexican President Claudia Sheinbaum to delay the 25 percent tariffs for one month on nearly all goods from Mexico that “fall under the USMCA Agreement.” The White House has not published details regarding the scope of this one-month pause for Mexico.
More Changes on the Way
Given the evolving nature of the administration’s trade policy, businesses affected by tariffs should closely monitor changes on the horizon. Businesses should continue to look out for official publications regarding the one-month pause on certain IEEPA tariffs to assess the actual scope of the one-month reprieve. Businesses should also prepare for potential new tariffs under President Trump’s Fair and Reciprocal Plan that may go into effect as soon as April 2, the same time the one-month pause on IEEPA tariffs ends.
European Union Adopts 16th Package of Sanctions Against Russia, Further Impacting the Aviation Industry
On 24 February 2025, the European Union adopted the 16th Russia sanctions package.
The new measures amending the framework Council Regulation (EU) 833/2014 are found and included in Council Regulation (EU) 2025/395. They target systemically important sectors of the Russian economy including energy, trade, transport, infrastructure and financial services. The new package also includes restrictions directly impacting the aviation industry, through the amendment to Article 3d, “the flight ban”, and the inclusion of Article 5ae, “a full transaction ban” on ports and airports in and surrounding Russia.Below you will find a very brief note on the beforementioned articles.
Amendment to Article 3d:
A notable new provision is the new Article 3d(1b) which provides for the possibility to list any third country airlines operating domestic flights within Russia or supplying, selling, transferring or exporting, directly or indirectly, aircraft or other aviation goods and technology to a Russian air carrier or for flights within Russia. If listed in Annex XLVI, these air carriers, as well as any entity owned or controlled by them, will not be allowed to land in, take off from or overfly EU territory.
Are there any exceptions?
The flight ban will not apply:
In the case of an emergency landing or an emerging overflight; or
If such landing, take-off or overflight is required for humanitarian purposes.
Inclusion of Article 5ae:
The new package includes a full transaction ban, with immediate effect, on Russian ports and airports, which are believed to have been used to transport combat-related goods and technology, or to circumvent the oil price cap by transporting Russian crude oil via ships in the shadow fleet. The restrictions are broadly drafted and will apply to any transactions with relevant ports and airports (as listed in Annex XLVII), even if there is no direct transaction with the port authorities themselves. That includes access to facilities of the listed ports, locks and airports, and the provision of any services to vessels or aircrafts.
Are there any exceptions?
The exceptions include transactions which are strictly necessary for:
Humanitarian purposes;
The operation of flights required for attending meetings with the objective of seeking a solution to Russia’s invasion of Ukraine or of promoting the policy objectives of the restrictive measures;
An emergency landing, take-off or overflight;
Travel for official purposes of members of diplomatic or consular missions of Member States or partner countries in Russia or of international organisations enjoying immunities in accordance with international law;
Travel, for personal reasons, of natural persons to and from Russia or of members of their immediate families travelling with them; and
The purchase, import or transport of pharmaceutical, medical, agricultural and food products whose import, purchase and transport is allowed under the EU sanctions regime.
Supreme People’s Court Presiding Judge Chen Wenquan Elaborates on 640 Million RMB Trade Secret Case
On March 7, 2025, Judge CHEN Wenquan, the Supreme People’s Court judge that presided over the case that yielded the largest intellectual property damages in China’s history, elaborated on the case. In decision （2023）最高法知民终1590号 released June 14, 2024, the SPC applied 2X punitive damages on appeal in a dispute between two well-known (and unnamed) domestic automotive companies regarding new energy vehicle chassis technical trade secrets that were misappropriated in a personnel poaching scheme. The plaintiff is believed to be Geely Holding Group and the defendant is WM Motor. Note that WM Motor is reportedly insolvent so collection is unlikely. Below, Judge Chen only mentioned the non-monetary obligations were fulfilled.
