Analysis by Julie Dautermann, Competitive Intelligence Analyst

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.

Trump Administration and Tariff Policies

• 天美传媒; Lardner provided an overview for multinational companies regarding the potential antitrust scrutiny over tariff-related pricing changes. Visit 天美传媒; Lardner鈥檚 Trump Administration Resource Hub: Legal and Business Insights for more updates on key policy and regulatory developments.
• The U.S. lowered the base level of duties on most Chinese goods to 30% from 145%, and China cut its levies on many U.S. products to 10% from 125% as part of a scheduled between the nations that is to take effect this week.
• A U.S.-UK trade deal May 8 would allow imports of 100,000 vehicles annually by UK car manufacturers under a 10% 鈥渞eciprocal tariff,鈥� with additional vehicles subject to 25% levies. The American Automotive Policy Council that in certain instances, 鈥渋t will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA compliant vehicle from Mexico or Canada that is half American parts.鈥�
• A U.S. Customs and Border Protection guidance for the auto parts tariffs that took effect May 3 indicated that US-Mexico-Canada Agreement (USMCA)-compliant parts have a 鈥�0 percent additional ad valorem rate of duty.鈥� The duration of this exemption is unknown.
• A pair of executive orders announced on April 29 will ease some of the impact of certain automotive import tariffs. One will establish a complex system of temporary and partial reimbursements for certain tariffed auto parts, and another indicates tariffed vehicles and auto parts will not 鈥渟tack鈥� on other levies, such as the 25% duty on steel and aluminum. One large supplier quoted in indicated the orders were a positive step, while an unnamed major supplier stated the tariff revisions were 鈥渘ot cause for celebration鈥� as the industry will still encounter significantly higher operational costs. An analyst from Wedbush the revised tariffs as a 鈥済ut punch鈥� for the auto industry.
• May 16, 2025 is the for submitting public comments regarding the Trump administration’s Section 232 investigation into imports of processed critical minerals and their derivative products.听

Automotive Key Developments

• Automotive News provided updates on suppliers鈥� concerns regarding the potential for this year as a result of automotive import tariffs, as well as the of assessing USMCA-compliant content in vehicles.
• GM the Trump administration鈥檚 tariffs could increase its costs by up to $5 billion this year, and potentially reduce 2025 net profit by up to 25% year-over-year. The automaker its projected tariff exposure by roughly 30% through spending reductions and shifting more supplies and manufacturing to the U.S. In 2024, GM more vehicles into the U.S. than any other automaker.听
• Japanese automakers could collectively experience a $19 billion impact from U.S. import tariffs, according to analysis from .
• and projected annual net profit declines of 35% and 70%, respectively, for fiscal year ending March 2026, if U.S. automotive import tariffs are maintained. Toyota its tariff impact reached $1.3 billion within just two months, while Honda an annual tariff impact of up to $3 billion.
• Ford a $2.5 billion impact from tariffs in 2025, but noted it plans to offset up to $1 billion of the costs.听
• Revised analysis from the Anderson Economic Group the Trump administration鈥檚 current automotive tariff policies will raise vehicle costs from $2,000 to $15,000.
• U.S. new light-vehicle inventory is down by an 24% year-over-year, representing a 61 days鈥� supply, following robust sales in April.
• Kelley Blue Book the U.S. new light-vehicle average transaction price (ATP) rose 2.5% in April 2025 from March. New-vehicle sales incentives fell to 6.7% of ATP last month, down from 7% in March and compared to a pre-pandemic norm of roughly 10%.
• The U.S. House Ways and Means Committee included a measure to eliminate consumer tax credits of up to $7,500 for a new EV and $4,000 for a used EV at the end of 2025 in the 鈥溾�� tax package introduced on May 12. The initial proposal would extend new EV tax credits until the end of 2026 for automakers that sold less than 200,000 EVs in the U.S. between 2010 and 2025.听
• California and 16 other states over the Trump administration鈥檚 of the $5 billion National Electric Vehicle Infrastructure (NEVI) program created by the 2021 Bipartisan Infrastructure Law.
• The U.S. House on May 1 of three Congressional Review Act resolutions to repeal Clean Air Act waivers issued by the Environmental Protection Agency for California’s vehicle emissions programs. A related to the proposals has not yet been scheduled.
• Federal Reserve Chair Jerome Powell the U.S. 鈥渕ay be entering a period of more frequent, and potentially more persistent, supply shocks鈥� due to economic and trade policy uncertainty.

翱贰惭蝉/厂耻辫辫濒颈别谤蝉听

• First-quarter 2025 profitability dropped by 2.3% for , 6.6% for , nearly 40% for , and over 60% for .
• Automakers that include , , recently suspended 2025 financial guidance due to tariff-related uncertainty.
• Magna its annual direct tariff costs will reach $250 million for 2025.
• Nissan a net loss equivalent to $4.55 billion for its fiscal year ended March 31, 2025 due in part to restructuring charges. The automaker to cut 15% of its global workforce, and consolidate its global production base to 10 assembly plants from 17.
• Ford to raise prices by as much as $2,000 on certain Mexico-produced models in response to U.S. import tariffs.
• GM to eliminate a shift at its Oshawa Assembly plant in Ontario in response to 鈥渇orecasted demand and the evolving trade environment.鈥�
• Aptiv to establish two new plants in China in the second half of this year that will produce high-voltage connectors and active safety products.
• Stellantis to launch a lower-priced version of its U.S.-made Ram pickup truck later this year to boost sales and mitigate tariff exposure. The automaker previously shifted pickup truck production for from Michigan to Mexico.

Market Trends and Regulatory

• AlixPartners Chinese brands will account for 30% of the global auto market by 2030, compared with 21% in 2024.
• BYD has a to achieve 50% of its sales outside of China by 2030.
• Congress an Environmental Protection Agency rule on National Emission Standards for Hazardous Air Pollutants related to rubber tire manufacturing.听
• According to a of 126 supply chain executives, 47% of respondents were renegotiating contracts with suppliers to mitigate the impact of tariffs.

Autonomous Technologies and Vehicle Software

• Automotive News provided an of recent developments in autonomous driving.
• Ford plans to cut 350 connected-vehicle software jobs in the U.S. and Canada, and the reductions account for roughly 5% of the total team, according to a report in .
• Waymo with Toyota to develop robotaxi technology for personally-owned vehicles. Waymo鈥檚 self-driving partnerships include Hyundai and China鈥檚 Geely.

Electric Vehicles and Low-Emissions Technology

• U.S. EV sales by roughly 5% in April, amid a 10% YOY increase in overall new-vehicle sales. Global EV sales in April were up by an 29% YOY, led by a 35% increase in China.
• Honda a planned $11 billion investment in new EV factories in Ontario, Canada due to slowing demand in North America.
• 骋惭鈥檚 Orion Assembly Plant in Michigan may not operate as a fully electric vehicle factory as originally planned, according to unnamed sources in .
• The American and Chinese car markets are likely to diverge further due to in supply chain costs and consumer preferences, as well as the nations鈥� ongoing trade conflicts.
• GM a project with Piston Automotive to establish a $55 million hydrogen fuel cell plant in Detroit.
• Stellantis production of its first battery-electric Ram pickup truck until 2027.
• Hyundai to launch a hydrogen production and dispensing facility for heavy-duty trucks in Georgia.
• Toronto-based battery recycler Li-cycle is a sale of its business or assets.
• Canadian electric truck and bus maker Lion Electric faces a 鈥渧ery high鈥� after the Quebec government decided not to support a public bailout.听

The global manufacturing landscape is undergoing a fundamental shift. In recent years, reshoring 鈥� at times discussed more conceptually than executed in practice 鈥� has evolved into a strategic response to a range of complex international risks, including tariff unpredictability. While traditional motivations for reshoring focused on customer proximity and supply chain agility, recent developments in the first Trump administration, particularly Section 232 tariffs on steel and aluminum and Section 301 tariffs on goods from China, were already leading some companies to re-evaluate their long-term supply chain strategy. But with the second Trump administration turbocharging new tariff proposals 鈥� and applying them to every country in the world 鈥� it has become increasingly vital for manufacturers to reevaluate their global sourcing and production strategies.

This article examines the evolution of reshoring as a business strategy, explores the current drivers of reshoring initiatives, and outlines the key advantages and disadvantages for manufacturers considering domestic investment in response to ongoing tariff uncertainty.

I. The Evolving Rationales for Reshoring

In the early 2010s, reshoring began gaining momentum among manufacturers seeking to reduce lead times, better serve regional markets, and improve supply chain responsiveness. Although these efforts often were driven more by operational considerations than trade policy, many of the advantages of reshoring still are considerations today:

• Customer Proximity: Manufacturers sought to reduce transportation costs and delivery times by locating production closer to key markets.
• Time-to-Market Pressures: In sectors with rapid product cycles, reshoring enabled more responsive production and reduced the risk of obsolescence.
• Inventory Optimization: Domestic production allowed companies to shift toward just-in-time models, reducing warehousing requirements.
• Advances in Automation: As automation technologies improved, the labor cost differential between offshore and onshore manufacturing narrowed, making domestic production more competitive.

These early trends positioned reshoring as a tool for improving supply chain performance, particularly in high-value or customized product segments. The Section 301 tariffs imposed during the first Trump administration, however, added additional tariff-related costs and uncertainty to the calculus for offshore manufacturing in China and using Chinese parts and components. Initially targeting $50 billion in Chinese imports in response to intellectual property and trade imbalances, these tariffs expanded to cover more than $350 billion in annual imports, thereby sharply raising the inducement for companies to look at reshoring as a way of diversifying their supply chains away from China.

Soon thereafter, currency volatility and inflationary pressures created new challenges for global procurement, with the Russian-Ukraine war exposing further strains on international supply chains. With offshore costs becoming more difficult to forecast, and with tariff increases and unpredictability becoming dominant costing considerations, manufacturers increasingly turned to domestic operations as a way to gain greater cost predictability.

