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.
Auto Insurer Settles With New York AG Over Insurance Application Platform Security Issues
The New York Attorney General recently entered into an assurance of discontinuance with Root Insurance Company following a 2021 data incident. According to the AG, the threat actors obtained people’s drivers’ license numbers by exploiting a website error on its car insurance application portal. Namely, upon entering a publicly available name and address, the site would generate a prefilled PDF that included that person’s drivers’ license number, which numbers were pulled from third-party databases. Threat actors used an automated bot to exploit this vulnerability, and gathered drivers’ license numbers of 44,449 New Yorkers (more than half of the total 72,852 people impacted). The threat actors then used many of these people’s information to file fake unemployment claims with New York, which according to the AG, was the goal of the attack.
According to the AG, the company was not aware of the design feature issue. Instead, the situation was discovered when company personnel noticed unusual application activity. Upon discovery, the company took measures to address the issue, including using CAPTCHA to ensure the application was made by a human, and masking the license numbers. The AG nevertheless brought this case, claiming that the incident occurred because the company did not have appropriate risk assessment measures in place to identify the design error. It also should have, according to the AG, used measures like masking sensitive data and detecting and deterring automated traffic. These failures, it alleged, constituted a violation of the state’s data security law, which requires that companies develop, implement and maintain “reasonable safeguards” to protect covered information. This information includes names and drivers’ license numbers.
Similar to past settlements, the AG required that the company implement of additional security measures (see, for example, our posts about settlements with a social media app last month, ENT in December 2024, a biotech company in mid-2024, and Herff Jones in 2022). Included in these are developing and maintaining a written information security program, designating a chief information security officer to oversee the program, engaging in network monitoring and employing multi-factor authentication, and maintaining compliance records for six years that the attorney general can access. The company has also agreed, among other things, to develop a data inventory, have a written process to ensure secure software development processes, to monitor network activity, and to promptly investigate suspicious activity. The company has also agreed to pay $975,000.
Putting it Into Practice: This settlement outlines expectations from the New York attorney general of the proactive measures companies it believes companies should have in place if handling sensitive personal information. As companies launch new platforms, or revamp existing ones, this is a reminder to think not only about platforms where they collect personal information directly from individuals, but also where that information might be gathered from third party sources.
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Productively Pursuing and Maximizing Insurance Claims
Maximizing insurance claims starts with locating and notifying all potentially responsive coverages when facing a loss or claim. This article offers a 101 about what types of maritime-, transportation-, and shipping-related events insurance may cover and how to go about productively pursuing an insurance recovery when disaster strikes—even if your insurance company says “no.”
Two Overarching Types of Insurance
Without getting too far into the weeds of the many different types of insurance coverage available to policyholders, think about them as falling into one of these two broad buckets: (1) first-party insurance coverage, and (2) third-party insurance coverage.
First-party insurance describes coverages that respond to a policyholder’s losses, which do not involve any claim asserted against the policyholder (e.g., you, your business, your employer). First-party property policies such as marine property insurance and bumbershoot property insurance, for example, typically insure against loss of, or damage to, the policyholder’s property (e.g., structures, terminals (including piers, breasting dolphins, storage tanks, etc.), electronic equipment), as well as coverage for lost business revenue. These first-party property policies frequently are “all risk” policies, meaning they cover the policyholder’s losses unless caused by an expressly excluded peril that the insurer can prove (e.g., ordinary wear and tear). Property policies often include business interruption coverage and coverage for inventory or goods lost or damaged in transit. Other types of first-party policies relevant to the maritime industry include:
Inland Marine Insurance that protects movable business property for policyholders that aren’t on the seas, including trucking and construction companies, property developers, and contractors, for example;
Marine Hull and Machinery Insurance that protects from physical damage to ships, vessels, and their machinery on the water, at the dock, and under construction for most sizes of commercial vessels including tugs, barges, dredges, and passenger vessels;
Marine Cargo Insurance that protects goods while in transit, across various modes of transportation, and while in storage; and
Political Risk Insurance that protects against losses caused by “political” events in a foreign country.