Judge Chen stated:
To build a strong country in science and technology, it is necessary to encourage and protect fair competition. In recent years, disputes over technical secrets caused by employee “job hopping” have occurred frequently, especially some newly established enterprises have illegally seized other people’s technology, personnel and resources in order to gain competitive advantages quickly, seriously disrupting the market order. The right holder in this case is one of the largest private automobile companies in my country. As early as 2014, it used its traditional models to develop, trial-produce, and produce hybrid and pure electric vehicles, made huge R&D investments, and has achieved initial R&D results. In order to gain competitive advantages quickly, competitors have poached senior management and technical R&D personnel related to the right holder on a large scale, and used the technical secrets mastered by the right holder’s former employees to apply for patents, manufacture and sell related models.
The outstanding feature of this case is that it is a case of infringement of technical secrets caused by the organized and planned large-scale poaching of new energy vehicle technical personnel and technical resources by improper means. On the basis of the overall judgment of the infringement of technical secrets, the People’s Court applied double punitive damages in accordance with the law and awarded more than 640 million RMB, setting a new record for the amount of compensation awarded in domestic intellectual property infringement lawsuit. More importantly, the trial of this case has always been based on the judicial concept of protecting innovation in an innovative way, and has made pioneering explorations in the specific way, content, scope of civil liability for stopping infringement, and the calculation standard of delayed performance of non-monetary payment obligations. After the judgment was made, the infringer took the initiative to perform the non-monetary obligations determined by the judgment on time. As a typical case of the People’s Court protecting scientific and technological innovation in accordance with the law, this case not only effectively cracked down on malicious infringement of intellectual property rights, actively regulated and guided enterprises to operate in good faith and in accordance with the law, but also helped to stimulate the innovation and creation of enterprises, help develop new quality productivity, promote high-quality development of new industries and new fields, and promote the creation of a business environment that respects originality, legal operation, and fair competition.
The original text is available here (Chinese only).
Foley Automotive Update 06 March 2025
Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more.
Special Update — Trump Administration and Tariff Policies
Foley & Lardner provided an update on the potential ramifications of steel and aluminum tariffs on multinational companies.
Foley & Lardner partner Gregory Husisian described sentiment among Chief Financial Officers on the Trump administration’s approach to trade policy in The Wall Street Journal article, “The Latest Dilemma Facing Finance Chiefs: What to Tell Investors About Tariffs.”
Key tariff announcements include:
USMCA-compliant automakers have a one-month exemption from the 25% tariffs on U.S. imports from Canada and Mexico that were announced on March 4. The Trump administration announced the decision on March 5, following discussions with Ford, GM, and Stellantis.
In a March 5 MEMA update regarding the temporary pause of auto tariffs on Canada and Mexico, President and CEO Bill Long stated “Conversations held today indicate positive results that USMCA-compliant parts are included, but we are awaiting official confirmation from the Administration.” In breaking news on March 6, Commerce Secretary Howard Lutnick stated to CNBC: “It’s likely that it will cover all USMCA compliant goods and services, so that which is part of President Trump’s deal with Canada and Mexico are likely to get an exemption from these tariffs. The reprieve is for one month.”
On March 4, U.S. duties on Chinese imports were doubled to 20%. China intends to implement new tariffs on U.S. imports on March 10, and the nation added over two dozen U.S. companies to export control and corporate blacklists.
The Canadian government does not plan to repeal the 25% retaliatory tariffs on approximately C$30 billion worth of goods from U.S. exporters, announced on March 4. Canada could also implement a second round of 25% tariffs in three weeks on C$125 billion of products that include cars, trucks, steel, and aluminum. Mexico plans to announce tariffs on U.S. imports on March 9.
25% levies on U.S. imports of steel and aluminum could be implemented March 12.
Announcements could follow on April 2 regarding 25% sector-specific tariffs that would include automobile and semiconductor imports, along with broader “reciprocal tariffs” on countries that tax U.S. imports. Details have not been provided regarding the recent threat for 25% duties on European imports.
A February 25 executive order directed the government to consider possible tariffs on copper.
Automotive Key Developments
U.S. new light-vehicle sales are estimated to have reached a SAAR between 16.1 and 16.3 million units in February 2025, according to preliminary analysis from J.D. Power and Haver Analytics.
Annual U.S. auto sales could decline by 500,000 units, and up to 2 million units, if the Trump administration were to implement 25% tariffs on automotive imports from Mexico and Canada, according to automotive analysts featured in the Detroit Free Press and Bloomberg. In addition, a recession could begin “within a year” if certain tariffs “persist for any length of time.”