In 2025, the return of an even more aggressive tariff policy under the second Trump administration introduced a new phase of uncertainty. The first six months of the Trump administration saw over sixty tariff proclamations, which would be a century鈥檚 worth of tariff changes under any other administration. Expanded tariffs included 10% global tariffs, reciprocal tariffs raising the ante up to 50%, a host of Section 232 sectoral tariff investigations on a variety of products, and the use of quickly imposed tariffs to create 鈥渘egotiating leverage鈥� with foreign governments.

For manufacturers, the implications of this policy shift are significant:

• Unpredictable Implementation: The speed and breadth of new tariffs have made long-term planning more difficult for businesses relying on complex global supply chains.
• Sector-Specific Targeting: Strategic industries, including semiconductors, clean energy, and critical minerals, have faced intensified scrutiny, complicating sourcing and investment decisions.
• Political Volatility: With tariff policy increasingly driven by election cycles and political signaling, businesses face heightened regulatory unpredictability that is difficult to hedge through traditional means.

As a result, many manufacturers now view reshoring not as a discretionary strategy 鈥� but rather a necessary tool to manage risk. Given the escalating risks associated with overseas manufacturing, reshoring offers several strategic benefits for companies looking to enhance operational stability and protect against future trade disruptions:

• Reduced Tariff Exposure. With new tariffs targeting all countries rather than just China, producing domestically is the only reliable way to avoid tariff uncertainty.
• Improved Supply Chain Control. Customs & Border Protection is increasing its focus on supply chain integrity, particularly regarding forced labor, human trafficking, and the Uyghur Forced Labor Prevention Act (UFLPA). Domestic supply chains mitigate the potential regulatory and reputational risk associated with international sourcing.
• Enhanced Risk Resilience: Localizing production strengthens a company鈥檚 ability to withstand global disruptions, including geopolitical conflict; foreign, economic, and tariff-related policy shifts; natural disasters and pandemics; and transportation or supply chain disruptions.
• Access to Incentives: Federal, state, and local governments are increasingly offering financial and regulatory incentives for domestic investment, including tax credits, infrastructure support, workforce development programs, and expedited permitting.

II. Strategic Questions Manufacturers Should Consider When Contemplating Reshoring

For firms evaluating reshoring in response to tariff uncertainty, a comprehensive risk-benefit analysis is essential. Reshoring decisions must account not only for tariff exposure but also a broader set of operational, financial, and strategic variables. Manufacturers should assess both quantitative and qualitative factors and tailor their approach based on product characteristics, market priorities, and long-term organizational goals.

Key questions to consider include:

General Questions:

• Does reshoring create a competitive advantage or merely achieve parity with peers?
• Will reshoring lead to measurable gains in lead time, customization, quality control, or regulatory responsiveness that can be leveraged commercially?
• Will reshoring allow the company to innovate faster or shorten the product development cycle?
• Are certain SKUs, product lines, or raw materials at higher risk based on current trade enforcement patterns, geopolitical relationships, or recent regulatory trends?
• How will reshoring impact relationships with key offshore suppliers or partners?
• Does the company have internal capabilities to manage a domestic manufacturing footprint?
• How resilient is the proposed reshored supply chain to future shocks?
• Does reshoring actually improve supply chain robustness, or does it introduce new vulnerabilities (e.g., single-source dependence, regional weather risks)?

Foreign Production-Related Questions:

• Are there existing contracts or long-term commitments overseas that would complicate a reshoring decision?
• Will the company face penalties, write-offs, or stranded costs associated with terminating leases, suppliers, or infrastructure abroad?
• Are there local workforce reduction laws, severance requirements, or government approvals required to scale down foreign operations?
• What intellectual property, tooling, or proprietary equipment is currently located overseas, and can it be repatriated efficiently?
• Are there political or diplomatic risks (e.g., retaliatory treatment, export bans) if operations are reduced in certain foreign jurisdictions?
• How integrated are current offshore facilities with other parts of the supply chain (e.g., regional hubs, contract manufacturers)?
• Could the company repurpose or reassign offshore assets (e.g., for other product lines or export markets) rather than shut them down?
• What is the cost and feasibility of transitioning production knowledge and processes from foreign to domestic facilities?
• Are there tax consequences, such as exit taxes associated with reshoring?

Tariff-Related Questions:

• Which products or components face the greatest exposure to future tariff actions?
• Have scenario models been developed to compare production costs under varying tariff rates, currency fluctuations, and shipping disruptions?
• What are the total landed costs of reshored versus offshore production, taking into account multiple tariff scenarios, including the potential expansion of tariffs (derivative steel and aluminum products, ongoing section 232 investigations, etc.)?
• Does reshoring open up the company to potential retaliatory tariffs in global trade disputes?
• Would reshoring open up possibilities for taking advantage of preferential trade programs (e.g., USMCA)?
• Would reshoring still require the importation of key inputs, materials, or components that would still present significant tariff-related risks?
• How will the company monitor and proactively respond to evolving U.S. trade policies, including potential expansions of Section 232 and Section 301 duties, to protect against future exposure?

Domestic Production-Related Questions:

• Are there domestic suppliers or partners capable of supporting production at scale?
• Is the existing North American supply base sufficient, or will it require time and investment to rebuild or expand?
• What workforce considerations need to be addressed? How will the company attract and retain domestic talent in a competitive labor market?
• Is skilled labor available in the target location? Are there education or training partnerships that can be leveraged? What labor relations or compliance obligations might emerge?
• What is the implementation timeline for reshoring, and how will the transition be managed?
• Are there zoning, permitting, or environmental regulations that could delay or complicate setup?
• Are domestic transportation networks (e.g., trucking, rail, ports) reliable and cost-effective?
• What warehousing and distribution capabilities are needed to support reshored production? Are they available and sufficient to support planned operations?
• How will production continuity be maintained during the shift? Are there interim sourcing strategies that can bridge the gap?

Cost-Based Questions:

• What capital investment is required to establish or scale domestic production?
• Can the company access the necessary financing, and what is the expected return on investment over a five- to ten-year horizon?
• Can reshored operations benefit from economies of scale, or will volume limitations drive unit costs higher?
• Can automation or other technologies offset higher domestic labor costs?
• Is the business able to integrate smart manufacturing, robotics, or advanced analytics to improve productivity and cost efficiency?
• If the importation will require imported parts and components, does reshoring still sufficiently eliminate tariff-related risks?
• Are there compliance-related costs (OSHA, EPA) that need to be factored in?
• How will fluctuations in domestic energy costs, utilities, and real estate impact the long-term competitiveness of reshored operations?

Tax and Other Incentive Questions:

• What federal, state, or local incentives are available for your industry and location?
• Are there applicable tax credits, grant programs, energy subsidies, or workforce training funds that could defray setup or transition costs?
• Are there 鈥渟tackable鈥� incentives (federal + state + local + utility programs, etc.) that can favor reshoring?
• What clawback provisions exist if job creation or investment thresholds aren鈥檛 met for public incentives?
• How sustainable are the incentives 鈥� are they subject to political change or annual appropriations?

Customer Service-Related Questions:

• How will reshoring align with long-term customer service, sustainability, and ESG goals?
• Will proximity to customers enable better collaboration on customization or design?
• Will customers be willing to pay a premium for U.S.-made goods with verifiable sourcing?
• Could reshoring enable new service models (e.g., direct-to-consumer, rapid prototyping, co-creation)?
• Will reshoring enhance delivery speed, support carbon reduction initiatives, or contribute positively to brand positioning and stakeholder expectations?

Regulatory and Compliance Questions:

• What new federal, state, or local compliance regimes will apply (e.g., Environmental Protection Agency, OSHA, etc.)? What product safety, labeling, or documentation requirements are unique to U.S. production? Do these requirements impose extra costs that negate the advantages of reshoring?
• Are there risks of more frequent inspections, audits, or whistleblower activity?
• Will reshored operations trigger additional export controls requirements (International Traffic in Arms Regulations or Export Administration Regulations)?
• Will reshored operations require new certifications or compliance audits (e.g., ISO, C-TPAT) to meet U.S. standards or customer expectations?
• How will reshoring affect data privacy or cybersecurity obligations?聽

Reshoring has evolved from a cost-savings alternative to a core element of trade risk management that has special resonance in the current volatile tariff environment. In many cases, the optimal path may not be a binary decision between full reshoring and full offshoring. Rather, a company should conduct a 鈥渞ight-shoring鈥� or 鈥渂est-shoring鈥� analysis to determine the most appropriate geographic location or locations for its processes. The analysis is driven by commercial, operational, tax, legal, and regulatory conditions in that company鈥檚 industry and for that company鈥檚 particular product. For companies seeking to safeguard against tariff uncertainty and future-proof their operations, domestic investment may represent the one sure method of eliminating tariff uncertainty.

The Foley International Government Enforcement Defense & Investigations Team is monitoring all tariff-related developments, including any modifications, clarifications/guidance, or additional measures introduced by the Trump administration, which we are posting as they occur on our Tariff & International Trade Resources blog. As new information becomes available, we will provide updates and analysis to help importers navigate the evolving international trade paradigm, including for new tariffs.

Our white paper on 鈥淢anaging Import and Tariff Risks During a Trade War鈥� outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on 鈥淢anaging Supply Chain Integrity Risks鈥� provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.

If you have questions about this post, please feel free to reach out to any of the authors or your 天美传媒; Lardner attorney. If you would like to see future updates regarding 鈥淲hat Every Multinational Company Needs to Know鈥� about operating in today鈥檚 complicated international trade world, please sign up for our Tariff & International Trade blog 鈥� 

Introduction: A Radical Shift in IP Policy

The  the Trump administration wants to charge patent holders 1% to 5% of their patent鈥檚 value to maintain the patent after grant. If implemented, this would mark a dramatic departure from the traditional flat-fee model. Framed as a revenue-raising measure, the plan would drastically reshape the U.S. innovation landscape.

Potential Impacts on Innovators

Small innovators would be disproportionately affected by the newly proposed fees. Smaller entities often rely on the patent system to protect their inventions but lack the financial resources to absorb significant cost increases. As a result of these fee changes, many smaller companies may opt to use other avenues to protect their innovations, such trade secrets, or may forego investing in IP protection altogether. 