Third-party insurance coverage sometimes is called liability insurance. That’s because it includes policies that provide insurance for the policyholder’s liability to third parties alleging damages. Perhaps the most well-known form of third-party insurance for policyholders in the maritime industry is maritime general liability insurance (and excess bumbershoot liability insurance), which provides broad coverage for allegations asserted against the policyholder for bodily injury, property damage, and product and completed operation for marine risks. Other types of potentially relevant third-party policies include:
Cargo Owner’s Liability Insurance to protect against the risks for property damage, bodily injury to third parties, and as a result of pollution from a cargo event in ocean transit;
Shipowners’ Liability (“SOL”) Insurance for a shipowner’s exposure arising from an alleged breach of a contract of carriage and certain liabilities that fall outside of the Protection and Indemnity (“P&I”) Club’s standard P&I rules;
Directors and Officers (“D&O”) Insurance that protects companies and their corporate officers and directors against claims alleging wrongful acts and may cover legal fees for responding to subpoenas and search warrants; and
Pollution Liability Insurance to supplement or bolster pollution coverage that may exist in other marine liability (and property) insurance; some policyholders have standalone pollution liability insurance to broadly cover allegations of property damage from an actual or threatened pollution incident (spill) including fines, penalties, criminal defense, and more.
A single event can implicate several types of coverage found in multiple different insurance policies. For example, a vessel colliding with a terminal may involve loss to:
the terminal’s structures and equipment covered by a marine property insurance policy;
the terminal owner’s profits covered by business interruption insurance (and other time element coverages);
claims by third parties (adjacent property owners or the government, for example) alleging property damage from pollutants released from the vessel or terminal’s structures that are covered by marine general liability insurance and pollution liability insurance;
claims by shareholders alleging malfeasance in allowing the collision to happen (depending on which entity was responsible for the tugs, for example) that are covered by D&O insurance; and
this does not begin to untangle the myriad insurance implications when analyzing claims against the vessel and potential subrogation claims.
It’s important to look for responsive coverage from a company’s entire insurance portfolio when facing a loss or claim.
Three Things to Keep in Mind When Pursuing Insurance
Many policyholders don’t productively or efficiently pursue all of the insurance that is provided by their insurance policies. Here are three considerations when filing claims:
Be prompt. One of the most important first steps in pursuing insurance is to make sure that notice of a loss, claim, or occurrence is prompt and otherwise meets the requirements of the insurance policy.
Be thorough. It is important to look at all potentially responsive coverages that may be located in several different insurance policies with varying notice provisions. The general rule is that notices should be given under all possible policies that might be triggered—regardless of type, year, or layer. The old adage “better safe than sorry” never rings more true than when it comes to a company giving notice to its insurers.
Be diligent. As already stressed, the notice provisions in insurance policies also may specify how, and in what form, notice should be given. The policies typically identify to whom notice should be addressed, and request a statement regarding all the particulars of the underlying claims.
After a loss or claim has occurred, the policyholder should present its claim to the insurer in a way that will maximize coverage. Many legal issues, such as trigger of coverage, number of occurrences, and allocation, can significantly affect the existence or amount of an insurance recovery. Moreover, certain causes of loss or liability may be excluded from coverage, while others are not. These are complex issues that vary by state law and require a high level of legal sophistication to be understood and applied to the facts of a particular case.
The insurer may respond to its policyholder’s notice letter with a request for information. Such requests may seek to have the policyholder characterize its claim in a way that will limit coverage. Before the policyholder engages in any such communications with its insurance company, the policyholder should know what legal issues are likely to arise, and how best to describe its claim to maximize coverage.
It’s important to get the little things right from the beginning to avoid being blindsided and enhance the likelihood of succeeding at the finish line.
Class Action Litigation Newsletter | 4th Quarter 2024
This GT Newsletter summarizes recent class-action decisions from across the United States.