The Alliance for Automotive Innovation and Anderson Economic Group estimate tariffs on Mexican and Canadian imports could raise the cost of a new vehicle by up to 25%, or by a range of $4,000 to $12,000, depending on the model.
Crain’s Detroit reports product launch delays are impacting suppliers as automakers postpone investment decisions until there is more stability in areas that include “federal tariffs, regulatory policy and electric vehicle incentives.”
A number of large auto suppliers are taking steps to reduce expenses in order to support profitability amid market uncertainty, according to a report in Automotive News.
The Wall Street Journal provided overviews of the potential impact of tariffs on automakers and vehicle components, stating that “no sector is as exposed to possible Trump tariffs as the auto industry.”
The benchmark price for domestic steel has increased 25% this year to $900 a ton, ahead of a possible 25% import tariff on the metal.
The Wall Street Journal reports the potential for tariffs on aluminum have already raised costs for buyers, as there are few U.S. suppliers capable of meeting supply needs after years of declining domestic production.
The National Highway Traffic Safety Administration laid off 4% of its staff as part of a government-wide reduction of federal employees. NHTSA had expanded its workforce by roughly 30% under the Biden administration, and it was estimated to have a staff of approximately 800 prior to the job cuts.
At the annual MEMA Original Equipment Suppliers event on February 27, the North American purchasing chief of Stellantis indicated the automaker will consider supplier requests for pricing relief. This represents a reversal of a “no more claims” policy announced in 2024.
OEMs/Suppliers
Stellantis reported a full-year 2024 net profit of $5.8 billion on net revenue of $156.9 billion, representing year-over-year declines of roughly 70% and 17%, respectively.
GM will temporarily halt production for a number of weeks at its Corvette plant in Bowling Green, Kentucky, for undisclosed reasons.
Mercedes plans to reduce capacity in Germany as part of an initiative to reduce expenses by 10% through 2027 amid heightened competition, uneven demand, and high material costs. The automaker may also reduce its sales and finance workforce in China, according to unidentified sources in Reuters.
China’s top-selling automaker, BYD, could decide on a third plant location in Europe within the next two years. The automaker has plants underway in Szeged, Hungary, and Izmir, Türkiye.
Detroit Manufacturing Systems, LLC will acquire Android Industries, LLC and Avancez, LLC. The combined entity, Voltava LLC, will be headquartered in Auburn Hills, Michigan, and it is expected to reach over $1.5 billion in annual revenue.
Market Trends and Regulatory
J.D. Power estimates the average monthly payment for a new vehicle reached $738 in February, up 2.4% year-over-year. The analysis noted “vehicle affordability remains a challenge for the industry and is the primary reason why the sales pace, while strengthening, has not returned to pre-pandemic levels.”
The new vehicle average transaction price reached $48,118 in January 2025, according to analysis from Edmunds.
The International Longshoremen’s Association (ILA) ratified a six-year labor contract with the United States Maritime Alliance (USMX), ending months of uncertainty over the potential for a follow-up strike at U.S. East and Gulf Coast ports.
National “right to repair” legislation was introduced in Congress last month by a bipartisan group of lawmakers. The Right to Equitable and Professional Auto Industry Repair Act (H.R. 906) follows multiple recent attempts by Congress to pass similar legislation.
The 2026 Detroit Auto Show will take place January 14–25, 2026, at Huntington Place.
In response to concerns over the compliance costs associated with 2025 carbon dioxide emissions standards in the European Union, the European Commission announced automakers will now have a three-year window to meet emissions targets in the bloc.
Autonomous Technologies and Vehicle Software
Automotive News provided an update on the outlook for artificial intelligence (AI) adoption in certain automotive applications.
A number of automakers are pursuing software and AI-based technology to differentiate their vehicles’ self-driving features, according to a report in The Wall Street Journal.
Stellantis debuted a Level 3 automated driving system, STLA AutoDrive 1.0, that is expected to facilitate hands-free and eyes-off functionality at speeds of up to 37 mph. The automaker did not provide a launch date for the technology. The Society of Automotive Engineers (SAE) defines Level 3 as autonomous technology that can drive the vehicle under limited conditions without human supervision.