Depending on how the value of patents is assessed, larger tech firms, while more capable of absorbing the costs, could respond by filing fewer but more strategically valuable patent applications. This could reduce the prevalence of ‘defensive’ filings and low-value patents, potentially streamlining the system. 

Specifically in the biotech and pharmaceuticals spaces, patent protection is critical due to high risks and long timelines associated with product development. The proposed fees could significantly raise the already substantial costs of bringing new products to market. Small biotech firms may find it difficult to protect or license their breakthroughs, potentially leading to reduced investment at early development stages. Medical device manufacturers face similar pressures, where the cost-benefit balance of patenting may shift unfavorably. 

The proposal could also result in industry consolidation, more strategic partnerships, or a shift toward trade secrets鈥攄evelopments that may hinder open innovation and collaboration. The net effect could be a leaner patent landscape focused on higher-quality applications and a reduction in 鈥減atent thickets,鈥� but potentially at the cost of accessibility and innovation diversity.

How Companies Might Adapt

If the proposal moves forward, companies may explore various strategies to mitigate the impact of the new fees. One likely response is increased reliance on trade secrets, especially for software and process innovations that are easier to keep confidential.

Firms may also shift their patenting focus to international jurisdictions with more predictable or affordable IP regimes. Open innovation models, such as defensive publishing or open-source licensing, could gain popularity as a way to prevent competitors from patenting similar inventions.

Patent pooling and consortia may become more common, allowing companies to share the costs of filing and maintaining patents. Additionally, provisional filings could be used more strategically to delay full applications and manage financial risk.

Broader Implications

The proposed fee structure raises broader concerns about equity and U.S. competitiveness. Higher fees could exacerbate the divide between well-funded incumbents and new entrants, encouraging market concentration and likely reducing diversity in innovation.

The new fees would almost certainly reduce the overall number of filings. There is a strong argument that reduced filings would result in higher-quality patents. While fewer filings might improve patent quality, the cost barrier could prevent disruptive but underfunded ideas from reaching the market. Fewer patents would also raise the stakes of patent disputes.

On the global stage, the U.S. could lose its competitive edge if innovators relocate R&D to countries with more accessible IP protections. Moreover, tying fees to patent value introduces significant uncertainty, as valuation is inherently subjective and prone to dispute.

Of course, the implications of the impact of the proposed fee structure depends greatly on how the valuation is calculated and how it is applied to the patents.  Does each individual patent get charged a percentage of revenue of a patented method, system, or product even though the system or product may be protected by dozens or hundreds of patents? Or does the percentage fee get distributed over all the patents attributable to the patented method, system, or product? There could be a scenario in which it is actually better for companies to get more patents to reduce the fees if the percentage is applied across an entire patent portfolio. For example, if a bicycle company makes $1M from sales of an innovative bicycle and there are 1,000 patents on the bicycle and the fee is 1% of revenue distributed over the total number of patents, the fees per patent are $10 and $10,000 for the portfolio of 1,000 patents. Given this example reduces the revenue to the government, it is unlikely to be applied in this manner; however, implementation details for the proposal are missing and whatever the details become, patent owners will find ways to reduce what they are to pay.

Potential Legal Challenges to the Proposal

The proposed fee changes are likely to face significant legal challenges. Under 35 U.S.C. 搂 41, Congress, not the executive branch, has the authority to set patent fees. Historically, courts have deferred to the USPTO on fee-setting when changes are modest and tied to cost recovery. However, a sweeping, revenue-driven increase could be struck down or stayed unless Congress explicitly authorizes it. Any attempt to implement such a change unilaterally would certainly be contested in court, with challengers likely arguing that a drastic fee hike oversteps executive authority.  

Additionally, the Administrative Procedure Act (APA) requires that regulatory changes undergo a notice-and-comment rulemaking process. Failure to comply with this process could result in successful legal challenges. There may also be constitutional concerns. If the fees are prohibitive, small businesses could argue that the fees violate Due Process or Equal Protection clauses, although such claims may be difficult to win.

In sum, the Trump Administration proposal is fraught with questions and uncertainty.  Congress and the courts should work to ensure that whatever the proposal is, it is thoroughly vetted and implemented by the correct branch of government.

On July 17, 2025, the Centers for Medicare and Medicaid Services (CMS) announced an additional extension of the deadline by which skilled nursing facilities (SNFs) must revalidate their Medicare enrollments. Enrolled SNFs should collect data on ownership, managerial, and related party information and submit their revalidation by January 1, 2026.[1]

On April 17, 2025 CMS extended the revalidation deadline from May 1, 2025, to August 1, 2025 and, on May 9, 2025, published guidance attempting to clarify new disclosure requirements.[2] The Final Rule CMS published in the Federal Register on November 17, 2023[3], which became effective on January 16, 2024, requires these off-cycle revalidations. These updated regulations set forth additional requirements for SNFs in disclosing ownership and control interests and additional disclosable parties (ADPs) as part of their Medicare enrollment.[4]

Under these regulations, SNFs must disclose the members of the facility鈥檚 governing body, officers, directors, members, partners, trustees, managing employees, and additional disclosable parties (and their organizational structures)[5], which include any person or entity who does any of the following:

(1)

1. Exercises operational, financial, or managerial control over the facility or a part thereof;
2. Provides policies or procedures for any of the operations of the facility; or
3. Provides financial or cash management services to the facility.

(2)

1. Leases or subleases real property to the facility; or
2. Owns a whole or part interest equal to or exceeding 5% of the total value of such real property.

(3) Provides鈥�

1. Management or administrative services;
2. Management or clinical consulting services; or
3. Accounting or financial services to the facility.[6]

As the basis for these disclosure requirements, CMS referenced concerns with private equity ownership of SNFs and its desire to assess the impact of such ownership on quality of patient care. CMS stated that:

Part of the challenge CMS faces in ensuring quality care at nursing homes is our lack of sufficient knowledge of all the parties associated with the nursing home鈥檚 ownership, operations, and management. Without a complete understanding of the full scope of the facility鈥檚 operations and its relationship with other persons and entities, it can be challenging to pinpoint the origin within the organization鈥檚 overall structure of any quality-of-care problems, as well as whether taxpayer funding is being appropriately spent on care.[7]

Additionally, in response to comments regarding the administrative burden and operational difficulties these reporting requirements may impose on SNFs, CMS determined that 鈥渢he importance of quality care and the potential saving of lives justifies additional burden on the part of the nursing facilities.鈥�[8]

CMS has not expressly provided a rationale for the new deadline extension, but the sheer scope of the administrative lift for SNFs to comply with these reporting requirements may be a contributing factor.  Given the Trump Administration鈥檚 scrutiny of existing HHS guidance and even existing regulations that are deemed to be overly burdensome, we cannot rule out the possibility of a change in course as to CMS鈥� focus on ownership and control transparency. Given the additional time for completion, providers should watch carefully for additional guidance with respect to the completion of their revalidations. 

Foley is here to help you address the short and long-term impacts in the wake of regulatory changes. We have the resources to help you navigate these and other important legal considerations related to business operations and industry-specific issues. Please reach out to the authors, your Foley relationship partner, our Health Care & Life Sciences Sector, or to our Health Care Practice Group with any questions.

Special thanks to Funmi Oguns, a summer associate in 贵辞濒别测鈥檚 Dallas office, for her contributions to this article.

[1] Centers for Medicare & Medicaid Services, 2025-07-17-MLNC (July 17, 2025) https://www.cms.gov/training-education/medicare-learning-network/newsletter/2025-07-17-mlnc#_Toc203551344

[2] Centers for Medicare & Medicaid Services, GUIDANCE FOR SNF ATTACHMENT ON FORM CMS-855A (May 9, 2025) https://www.cms.gov/files/document/guidance-snf-attachment-855a.pdf

[3] 88 FR 80141 (Nov. 17, 2023).

[4] 42 C.F.R. 搂 424.516(g).

[5] Id.

[6] 42 C.F.R. 搂 424.502.

[7] 88 FR 80141, 80147 (Nov. 17, 2023).[8]Id. at 80148.

On June 25, 2025, the Financial Crimes Enforcement Network (FinCEN) at the U.S. Department of the Treasury designated three Mexico-based financial institutions as primary money laundering concerns under Section 311 of the USA PATRIOT Act.[1] In the short term, this means that domestic and U.S.-located foreign financial institutions and agents will now have until September 4, 2025 to implement the orders鈥� prohibitions on certain transmittals of funds involving the designated institutions.[2]

Orders Pursuant to the Declared Fentanyl-Trafficking Emergency

FinCEN鈥檚 orders, made pursuant to the Fentanyl Sanctions Act and the FEND Off Fentanyl Act, designate the following three financial institutions on the basis that they are facilitating payments related to the production of fentanyl:

• CIBanco S.A., Instituci贸n de Banca M煤ltiple (CIBanco)[3]
• Intercam Banco S.A., Instituci贸n de Banca M煤ltiple (Intercam)[4]
• Vector Casa de Bolsa, S.A. de C.V. (Vector)[5]

FinCEN based its designations on findings indicating that these institutions facilitated transactions between Chinese entities that sell fentanyl precursors and Mexico-based drug cartels that make and market finished fentanyl products. The institutions therefore fall under the ambit of the Fentanyl Sanctions Act of 2019 and the FEND Off Fentanyl Act of 2024.[6]

With these orders FinCEN aims to sever any illicit financial channels supported by money laundering conducted through CIBanco, Intercam, and Vector. The orders will prohibit domestic and U.S.-located foreign financial institutions and agents from engaging in transmittals of funds from or to the three institutions, or from or to any account or convertible virtual currency address administered by or on behalf of them. In practice, however, the orders have already incentivized broader compliance with FinCEN in the form of entities taking proactive steps to distance themselves from these financial institutions. For example, following the FinCEN designations, Visa suspended all international transactions made with CIBanco bank cards.[7] And the Government of Mexico has begun the process of separating the fiduciary units of CIBanco and Intercam and temporarily transferring them to state-owned banks.[8]

Signs of a Broader Shift in Federal Enforcement Priorities

This FinCEN enforcement action likely reflects a broader shift in U.S. federal enforcement priorities, with multiple agencies now intensifying focus on the international narcotics trade, particularly targeting Mexico-based fentanyl traffickers.[9] Shortly after taking office in 2025, President Trump announced an aggressive stance against drug cartels and transnational criminal organizations (TCOs), in part through Executive Order 14157 that directed the State Department and Treasury Department to take related enforcement actions.[10] Following this, the Office of the Attorney General announced its goal of totally eliminating cartels and transnational criminal organizations,[11] the Secretary of State designatedeight Mexican cartels as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs),[12] and the Criminal Division of the Department of Justice published a memorandum identifying a prioritization of cartel- and TCO-activity within its white-collar enforcement approach.[13]

In the coming months, this enforcement trend may continue and evolve. For example, the Office of Foreign Assets Control (OFAC) at the Treasury Department may begin to issue Specially Designated Nationals (SDN) designations targeting persons and entities involved with such cartels and TCOs, especially in activities relating to fentanyl trafficking. Certain entities, including the following, may be at a heightened risk of receiving such designations:

• Financial institutions, especially those that facilitate foreign transactions requiring U.S. correspondent banks, and/or those involved in facilitating transactions between Chinese and Mexican parties;
• Chemical manufacturers, especially those involved in the manufacture of precursor chemicals used to produce fentanyl or other illicit narcotics, many of which are based in China (including Hong Kong), India, and Germany;
• Customs brokers facilitating the clearance of goods from countries that will be faced with increased scrutiny; and
• Logistics companies, especially those involved in shipping products into, out of, and within Mexico.