Highlights from this issue include:
First Circuit addresses four questions of first impression relating to CAFA jurisdiction and “home state” and “local controversy” exceptions.
Second Circuit holds class representative’s susceptibility to unique defenses is not a basis for finding lack of adequacy, though it may go to typicality.
Fourth Circuit reverses certification of FLSA class action, finding conclusory allegations of company policies were insufficient to satisfy commonality requirement.
Sixth Circuit vacates class certification based on individualized questions in automotive defect case.
Seventh Circuit affirms decertification of Rule 23(c)(4) issues class for lack of superiority.
Ninth Circuit holds unexecuted damages model sufficient to demonstrate damages are susceptible to common proof at the class certification stage.
Continue reading the full GT Class Action Litigation Newsletter | 4th Quarter 2024
Additional Authors: Richard Tabura, Aaron Van Nostrand, Gregory A. Nylen, David G. Thomas, Angela C. Bunnell, R. Morgan Carpenter, Gina Faldetta, and Gregory Franklin.
Foley Automotive Update with Tariff Rundown
Special Update — Trump Administration and Tariff Policies
Foley & Lardner partner Vanessa Miller commented on the Trump administration’s imposition of automotive tariffs in the Associated Press article, “Trump’s latest auto tariffs explained: What car buyers should know this year.” Miller, who is chair of Foley’s national Automotive Team, said that while some companies will be able to pivot their operations to the United States, others are too integrated with factories in Mexico and elsewhere to make a speedy transition.
Foley & Lardner provided an update for multinational companies regarding the potential for criminal enforcement of trade, import, and tariff rules. Visit Foley & Lardner’s 100 Days and Beyond: A Presidential Transition Hub for more updates on policy analysis and the business implications of the Trump administration across a range of areas.
Fully assembled automobiles are subject to a 25% U.S. import tariff,effective at 12:01 a.m. on April 3, 2025, through President Trump’s March 26 proclamation (90 FR 14705). An accompanying Fact Sheet states: “Importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content.”
U.S. import tariffs of 25% on certain major auto parts (engines and engine parts, transmissions and powertrain parts, and electrical components) are scheduled to take effect no later than May 3. The March 26 proclamation states “the ad valorem tariff of 25 percent described in clause (1) of this proclamation shall not apply to automobile parts that qualify for preferential treatment under the USMCA until such time that the Secretary, in consultation with CBP, establishes a process to apply the tariff exclusively to the value of the non-U.S. content of such automobile parts and publishes notice in the Federal Register.”
Reciprocal tariffs announced April 2 will be established at a baseline of 10% and ranging up 49% beginning on April 5. The reciprocal rates include 34% on China, 20% on the European Union, 46% on Vietnam and 32% on Taiwan. This announcement did not impose reciprocal tariff rates on Canada or Mexico.
The European Union intends to pursue countermeasures in response to the Trump administration’s reciprocal tariffs.
Mexican President Claudia Sheinbaum indicated trade negotiations are ongoing with the Trump administration, and Mexico thus far has not announced retaliatory tariffs.
The Canadian government imposed retaliatory tariffs on C$60 billion ($42 billion) worth of U.S.-made goods in response to U.S. import tariffs on steel and aluminum.
U.S. import tariffs on copper could be implemented before the 270-day deadline established in a February 25 executive order which directed the government to assess possible levies on the metal, according to unnamed sources in Bloomberg.
The U.S. Senate on April 2 voted 51-48 to approve a joint resolution (SJ Res 37) to terminate the national emergency declared on February 1, 2025, by the President in Executive Order 14193 (90 Fed. Reg. 9113) to impose tariffs on imports from Canada. The measure does not have the force of law, however it notably received support from four Republican Senators: Rand Paul (KY), Susan Collins (ME), Lisa Murkowski (AK) and Mitch McConnell (KY). The U.S. House recently took steps to block the ability of tariff critics to expedite a floor vote on the issue.
Dozens of Chinese companies were added to a Commerce Department entity list to restrict trade due to national security concerns.