Mercedes is currently the only automaker with a Level 3 system approved for use in the U.S., and the automaker’s Drive Pilot is only available in Nevada and California. Honda plans to launch Level 3 automated driving system in 2026, in the 0 Series in North America.
Uber began offering its customers driverless Waymo rides in Austin, Texas.
Electric Vehicles and Low Emissions Technology
China’s Xiaomi has a goal to deliver over 300,000 EVs in 2025, and this would more than double its deliveries last year. The consumer electronics giant sells nearly all its EVs within China.
China announced new export restrictions on tungsten and other specialty metals used in applications that include EV batteries.
TechCrunch analysis indicates there are currently 34 battery factories either planned, under construction, or operational in the U.S., up from two in 2019.
Stellantis’ Brampton Assembly plant in Ontario has been temporarily shut down as the automaker reevaluates plans for the next-generation electric Jeep Compass SUV that was scheduled to begin production in early 2026. This follows a decision by Ford to delay the launch of its next-generation gas and hybrid F-150 pickup trucks.
Canada’s zero-emission vehicle sales declined by nearly 30% in January 2025 from December 2024. This follows a halt in the federal rebate program, when funding was exhausted ahead of the original termination date of March 31, 2025.
The Trump administration directed federal buildings across the U.S. to shut off EV chargers, according to communications from the General Services Administration described by unidentified sources in Bloomberg.
Upstream’s 2025 Automotive and Smart Mobility Global Cybersecurity Report found that attacks involving EV chargers increased to 6% in 2024, from 4% in 2023. According to the report, 59% of the EV charging attacks in 2024 had the potential to impact millions of devices, including chargers, mobile apps, and vehicles.
Among the top 10 battery electric vehicle (BEV) models with the fewest reported problems in the J.D. Power 2025 U.S. Electric Vehicle Experience (EVX) Ownership Study, seven were in the mass market segment. BMW iX was rated highest overall and highest in the premium BEV segment, and the Hyundai IONIQ 6 ranked highest in the mass market BEV segment.
Consumer Reports’ Best Cars of the Year for 2025 includes six models with hybrid options and one fully electric model.
BEV sales in Europe increased 34% year-over-year in January 2025, while overall new-vehicle registrations fell by 2.5%, according to data from the European Automobile Manufacturers’ Association (ACEA). BEVs achieved a 15% market share in Europe, compared to 10.9% in January 2024.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
Michigan’s Car Seat Law is Changing in 2025 – Here’s What You Need to Know
Big changes are coming to Michigan’s car seat laws on April 2, 2025, aimed at keeping children safer on the road. If you’re a parent or caregiver, now is the time to get familiar with the new rules to ensure your little ones are protected.
Why Do These Changes Matter?
Car seats are life-saving devices. In passenger cars, child restraints lower the risk of fatality by 71% for infants under 1 year old and 54% for children ages 1-4. Since 1975, child restraints have saved over 11,000 children under the age of 5, according to the National Highway Traffic Safety Administration (NHTSA).
What’s Changing?
Here’s what you need to know about Michigan’s updated car seat requirements:
Rear-Facing Until Age 2: Children must remain in a rear-facing car seat until they are at least 2 years old, or until they exceed the height or weight limits of their seat.
Harnessed Car Seat Until Age 5: Children must use a harnessed car seat until they turn 5 years old, or until they outgrow the height or weight limit of their seat.
Booster Seat Rules Remain the Same: Kids under 8 years old and shorter than 4 feet 9 inches are still required to use a booster seat.
The Importance of Proper Car Seat Use
The sad truth is that many children are at risk of injury because of improper car seat use. In 2022, 599 children under age 13 died in traffic crashes, and 429 were injured. Shockingly, more than one-third of those who died were unrestrained.
A study found that 46% of car seats and boosters are used incorrectly, reducing their effectiveness. This is why it’s essential to double-check that your child’s car seat is properly installed. Local organizations like Safe Kids offer car seat safety checks to help parents and caregivers ensure their seats are secure.
Car Seats Save Lives
When used correctly, car seats, booster seats, and seat belts dramatically reduce the risk of injury and death. These updated laws are designed to give children the best possible chance of walking away from an accident unharmed. As we get closer to April 2, 2025, take the time to review your child’s car seat setup to ensure you’re following the updated safety guidelines.