Upon designation, an SDN鈥檚 assets are blocked and transactions with U.S. persons, on U.S. territory, or involving U.S. currency are prohibited. For non-U.S. entities that do business with cartels and TCOs, OFAC might even issue secondary sanctions, effectively severing from the U.S. market not only the cartels and TCOs themselves, but also anyone who does not comply with U.S. sanctions on them. OFAC can pursue civil penalties for any violation of SDN sanctions.

The Justice Department鈥檚 National Security Division may also begin to initiate enforcement actions, including the following:

• Prosecutions under the Anti-Terrorism Act (ATA),[14] for knowingly providing, or attempting or conspiring to provide, 鈥渕aterial support or resources鈥� to an FTO.[15] The Justice Department has already brought ATA charges against Mexican and Venezuelan nationals鈥攊ndividuals alleged to be members of the Jalisco New Generation Cartel[16] and Tren de Aragua,[17] respectively. The Justice Department has even indicted two Americans on grounds of conspiring 鈥渢o provide material support鈥� to a Mexican cartel 鈥渋n the form of U.S. currency鈥� through the operation of a crude oil company based in Texas.[18]
• Prosecutions under the International Emergency Economic Powers Act (IEEPA) against persons or entities who violate SDN or SDGT sanctions willfully or egregiously.
• Prosecutions related to international money laundering charges that criminalize financial transactions involving the proceeds of unlawful activity, or under the Bank Secrecy Act (BSA), 31 U.S.C. 搂 5322, which criminalizes failure by a financial institution to meet certain reporting and recordkeeping requirements designed to prevent money laundering. Such prosecutions expose defendants to asset forfeiture and government seizures.[19] In 2024, TD Bank N.A. pleaded guilty and agreed to pay nearly US$2 billion in penalties鈥攁bout a quarter of which were in forfeitures鈥攆ollowing the Justice Department鈥檚 investigation of anti-money laundering and BSA violations that 鈥渁llowed hundreds of millions of dollars from money laundering networks to flow through the bank, including for international drug traffickers.鈥�[20]

This kind of shift in the federal government鈥檚 enforcement approach has precedent. In fact, the current Trump Administration鈥檚 emerging enforcement approach toward Mexican cartels and TCOs appears to resemble the first Trump Administration鈥檚 enforcement escalation against North Korea that began in 2017. That strategy also involved layered and coordinated actions鈥攊ncluding FTO/SDGT designations, FinCEN orders, OFAC SDN designations, and DOJ prosecutions鈥攃ulminating in a robust sanctions and enforcement regime. And, perhaps coincidentally, the U.S. enforcement actions on North Korea in 2017, similar to its enforcement actions on cartels and TCOs today, involved targeting Chinese facilitators.

Heightened Legal and Reputational Risks Within Certain Industries and Regions

The Trump Administration鈥檚 strategic realignment of the federal government鈥檚 enforcement mechanisms against fentanyl traffickers appears poised to create heightened legal and reputational risks for certain companies and individuals. Vulnerable industries include, as stated, financial services, chemical manufacturing, customs-clearance, and logistics and shipping. Key risks include liability for transacting with sanctioned individuals under IEEPA, for materially supporting terrorism under the ATA, for engaging in money laundering, or failing to comply with the BSA. Companies and individuals even risk becoming designated as SDNs themselves and having their assets blocked by the U.S. financial system.

To respond to such risks, companies should implement a comprehensive compliance regime and take steps such as: employing a comprehensive risk assessment that identifies exposure to indirectly or unwillingly aiding drug trafficking and advanced money laundering techniques;聽 enhancing due diligence protocols, especially for counterparties in high-risk jurisdictions to include China (and Hong Kong), Germany, and India; training employees on internal reporting and escalation procedures; and engaging in the other risk-mitigating steps identified by Foley, such as here.

If you have questions or concerns about the compliance issues raised in this article, please reach out to any of the authors or your 天美传媒; Lardner attorney.

The Foley聽International Government Enforcement Defense & Investigations聽Team is monitoring all international trade and regulatory developments, which we are posting as they occur on our聽Tariff & International Trade Resources聽blog. Our white paper on聽鈥淢anaging Import and Tariff Risks During a Trade War鈥�聽outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on聽鈥淢anaging Supply Chain Integrity Risks鈥�聽provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs. If you would like to see future updates regarding 鈥淲hat Every Multinational Company Needs to Know鈥� about operating in today鈥檚 complicated international trade world, please sign up for our Tariff & International Trade blog 鈥斅�

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[1] 鈥淭reasury Issues Historic Orders under Powerful New Authority to Counter Fentanyl,鈥� U.S. Treasury Dep鈥檛 (June 25, 2025), .

[2] 鈥淭reasury Extends Effective Dates of Orders Issued Under New Authority to Counter Fentanyl,鈥� Financial Crimes Enforcement Network (July 9, 2025), .

[3] Imposition of Special Measure Prohibiting Certain Transmittals of Funds Involving CIBanco S.A., Instituci贸n de Banca Multiple, 90鈥疐ed.鈥疪eg.鈥�27770 (June 30,鈥�2025).

[4] Imposition of Special Measure Prohibiting Certain Transmittals of Funds Involving Intercam Banco S.A., Instituci贸n de Banca Multiple, 90鈥疐ed.鈥疪eg.鈥�27777 (June 30, 2025).

[5] Imposition of Special Measure Prohibiting Certain Transmittals of Funds Involving Vector Casa de Bolsa, S.A. de C.V., 90鈥疐ed.鈥疪eg.鈥�27764 (June鈥�30,鈥�2025).

[6] 21鈥疷.S.C. 搂鈥�2313a; Public Law 118鈥�50 (H.R.鈥�815), Division E (鈥淔END Off Fentanyl Act鈥�), Title I, Subtitle A, enacted April 24, 2024.

[7] 鈥淰isa suspends international transactions made with CIBanco cards,鈥� Mexico Daily News (July 1, 2025), .

[8] 鈥淢exico Shifts CIBanco, Intercam Trusts to State Banks,鈥� Mexico Business News (July 8, 2025), .

[9] Foley has been following and analyzing the Trump Administration鈥檚 actions: 鈥淲hat Every Multinational Company (Doing Business in Mexico) Should Know About . . . Mitigating Risks From ATA Scrutiny in a New Enforcement Regime鈥� (March 6, 2025), /insights/publications/2025/03/multinational-company-business-mexico-mitigating-risks-ata-scrutiny/; 鈥淲hat Every Multinational Company Should Know About . . . Mitigating Risks Posed by the New Trump Administration Focus on Drug Cartels and TCOs鈥� (June 17, 2025), /insights/publications/2025/06/multinational-company-mitigating-risk-focus-drug-cartels-tco/.

[10] Executive Order 14157, 鈥淒esignating Cartels and Other Organizations As Foreign Terrorist Organizations And Specially Designated Global Terrorists鈥� (Jan. 20, 2025), .

[11] 鈥淭otal Elimination of Cartels and Transnational Criminal Organizations,鈥� Office of the Attorney General (Feb. 5, 2025), .

[12] 鈥淒esignation of International Cartels,鈥� Office of the Spokesperson of the U.S. State Dep鈥檛 (Feb. 20, 2025), .

[13] 鈥淔ocus, Fairness, and Efficiency in the Fight Against White-Collar Crime,鈥� Criminal Division of U.S. Dep鈥檛 of State 聽(May 12, 2025), .

[14] There is also a risk of civil liability under the ATA. The statute allows for U.S. national victims and their estates or heirs to bring claims against defendants alleged to have aided and abetted an 鈥渋njury arising from an act of international terrorism committed, planned, or authorized by an organization that had been designated as a foreign terrorist organization.鈥� 18 U.S.C. 搂 2333(a).

[15] 18 U.S.C. 搂 2333 (2024).

[16] 鈥淢exican Indicted in US in First After Cartel Designated as Terrorist Group,鈥� Reuters (May 16, 2025), .

[17] 鈥淛ustice Department brings first terrorism case against alleged high-ranking TdA gang member,鈥� AP News (April 23, 2025), .

[18] 鈥淔ather and Son indicted for Providing Material Support to Mexican Cartel Engaged in Terrorism,鈥� U.S. Drug Enforcement Administration (May 30, 2025), . 聽

[19] See 18 U.S.C. 搂搂 981鈥�82; 31 U.S.C. 搂 5317(c).

[20] 鈥淭D Bank Pleads Guilty to Bank Secrecy Act and Money Laundering Conspiracy Violations in $1.8B Resolution,鈥� U.S. Dep鈥檛 of Justice (Oct. 10, 2024), .