Automotive Key Developments
Foley & Lardner provided an update on a notable federal court ruling against Stellantis in a supplier pricing dispute, and assessed the impact of the case in regards to what constitutes a valid requirements contract under Michigan law.
Certain major automakers could incur up to $1 billion to $7 billion annually in U.S. import costs, depending on the breadth and duration of the 25% automobile and auto parts tariffs announced by President Trump on March 26. The effects of these sector-specific tariffs in their current form could cost the auto industry up to $110 billion annually, according to investment bank estimates featured in The Wall Street Journaland Bloomberg.
S&P Global Mobility predicts U.S. light-vehicle sales could decline to between 14.5 and 15 million units annually if the automotive import tariffs proceed as announced, and the duties could “create a reset of the automotive value chain within North America and the world.”
Nearly 50% of U.S. new light vehicles sold in 2024 were assembled outside the U.S., and up to 70% of vehicles sold in the U.S. in a typical year contain imported components. New-vehicle prices could increase by 11% to 15% due to the pass-through effects of automotive import tariffs, and consumers could encounter tariffed inventory at dealerships by May or sooner.
President Trump warned U.S. automakers not to raise prices in response to tariffs, according to unnamed sources in The Wall Street Journal. The president stated in an NBC News interview that he “couldn’t care less” if foreign automakers raised prices because consumers would instead “buy American cars.” In the interview, the president did not comment on the potential for higher prices in domestically manufactured vehicles that may result from duties on imported components.
Cox Automotive estimates the cost impact of tariffs could make at least half of the 20 vehicle models priced below $30,000 “unviable for the U.S. market.”
Bloomberg reports Senate Republicans intend to utilize the Congressional Review Act to revoke the Environmental Protection Agency’s authority to grant Clean Air Act waivers allowing California to impose emissions standards that exceed federal regulations.
U.S. new light-vehicle sales in March reached a SAAR of 17.8 million units, representing an increase of 11% year-over-year, according to preliminary estimates from GlobalData. Increased volumes in March were attributed to accelerated consumer purchases to avoid tariffs.
OEMs/Suppliers
Hyundai on March 24 announced plans to invest an additional $21 billion in U.S.-based vehicle manufacturing and supply chains for critical materials, including a new steel mill in Louisiana.
Cleveland-Cliffs plans to lay off over 1,200 workers in Michigan and Minnesota due to market challenges that include the expectation for declining automotive demand amid higher prices caused by tariffs.
Toyota and Honda stated they currently have no plans to reduce manufacturing in Ontario, Canada in response to U.S. trade policies.
Certain luxury brands that performed well during previous market disruptions could be significantly exposed to automotive import tariffs because the vehicles do not meet the U.S.-Mexico-Canada free-trade agreement rules.
The American Trucking Associations estimates automotive import tariffs could add upwards of $30,000 to the cost of a new Class 8 truck.
Crain’s Detroit provided estimates of the Detroit Three automakers’ U.S. plant utilization rates, and an overview of which factories in Michigan have excess capacity.
The UAW in a March 26 statement praised President Trump’s automotive import tariffs, and suggested automakers could shift production to the U.S. “within a matter of months” by “adding additional shifts or lines in a number of underutilized auto plants.”
At least two major automakers recently stopped tracking purchases with minority-owned suppliers, according to a report in Crain’s Detroit.
Taiwanese automotive lighting supplier TYC Americas plans to invest $18.75 million to establish production in Wixom, Michigan.
The Chinese government intends to restructure a number of China’s state-owned automakers to improve competitiveness and market share. This could affect automakers including Dongfeng Motor Group, China FAW Group, Changan Automobile Co., SAIC Motor Corp., GAC Motor Co., BAIC Motor Co., Chery Automobile Co., and Jianghuai Automobile Co.
Toyota Chairman Akio Toyoda spoke to Automotive News about the challenges of automotive consolidation.
Market Trends and Regulatory
The National Highway Traffic Safety Administration (NHTSA) launched an investigation into more than 2 million Honda vehicles over reports that engines can fail to restart from idling.