One of the most common questions we get from clients is, 鈥淲hat is the future of the Trump administration鈥檚 tariff strategy?鈥� With President Trump having issued over 50 tariff proclamations 鈥� a six-month sprint of more major changes to the tariff system than occurred over the prior 90 years 鈥� it can be hard to keep in mind that there will eventually be a landing spot for the tariffs. That landing spot likely will be along the lines of some combination of baseline global and sectoral tariffs, alongside a varying country-by-country tariff regime in place of the former slate of low and similar tariffs for all WTO signatories. So as an aid to helping importers risk-plan for the uncertain international trade and tariff environment, here are 16 fearless attempts to step back from the day-to-day static of new tariff proclamations to try to predict the likely landing place for the tariffs.

Where Are We Going on the Tariffs?

• Fearless Guess #1: Plan for Permanent Global Tariffs. The Trump administration seems to view the global 10% tariff as a long-term revenue measure and the 鈥減rice of admission鈥� for companies to sell into the U.S. market. Even the United Kingdom, which is one of the few countries that has a trade deficit with the United States, announced a negotiated framework settlement that preserves the 10% global tariff. The same was true for the 90-day pause for China, which eliminated the high reciprocal tariff rates but still left the global 10% tariff in place. Our best guess is that the U.S. government will become accustomed to collecting an additional $300 billion or more in tariffs and will maintain this as an ongoing revenue source, regardless of who occupies the White House in four years.

• Fearless Guess #2: The Tariffs Continue Despite the Court of International Trade Ruling. The U.S. Court of International Trade on May 28, 2025, struck down all of the Trump tariffs issued under the International Emergency Economic Powers Act (IEEPA), including the global and reciprocal tariffs and the 20% fentanyl-based tariffs, ruling they exceed the president鈥檚 legal authority. But the Trump administration already has appealed this decision and has received a stay from the Court of Appeals for the Federal Circuit, meaning the tariffs are still being collected. Our expectation is these tariffs will stay in place until the U.S. Supreme Court rules on the issue, and that as a backup plan the Trump administration will launch investigations to support alternative bases for tariffs, under either Section 232 and Section 301.

• Fearless Guess #3: Notwithstanding the foregoing, Canada and Mexico will be the exception as they reduce or even eliminate the 10% global tariff, as part of the 2026 review of the U.S.-Mexico-Canada Agreement, but only for USMCA-compliant goods that meet strengthened country-of-origin requirements.

• Fearless Guess #4: There will be Partial Rollbacks for Reciprocal Tariffs that Still Leave Fairly High Tariffs in Place. Despite the 90-day pause representing a potential off-ramp to permanently higher tariffs, the reciprocal tariff pause should not be viewed as a dialing down of the trade war until we see concrete evidence of negotiated and lowered long-term tariffs. There are several reasons to believe that while negotiated tariffs will decline, they will bottom out at a fairly high level:
  • The reciprocal tariffs are based on trade deficits, not actual tariff barriers. This is why countries like Switzerland and Korea, which impose very low tariffs on imports, were still hit hard with big reciprocal tariff numbers. The administration appears to view any trade deficit as needing major correction, which implies the need to maintain much more than just 10% global tariffs.
  • The originally announced vision for the reciprocal tariffs, which was to go subheading-by-subheading and identify areas where the United States was charging less than foreign countries, has gone by the wayside. Instead, there is a general sense that the reciprocal tariffs are intended to counteract any and all potential forms of favoring foreign industries (subsidized electricity, manipulated currency, and maintaining a Value-Added Tax, which generally exempts exports from paying any VAT, which President Trump views as an export subsidy), as well as any tariff or non-tariff barriers that make it harder for U.S. firms to export abroad.
  • The Trump trade officials seem to view any pain that U.S. importers are seeing as being short term, believing that there will be a renaissance of made-in-USA manufacturing that will 鈥渇ix鈥� all tariff issues in fairly short order.
  • The Trump administration views tariffs as helping with a different administration priority, which is to provide revenue to partially offset the cost of extending the 2017 tax cuts.

• Fearless Guess #5: Plan for Very High Tariffs for the Reasonably Foreseeable Future. Tariff rates are still very high, even after the reciprocal tariff pause. As a rough approximation, U.S. imports totaled $3.3 trillion last year. A 10% tariff, even taking into account the certain coming decline in imports, implies a $300 billion tax increase paid by U.S. importers. Adding in steel, aluminum, automotive tariffs, and likely Section 232 tariffs raises the total to well over $400 billion, and this is before accounting for wherever the reciprocal tariffs end up. Add it up, and CBP is on track to be collecting over $1.5 billion dollars per day in duties.

• Fearless Guess #6: Retaliation Will Not Be a Major Factor. The EU and others have announced that they will not retaliate (other than retaliating against steel and aluminum tariffs, as previously announced) 鈥� for now 鈥� given the decision to pause the reciprocal tariffs. This puts the focus squarely on negotiating reciprocal tariff reductions, not escalation, for the 90-day pause. Our prediction is that most countries will choose to negotiate the best deal they can rather than risk the type of retaliation that the Trump administration imposed against China when China originally retaliated against the U.S. tariffs.

• Fearless Guess #7: Product-Specific Exclusions Will Be Rare and Based on National Security Reasons, Not Economic Ones. It is tellingthat one of the very first tariff actions taken by the Trump administration was to wipe out all accumulated product-specific exclusions that had built up over the years from the 2018 steel and aluminum exclusions. In the current tariff proclamations, the impetus has been in the opposite direction, which is to give U.S. producers opportunities to expand the number of products covered, with no provision for any exclusions. We anticipate that few (if any) exclusions will be granted, and any that come on board will be for reasons of national security for critical items in short supply rather than for economic reasons. Importers should be looking to build flexibility, resilience, and agility into their supply chains and should be risk-planning how they would negotiate a new normal of permanently higher tariff rates, rather than hoping for the administration to reinstate the type of product exclusions seen in the first Trump administration for steel and aluminum products.

What Are the Key Concerns for Importers and Manufacturers?

• Fearless Guess #8: The Tariff Proclamations Represent a Permanent Attack on a Dominant U.S. Manufacturing Model. Many U.S. manufacturers rely on global parts and components for domestic assembly. The business strategies of multinationals often depend on purchasing parts and components through carefully thought-out international supply chains and then adding value and further manufacturing in the United States. These carefully engineered supply chains took decades to build, and tariffs threaten to upend this entire business strategy, not just margins.

• Fearless Guess #9: Recognize that Tariff Uncertainty Is a Huge Business Risk for the Reasonably Foreseeable Future. A common theme we see when engaging in tariff risk-planning exercises with clients is the difficulty of reacting to rapidly changing tariff announcements and the uncertainty of not knowing which countries will end up with high or low tariffs. This leads to delayed investments, frozen M&A activity, and general investment and planning paralysis. Companies are spending resources on cost-passing strategies and supply chain triage, not growth. This means the tariffs will have an impact far beyond the direct bottom-line impact for companies that depend on imports.

What Is the Outlook for the China Tariffs?

• Fearless Guess #10: Recognize that the Trade War Has a Sharper China Focus. Though also broad-based, the trade war has a clear China focus, which is the only country with triple-digit tariff rates. Although some of these tariffs are now temporarily suspended to support a negotiated settlement, even the remaining tariffs still add up to more than the highest reciprocal rate imposed on any other country. With China and the United States comprising 40% of global GDP, the escalation in tariffs between these two economies introduces significant systemic global trade risks. Supply chains can鈥檛 shift overnight, and companies report that for many items, including basic parts such as capacitors or resistors, no alternative sourcing exists outside of China. Even if relocation were possible, it could take years and raise permanent costs. With China preparing its producers for a long trade war, there may be a long and uncertain path toward resolution. We also would not be surprised to see the administration push other countries to take coordinated actions against China or to look for ways to impose a tariff on all Chinese-origin content, even if the good is substantially transformed in another country, as a means of pushing back on Chinese efforts to use non-U.S. markets as a way to indirectly sell to the United States.

What Is the Outlook for the USMCA review?

• Fearless Guess #11: USMCA Survives 鈥� but with Strengthened Originating Content Requirements and New Anti-China Provisions. At this point, it is clear that Canada and Mexico are receiving preferential trade treatment, as most tariffs aimed at Canada and Mexico are paused 鈥� but only for USMCA-compliant goods. Because so many U.S. companies have integrated supply chains across North America 鈥� particularly within the politically powerful automotive industry 鈥� it is likely that the administration will ultimately seek to preserve the USMCA. We do anticipate, however, that there will be substantial revisions, including strengthened country of origin rules, new measures restricting the use of Chinese parts and components, and potential new unified tariff barriers against China.

What Is the Outlook for the Automotive Tariffs?

• Fearless Guess #12: Recognize that the Automotive Sector Still Faces Major Disruption. Automotive tariffs remain a flashpoint, with ripple effects across the U.S.-Canada-Mexico supply chain. These tariffs will continue to disrupt the largest U.S. manufacturing sector, especially with the administration launching a new Section 232 investigation into medium- and heavy-duty trucks. Because of the integrated U.S.-Canada-Mexico automotive supply chains, it is impossible to divorce the upcoming 2026 USMCA review from the automotive sector, as it is the main determinant of the trade deficit with Mexico. Chinese investment in Mexico, and the use of Chinese-origin parts and components in Mexico, have been major trends over the last six years as Chinese companies have reacted to the Section 301 tariffs imposed in the first Trump administration. So one likely area of compromise will be limitations on Chinese investment in North America and the use of Chinese-origin parts and components to qualify for USMCA-compliant status.

What Is the Outlook for Additional Section 232 Tariffs?

• Fearless Guess #13: Plan on More Section 232 Tariffs. We do not believe the incessant drumbeat of new Section 232 investigations is at an end. Expect the administration to continue to announce more investigations, particularly in light of the Court of International Trade striking down the expansive use of IEEPA to support general tariff increases.

• Fearless Guess #14: Recognize that Lobbying Will Be Intense 鈥� and You May Need to Get Involved. All or nearly all countries are negotiating. Industries will jockey to receive favorable treatment for their own concerns. Thus, with global tariffs on the table, expect a surge of special-interest activity, as industries and companies race to secure carveouts, exemptions, or favorable tariff treatment. Negotiations will open a free-for-all of companies and industries pushing to get favored status. The same will be true as various Section 232 investigations play out.

What Coping Mechanisms Should Importers Be Taking?

• Fearless Guess #15: Recognize that the Risks of Being an Importer Have Sharply Risen 鈥� and that Customs Compliance and Accuracy in Import Operations Is More Important than Ever. In a high-tariff environment, it is essential to have complete accuracy for all imports, as errors can quickly result in large underpayments, associated interest, and penalties. Further, the Trump tariff proclamations have directed Customs to focus on ensuring full collection and compliance with the new tariff requirements, often directing Customs to impose penalties at the maximum level allowed without considering any mitigating factors. As a result, it is essential that importers carefully review the accuracy of all import-related information, especially for the critical areas of country of origin, valuation of the product, and USMCA compliance. This is especially important when importing goods made in third countries using Chinese parts and components, as these goods could be considered to still be Chinese in origin and thus subject to the high Chinese tariffs unless they were substantially transformed in the third country. Because Customs is carefully scrutinizing all imports for potential underpayments of the new tariffs, importers should be doing the same.

• Fearless Guess #16: The Importance of Filing Voluntary Self-Disclosures Has Never Been Greater. Importers are required to file all import-related information electronically in the Customs entry portal known as the Automated Commercial Environment (ACE). Customs uses sophisticated data mining to find anomalies and potential tariff underpayments. With Customs being directed to emphasize enforcing the new tariffs, and to apply the maximum penalties without considering mitigating factors, Customs will be using ACE data frequently to target tariff underpayments and to initiate investigations to seek the recovery of underpaid tariffs. The only way to avoid these high penalties is for importers to file voluntary self-disclosures, which lock in the ability to close out administrative disclosures with the payment of back duties and interest but with no penalty. We accordingly expect disclosures will sharply increase as importers take steps to avoid potential penalties.

The Foley International Government Enforcement Defense & Investigations Team is monitoring all tariff-related developments, including any modifications, clarifications/guidance, or additional measures introduced by the Trump administration, which we are posting as they occur on our Tariff & International Trade Resources blog. As new information becomes available, we will provide updates and analysis to help importers navigate the evolving international trade paradigm, including for new tariffs.

Our white paper on 鈥淢anaging Import and Tariff Risks During a Trade War鈥� outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on 鈥淢anaging Supply Chain Integrity Risks鈥� provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.

If you would like to see future updates regarding 鈥淲hat Every Multinational Company Needs to Know鈥� and other updates about operating in today鈥檚 complicated international trade world, please our Tariff & International Trade blog.

This year, U.S. trade policy has undergone a dramatic shift, driven by a series of presidential proclamations that have raised tariff rates sharply. Some tariffs (such as the global and reciprocal tariffs, and the special tariffs relating to fentanyl and unauthorized immigration) have been issued under the International Emergency Economic Powers Act (IEEPA), and others have been issued using Section 232 (the sectoral tariffs on steel, aluminum, and passenger vehicles and light-duty trucks). Recently, the validity of the entire tariff structure has been thrown into doubt, when first the Court of International Trade and then a D.C. district court issued determinations finding that IEEPA could not be a basis either for longstanding broad-based tariffs or the imposition of tariffs as a means of creating negotiating leverage.

In light of this decision, we have received numerous requests for further information regarding the impact of these decisions. As an aid to the importing community, this article provides an overview of: (1) the current status of existing and proposed tariffs, in light of these two decisions; (2) the impact of these two determinations; and (3) coping mechanisms for importers to manage and mitigate exposure in the current environment.

The Current Tariff Landscape

To appreciate the impact of the recent court decisions, it is helpful to provide some context regarding the current structure of U.S. tariffs. The table below outlines the six main 鈥渂uckets鈥� of tariffs currently shaping the trade environment:

Bucket	Description	Current Status
1	Normal (Chapters 1鈥�97): Standard duties (generally 0%鈥�7%) under the HTS.	Permanent (0%鈥�7%).
2	Global 10% Tariffs: Broad, across-the-board duties on all non-exempt goods. Issued under IEEPA.	Still in place; likely permanent.
3	Reciprocal 50% Tariffs: Suspended pending negotiations; could ultimately decline, but terms uncertain. Issued under IEEPA.	Paused for country-by-country negotiations.
4	China (up to 170%): Includes 25% Section 301 duties (7 years in place) plus additional levies on critical sectors. All tariffs other than the original Section 301 duties under IEEPA.	Permanent for Section 301; IEEPA tariffs still in place; global and reciprocal tariffs suspended for 90 days.
5	Sectoral 232 Tariffs (25%): Steel & aluminum (permanent); autos (suspended for USMCA-origin goods); future sectors under review. None are issued under IEEPA.	Potential expansion of steel and aluminum derivates; ongoing investigations for copper, lumber, semiconductors, civilian aircraft, pharmaceutical, and certain minerals.
6	Canada & Mexico Goods: Subject to global and reciprocal tariffs of 10% and 25%, as well as 25% tariffs relating to fentanyl and unauthorized immigration (all issued under IEEPA). All tariffs suspended for goods meeting updated Rules of Origin (75% North American content, 40% labor rule).	Remains suspended; subject to USMCA review.

Litigation Challenging the Use of IEEPA As Authority to Impose Tariffs

On May 28, 2025, the U.S. Court of International Trade (CIT) and the D.C. Circuit issued parallel rulings holding that IEEPA does not confer 鈥渦nbounded鈥� authority to impose tariffs; nor does it authorize the use of tariffs to create leverage in broader trade negotiations. As a result, several IEEPA-based measures were enjoined. A U.S. District Court judge issued a similar ruling the next day. The CIT directed that the tariffs be eliminated within ten days, prompting the Trump administration to file an immediate appeal and an emergency motion seeking a stay of the CIT directive, which the Court of Appeals for the Federal Circuit (CAFC) granted. The CAFC also established an aggressive briefing schedule, with the last brief due June 9, 2025. The Trump administration has indicated that it will take the issue to the Supreme Court if necessary (and we expect the same is true of the parties challenging the tariffs).

Tariffs Impacted by the CIT Decision

The CIT鈥檚 decision invalidated key tariffs imposed under IEEPA. Specifically, the ruling struck down:

• The fentanyl-related tariffs targeting Canada and Mexico (25%) as well as China (20%).
• The 10% global tariffs applied across a wide range of non-exempt imports.
• The reciprocal tariffs of up to 50%, which have been suspended for China but remain in place for other trading partners.

Soon after the CIT鈥檚 decision, on May 29, 2025, the U.S. Court of Appeals for the Federal Circuit granted a temporary stay of the CIT ruling, leaving the IEEPA-based tariffs in place until the Federal Circuit hears arguments and rules on the merits.

Notably, not all Trump tariffs were affected. Section 301 tariffs on China and Section 232 tariffs on autos/auto parts and on steel and aluminum remain intact, as they are grounded in separate statutory authorities.

The Likely Future of Tariffs

Rather than await final judicial outcomes, the administration has pursued or indicated that it will pursue multiple 鈥淧lan B鈥� approaches including aggressively seeking stays of CIT rulings and expediting appeals through the Federal Circuit. These include the following:

• The CIT decision has been appealed to the Court of Appeals for the Federal Circuit, which, as noted above, issued May 29 a temporary stay of that decision pending further proceedings. As a result, the IEEPA-based tariffs remain in effect for now. This includes the reciprocal tariffs, which are currently set at 10% but could rise to as much as 50% by July 9, along with the fentanyl-related tariffs, which range from 10% to 25%, depending on the product and its country of origin. We expect that the administration will continue appealing the decision, potentially all the way up to the Supreme Court.
• The CIT noted that there is a provision within the IEEPA that is intended to deal with trade imbalances, which authorizes short-term (150-day) special tariffs. The administration could trigger this authority to buy it time to take action under other trade statutes, which generally require the administration proceed through a series of steps (notice and comment, etc.) before imposing tariffs.
• The administration can launch new 270鈥恉ay investigations under Section 301, which is a statutory authority that the first Trump administration used to impose the Section 301 China tariffs. This use of the statute was upheld by the CIT (and currently is on appeal at the CAFC).
• The administration could expand its use of Section 232 tariffs beyond steel, aluminum, and automobiles to include additional products. The administration already has launched Section 232 investigations relating to critical minerals, semiconductors, pharmaceuticals, civilian aircraft, and pharmaceuticals. The use of Section 232 to impose steel and aluminum tariffs already was upheld by the CIT and the CAFC in the first Trump administration.
• The administration can continue engaging trading partners directly to secure country-specific agreements. With the tariffs still in place, and the outcome of the IEEPA litigation uncertain, trading partners have considerable incentive to strike deals with the Trump trade team, especially since there are alternatives ways to support the tariffs.
• The administration could push for Congress to endorse higher tariffs. We view this option as unlikely, given opposition in Congress to the increased tariffs.

Key Takeaways: Coping Strategies in the Current Environment

Even as some levies are struck down, others 鈥� backed by statute and negotiation progress 鈥� remain firmly in place or are likely to be renewed. At this point, we envision that all tariffs, regardless of the governing authority, will remain in place for the foreseeable future (i.e., at least 90 days). For more information on where we predict the likely landing spot on the Trump tariffs will be, see our article, 鈥淲hat Every Multinational Company Should Know About 鈥� The Likely Landing Spot for the Trump Tariffs.鈥�

Moreover, to thrive in this uncertain environment, companies must embed robust customs-compliance practices, actively audit supply chains, and maintain rapid-response capabilities for CBP and USTR proceedings. As tariff regimes continue to evolve through litigation, negotiation, and statute, organizations that invest in proactive import governance will be best positioned to mitigate costs, avoid enforcement penalties, and preserve their competitive edge in global markets. For detailed advice on coping strategies, please see the latest update of 鈥渆vergreen鈥� our article, 鈥淲hat Every Multinational Company Should Know About 鈥� The Current Trump Tariff Proposals (June 2025 Update)鈥�, and our white paper on .