The U.S. Commerce Department delayed a preliminary ruling on a Chinese graphite anode countervailing duty case to May 19, 2025. North American graphite miners had petitioned last year to impose a 920% tariff on Chinese suppliers to counter China’s control over critical minerals. Graphite is a key component in EV lithium-ion batteries.
President Trump stated U.S. House Speaker Mike Johnson is “working on” a proposal that could allow tax deductions for the interest paid on auto loans for U.S.-made vehicles. Details of the plan were not provided.
President Trump nominated Derek Barrs, a former Florida Highway Patrol chief, to head the Federal Motor Carrier Safety Administration.
An estimated 1.73 million vehicles were repossessed in the U.S. in 2024, representing the highest level since 2009.
The University of Michigan’s March 2025 Index of Consumer Sentiment fell to 57, the lowest level since 2022. Two-thirds of consumers expect higher unemployment in the next year, the highest reading since 2009.
The Conference Board’s March 2025 Consumer Confidence Survey found that short-term expectations for income, business and labor-market conditions were at the lowest level in 12 years.
New vehicle registrations in the European Union declined 3% year-over-year in the first two months of 2025, according to analysis from the European Automobile Manufacturers’ Association (ACEA). Registrations of new battery-electric vehicles (BEVs) in the EU increased 28.4% YOY, reaching 255,489 units for a 15.2% share of the total EU market. New EU registrations of hybrid-electric vehicles rose 18.7% YOY for a 35.2% share of the EU market.
The European Commission granted final approval to Tesla’s 2025 EU emissions pool, which includes Stellantis, Toyota, Ford, Honda, Mazda, Subaru and Suzuki. The bloc’s other key pool is managed by Mercedes-Benz and it includes several Geely brands.
The European Commission fined 15 automakers and the European Automobiles Manufacturers’ Association (ACEA) €458 million ($495.3 million) over participating in anticompetitive agreements concerning end-of-life vehicle recycling.
U.S. traffic fatalities in the first half of 2024 were 25% higher compared to the same period in 2014. Pedestrian fatalities in H1 2024 were up by 48% compared to H1 2014.
Autonomous Technologies and Vehicle Software
Ford intends to use artificial intelligence systems and Nvidia GPUs to improve the process of designing and bringing new vehicles to market.
Waymo plans to launch robotaxi services in Washington D.C. in 2026, following previously announced expansions in Miami and Atlanta. Waymo currently operates in parts of San Francisco, Los Angeles, Phoenix, and Austin.
Lyft could offer driverless rides on its platform “as soon as this summer.”
Caterpillar will integrate lidar technology from Luminar to the Cat Command autonomy platform on its heavy-duty construction equipment.
Volkswagen will partner with Valeo and Mobileye to develop Level 2 advanced driver assistance systems (ADAS) for upcoming vehicle models. The Society of Automotive Engineers (SAE) defines Level 2 as driver support features that require constant control and supervision.
Electric Vehicles and Low-Emissions Technology
BYD reported 2024 net income of 40 billion yuan ($5.6 billion) on total revenue of 777.1 billion yuan ($107 billion), representing YOY increases of 34% and 29%, respectively. BYD’s global vehicle sales rose 41% YOY to 4.27 million units in 2024, and it has a goal to double sales outside of China to over 800,000 units in 2025.
The Michigan Strategic Fund approved the transfer of over $180 million in state and local incentives to LG Energy Solution after GM exited a $2.5 billion project to construct an EV battery plant in Lansing.
Rivian will spin out its electric micromobility platform, Also Inc., into a new startup focused on lightweight vehicles that include scooters and bicycles.
Governor Gavin Newsom announced California has 178, 549 public and shared private EV chargers, which is 48% higher than the amount of gasoline nozzles in the state.
Contract electronics maker Hon Hai Precision Industry, known as Foxconn, is reported to be pursuing an agreement to produce EVs for Mitsubishi.