Conclusion

The Foley International Government Enforcement Defense & Investigations Team is monitoring all tariff-related developments, including any modifications, clarifications/guidance, or additional measures introduced by the Trump administration, which we are posting as they occur on our Tariff & International Trade Resources blog. As new information becomes available, we will provide updates and analysis to help importers navigate the evolving international trade paradigm, including for new tariffs.

Our white paper on 鈥淢anaging Import and Tariff Risks During a Trade War鈥� outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on 鈥淢anaging Supply Chain Integrity Risks鈥� provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.

If you would like to see future updates regarding 鈥淲hat Every Multinational Company Needs to Know鈥� and other articles on international trade and regulatory compliance, please our Tariff & International Trade blog.

The Trump Administration鈥檚 crackdown on cartels and transnational criminal organizations (TCOs) operating abroad and in the United States is a significant Department of Justice (DOJ) priority.[1] The Trump Administration already has designated certain cartels and transnational criminal organizations as terrorists (labeling them as either Specially Designated Global Terrorists (SDGTs), Foreign Terrorist Organizations (FTOs), or both), thereby blocking these groups or persons from conducting transactions in or with the United States, any U.S, persons, or even non-U.S. persons where there is some jurisdictional nexus to the United States, including the use of U.S. dollars related to the transaction.

Engaging in transactions with FTOs can result in civil penalties or even criminal prosecution. Indeed, at the end of May 2025, was unsealed, charging two men from Utah with conspiring 鈥渢o provide material support鈥� to the Mexican cartels 鈥渋n the form of U.S. currency鈥� through their operation of a crude oil company based in Texas. Notably, the cartel at issue was designated under the Trump Administration, on February 20, 2025.

This is only a precursor to the many similar actions that will be coming under the Trump Administration. In advance of further enforcement actions by the DOJ and other agencies, companies doing business in areas where cartels operate or TCO activity is prevalent should take practical steps to ensure compliance with applicable U.S. laws and regulations. The Trump Administration鈥檚 renewed focus on cartel and TCO-related threats means that multinational companies must reassess their risk exposure in this evolving enforcement environment.

Under this new approach, companies operating in regions with known cartel or TCO activity 鈥� including Mexico, Central and South America, the Caribbean, and parts of Africa 鈥� may face heightened scrutiny from U.S. regulators and enforcement agencies. In some cases, exposure could arise not from direct contact with cartels but from indirect connections through suppliers, subcontractors, or intermediaries.

To manage these increased risks, companies 鈥� particularly those with complex global operations or vulnerable supply chains 鈥� should undertake a frank and rigorous compliance assessment. Key measures to consider include the following:

• Strengthen and Expand Due Diligence Protocols. Conduct enhanced due diligence on all third-party business partners, with special emphasis on new suppliers, distributors, and intermediaries. Go beyond traditional onboarding checks by including screenings for SDGTs, FTOs, and other Specially Designated Nationals (SDNs) identified by OFAC and other agencies. SDGT/FTO screening should occur at the same time as OFAC SDN screening and should be incorporated into both supplier onboarding and recurring supply chain integrity audits. When using automated tools, ensure they are calibrated to flag indirect affiliations or complex ownership structures that may obscure ties to prohibited actors.

• Update Supply Chain and Partner Contracts to Include Risk Controls. Review and update all supply chain, distribution, and vendor contracts to include explicit anti-cartel and anti-transnational criminal organization clauses. Use template language vetted by legal counsel to maintain consistency across global agreements.

• Reevaluate Existing Relationships for Creeping Risk. Even longstanding, previously vetted business partners may change in ways that introduce new risks, such as through a change in beneficial ownership, acquisition by unknown entities, or subtle expansion of services into new sectors. Establish a process for ongoing counterparty review and re-screening. Changes in business scope, leadership, or operating regions should automatically trigger a due diligence refresh and possibly a targeted audit.

• Scrutinize Cash Payments and Sudden Financial Behavior Shifts. Cash transactions are frequently used by TCOs and cartels to avoid detection. Companies should monitor for counterparties that insist on cash payments or suddenly switch from traceable payment methods (e.g., wire transfers, checks) to cash-based transactions. Establish a robust vendor management and transaction monitoring system capable of flagging such shifts. Red flags may include frequent invoice overpayments, ambiguous remittance details, or transactions routed through high-risk jurisdictions.

• Conduct Deep-Dive Audits on High-Risk Counterparties. Map all tiers of your supply chain to identify potential exposure points to cartel activity or TCO influence or cartel activity. For high-risk counterparties 鈥� particularly those located in known trafficking corridors or regions with a high volume of organized crime 鈥� conduct transaction-level audits to assess whom they are paying, the nature of those payments, and whether financial flows align with declared business purposes. Routinely screen for changes in beneficial ownership, payment methods, and contract behavior. If indicators of risk arise, consider notifying the counterparty and requiring remedial steps.

• Identify and Monitor Vulnerable Industries. Certain industries are systematically targeted by cartels and TCOs for their logistical value, regulatory complexity, or local influence. These include (1) logistics and transportation firms, especially those crossing remote borders or maritime routes; (2) construction and infrastructure developers, often required to interact with local permitting authorities; (3) utility monopolies or service providers, like trash collection or internet services, where regional dominance makes them strategic takeover targets; and (4) sectors with powerful unions or complex labor dynamics, which may be subject to infiltration or co-option. When partnering with companies in these industries 鈥� especially in regions known for cartel or TCO activity 鈥� layer additional scrutiny into the relationship and maintain heightened oversight throughout the contract lifecycle.

• Institutionalize Training and Internal Reporting Channels. Train employees, compliance personnel and, where appropriate, third-party partner employees on how to identify and report signs of cartel or TCO interference. Go beyond providing lists of restricted parties 鈥� build awareness of red flags. Establish secure, anonymous internal whistleblower channels and provide amnesty or protection policies to encourage early reporting of compliance breaches or attempted criminal coercion.

• Establish Executive and Board Oversight Mechanisms. Ensure that TCO- and cartel-related risks are regularly escalated to executive leadership and the board of directors. Incorporate updates into quarterly compliance reports or risk committee briefings. For companies operating in high-risk regions, consider designating a senior-level risk officer or task force to oversee response protocols and monitoring, or appoint someone within procurement or the legal department to perform these risk-management tasks.

• Develop a Crisis Response Plan for Criminal Acts. Cartels often rely on violent or coercive tactics, such as extortion, theft, fraud, and even kidnapping, to infiltrate business operations. Companies operating in high-risk regions should prepare in advance. Develop a crisis management protocol, including incident escalation steps, points of contact within local and international law enforcement, communication procedures, and protocols for employee safety and legal response. Consider risk-management exercises to test responsiveness.

• Monitor Public Crime Reports and Prepare for Legal Requests. Maintain regular review of public crime databases, law enforcement briefings, and NGO reports to stay informed about emerging threats in your company鈥檚 regions of operation. Coordinate with inside and outside counsel to ensure readiness to respond to subpoenas, civil investigative demands, and voluntary requests for information, as the Trump Administration is expected to ramp up these tools for probing potential violations of law. Rapid response capability is especially important in high-risk sectors or jurisdictions where investigations may commence with little warning.

• Implement Incident Documentation and Red Flag Response Protocols. Create a formal procedure for documenting red flags, screening matches, due diligence findings, and responses to suspected cartel/TCO exposure. Maintain a secure compliance log or internal case management system to ensure continuity, support audits, and demonstrate good faith efforts in the event of enforcement action.

*           *           *

The Trump Administration鈥檚 policy pivot toward aggressive enforcement of cartel and TCO-related crimes brings heightened risk for global businesses 鈥� not just for direct violations but for secondary liability through unmonitored third parties. A proactive, systems-based approach to compliance, backed by due diligence, real-time monitoring, employee training, and strong response plans, is essential to avoid reputational, financial, and legal damage in this new enforcement landscape.

Nonetheless, while the Trump Administration鈥檚 enhanced focus and enforcement strategy on eliminating cartels and TCOs may be a shift from the previous administration鈥檚 enforcement priorities, multinational companies do not have to reinvent the wheel to ensure they are operating in compliance with relevant U.S. laws. Companies should look to harness existing compliance procedures such as due diligence supplier onboarding measures, OFAC screening, supply chain integrity reviews, and red flags awareness and to adapt them to the new enforcement priorities of the new administration. By proactively following longstanding compliance best practices, they can effectively mitigate against these heightened risks.

If you have questions or concerns about the compliance issues raised in this article, please reach out to any of the authors or your 天美传媒; Lardner attorney.

The Foley International Government Enforcement Defense & Investigations Team is monitoring all international trade and regulatory developments, which we are posting as they occur on our Tariff & International Trade Resources blog. Our white paper on 鈥淢anaging Import and Tariff Risks During a Trade War鈥� outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on 鈥淢anaging Supply Chain Integrity Risks鈥� provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.If you would like to see future updates regarding 鈥淲hat Every Multinational Company Needs to Know鈥� about operating in today鈥檚 complicated international trade world, please sign up for our Tariff & International Trade blog 鈥�

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[1] See Executive Order 14157,鈥�,鈥� (Jan. 20, 2025); Office of the Attorney General, 鈥�,鈥� (Feb. 5, 2025); ,鈥� (Feb. 20, 2025); Criminal Division of U.S. Dep鈥檛 of Justice, 鈥溾�� (May 12, 2025).

Less than five months into the new administration, we have already seen more than 50 tariff proclamations. With new tariffs being proposed, imposed, revoked, suspended, and sometimes reimposed, it can be difficult for importers to keep up with all the proclamations. So, as an aid to the importing community, we have put together an 鈥渆vergreen鈥� tariff article, which contains three key items for importers:

• A summary of the key tariffs and tariff proposals, including their current status[1] and the key issues for each.
• A list of resources for importers looking for aids to cope with tariff and international trade uncertainty; and
• A list of the most common questions we are receiving from clients regarding the new tariffs and their implementation.

We also note that on May 28, 2025, the U.S. Court of International Trade struck down many of the new Trump tariffs (i.e., those based on the International Emergency Economic Powers Act (IEEPA)), ruling that they exceed the president鈥檚 legal authority. Commerce Secretary Lutnick recently emphasized that 鈥渢ariffs are not going away,鈥� citing multiple statutory authorities available to maintain them. The Trump administration has already appealed the CIT鈥檚 decision to the U.S. Court of Appeals for the Federal Circuit and has obtained a stay. Our expectation is that these tariffs will stay in place until the U.S. Supreme Court rules on it, which will take time to occur. We also anticipate that the Trump administration will likely launch investigations to support alternative bases for the IEEPA tariffs, including under Section 232 and Section 301. We will be regularly updating these resources to reflect new tariff proposals and modifications, which are in some cases being updated or changed daily.

Where Are We on the Various Tariff Announcements?

The state of play for each tariff is as follows:

Bucket 1: Chapter 1-97 Pre-Existing Tariffs

• What Are They? The first set of tariffs are the 鈥渘ormal鈥� tariffs that have existed for decades.
• Are they Permanent? Yes.
• How Much Are They? Generally, in the range of 0%鈥�7%.
• Do They Stack? These tariffs are the starting point for stacking, as all tariffs are added to these initial normal tariffs.

Bucket 2: Global 10% Tariffs

• What Are They? The 鈥減rice of entry鈥� for selling to the United States.
• Are They Permanent? Unlikely to be negotiated away, with the possible exception of Canada and Mexico as part of USMCA review.
• How Much Are They? 10%.
• Do They Stack? Yes, the global tariffs stack on top of the Chapter 1-97 tariffs.

Bucket 3: Reciprocal Tariffs

• What Are They? Tariffs against the entire world, based on the level of trade surpluses with the United States.
• Are They Permanent? Currently suspended for country-by-country negotiations. They are likely to return but at lower, negotiated levels.
• How Much Are They? Up to 50%.
• Do They Stack? The reciprocal tariffs stack on top of the Chapter 1-97 tariffs. The announced reciprocal tariff rates include the 10% global tariff. The reciprocal tariffs, however, carve out any goods that are subject to any Section 232 sectoral tariffs, making the reciprocal and sectoral tariffs an either-or set of tariffs.

Bucket 4: China Tariffs

• What Are They? The fourth set of tariffs comprises those imposed specifically against China, which include both the global and reciprocal tariffs and additional, China-only tariffs. Thus, calculating the total tariffs on China requires adding up the following tariffs:
  • Section 301 Tariffs: The first China-specific tariffs were imposed on Chinese-origin goods in the first Trump administration. About half of trade with China is exempt from these tariffs (the so-called 鈥淟ist 4B鈥�); the other half of imports from China pay a tariff of between 7.5% and 25%. These tariffs stack on top of the Chapter 1-97 tariffs. These tariffs are carryovers from the first Trump administration and continued through the Biden administration, and thus are likely permanent unless negotiated away as part of the current negotiations with the Chinese government (unlikely).
  • IEEPA 20% China Tariffs: The second China-specific tariffs are the 20% tariffs relating to what the Trump administration characterizes as the Chinese government鈥檚 failure to halt the shipment of fentanyl precursors used to support the export of fentanyl into the United States. These tariffs are not currently paused and stack on top of the Chapter 1-97 and the Section 301 tariffs. There is some chance that these tariffs will be diminished or removed based on the progress in negotiations and perceptions of the administration regarding whether China has taken sufficient steps to address concerns relating to the export of fentanyl precursors. The fentanyl tariffs stack on top of the Chapter 1-97, Section 301, and global tariffs. These tariffs are not paused and are likely to be permanent.
  • Reciprocal Tariffs: The fourth set of China tariffs are the reciprocal tariffs. After China retaliated against the U.S. tariffs, the Trump administration raised the China IEEPA reciprocal tariff to 125% (which includes the 10% global tariff). The reciprocal tariffs stack on top of the Chapter 1-97, global, and Section 301 tariffs. The China reciprocal tariffs are currently paused and are subject to negotiations with China. It is likely that these tariffs will return at the end of the 90-day pause period, albeit at a lower negotiated rate.
  • Total China Tariffs/How They Stack: Thus, all China-origin goods have a tariff rate of 145%. These goods are still subject to the original Section 301 tariffs, which means the stacked tariffs on Chinese-origin goods range from 145% to 170%, plus the normal Chapter 1-97 tariff rates for the specific product. With the paused reciprocal tariffs, the current baseline is the Chapter 1-97 tariffs, plus the global 10% tariff and the 20% fentanyl-based tariff, with the addition of any applicable Section 301 tariff.

Bucket 5: Section 232 Sectoral Tariffs

The fifth set of tariffs are the sectoral tariffs imposed under Section 232 on specific products.

• What Are They: These sectoral tariffs currently include steel and aluminum tariffs (50% as of June 4) and the automotive(25%) sectoral tariffs, with the latter currently suspended for USMCA-compliant goods. Because the sectoral tariffs are either-or with the reciprocal and global tariffs, where these tariffs apply, they replace those tariffs.
• Future New Sectoral Tariffs: The administration has announced or clearly telegraphed new Section 232 investigations covering medium- and heavy-duty trucks and parts; copper and derivative products; critical minerals; lumber and timber; aircrafts, jet engines, and parts; pharmaceutical; and semiconductor goods.
• Expansion of Sectoral Tariffs: For Section 232 tariffs currently in place, the administration has announced there will be opportunities for U.S. producers to request additional derivative tariffs.
• How They Stack: Where the Section 232 tariffs apply, the global and reciprocal tariffs do not. Thus, they stack on top of the normal Chapter 1-97 tariffs. For China, they stack also on top of the 20% fentanyl-based tariffs and the Section 301 tariffs.

Bucket 6: IEEPA 25% Canada and Mexico Tariffs

The last set of tariffs are the 25% tariffs imposed on Canada and Mexico, relating to what President Trump characterizes as those countries鈥� insufficient efforts to halt the flow of fentanyl and unauthorized immigrants into the United States. These tariffs are suspended for any goods that are USMCA-compliant.

What Resources Are Available To Help Cope with Tariff and International Trade Uncertainty?

To help importers cope with the unpredictability of the current trade environment, 贵辞濒别测鈥檚 International Trade, Supply Chain, and False Claims Act Teams offer focused, practical resources to help manage international trade. These include:

• Tariff & International Trade Resources: The Foley Tariff & International Trade Resources page includes information to help multinational companies understand the rapidly changing international trade world, including many resources to help companies understand and navigate the rapidly changing tariffs and their impact on international supply chains.

• White Papers: Our companion white papers on 鈥淢anaging Import and Tariff Risks During a Trade War鈥� and 鈥�Managing Supply Chain Integrity Risks鈥� provide practical advice to help importers identify and manage rising tariffs and the risks arising from supply chain integrity issues such as forced labor, human trafficking, and the Uyghur Forced Labor Prevention Act.

• Article Series: Our biweekly articles on 鈥淲hat Every Multinational Company Should Know鈥� discuss pressing international trade topics, including the key tariff proposals. You can view all articles in that series, sortable by topic, at our Tariff & International Trade Resources page. You can sign up to receive notices of upcoming biweekly emails .

• Presidential Transition Hub: To provide practical advice on dealing with all aspects of the rapid-fire announcements from the new administration, Foley has set up a 100 Days and Beyond: Presidential Transition Hub for frequent legal updates on new administration announcements as they occur. You can register to receive updates there as well.

Service Offerings

• Customs Audit and Supply Chain Integrity Review: Our International Trade and Supply Chain teams can provide a Customs Audit and Supply Chain Integrity review, which provides a thorough assessment of the state of your customs compliance and whether there are unaddressed risks that your company needs to address to avoid unwanted Customs scrutiny of your imports. More details here.

• Contract Reviews for Tariff Concerns: 贵辞濒别测鈥檚 Supply Chain Team can leverage AI to assist with assessing your key supplier agreements for key provisions related to which party bears the costs of tariffs, including delivery terms and pricing terms.

Frequently Asked Questions

After presenting at numerous seminars and webinars, and in discussions with clients, we have noticed certain recurring questions. To aid the importing community, we have compiled a list of these, which include the following:

General FAQs

Do the tariffs stack? Yes, all tariffs stack, with the exception of the Section 232 sectoral tariffs and the global/reciprocal tariffs, which are either-or. The full stacking details are above. In addition, if the product is covered by an antidumping or countervailing duty order, then those duties also stack.

Is the stacking compounded? No. The tariffs add up without compounding. If both a 20% and a 25% tariff apply, the result is a 45% increased tariff.

Are you seeing clients pursue a China +1 strategy to cope with the new tariffs? Yes. Many clients have been pursuing a strategy of adding additional capacity outside of China since the imposition of the original Section 301 duties. These efforts appear to be accelerating, as there is a growing realization that high tariffs for China are the new normal. In this regard, it is important to note the original Section 301 tariffs remained in place even under the Biden administration. Further, China is likely to see the greatest amount of increased tariffs under the reciprocal tariff proposal because it hits so many categories 鈥� it heavily subsidizes its industries, it has been tagged as a currency manipulator by the Department of Treasury for years, and there are numerous countervailing duty findings by the Department of Commerce that provide a clear roadmap to identify subsidy programs.

One caution is that when companies move production out of China, they often continue to use Chinese-origin parts and components. Companies pursuing this strategy need to do a careful analysis to ensure they are 鈥渟ubstantially transforming鈥� the product by doing enough work and adding enough value in the third country to create a new and different article of commerce with a new name, character, or use, thus giving it a new, non-Chinese country of origin.

Will there be exceptions for goods like medical devices in the proposed tariffs? Medical devices that fall under Chapter 98 continue to maintain duty-free status under the Nairobi Protocols. Whether further exceptions will be granted is unclear, as the tariffs have veered toward being universal due to concerns that exceptions (like those granted for steel and aluminum under the original sectoral tariffs) tend to undermine the efficacy of the new tariff measures. As a result, one purpose of the aluminum and steel tariff announcement was to wipe out the list of accumulated product-specific exceptions that had grown over the years. These factors work against an announcement of tariff-specific exceptions.

Will there be exemptions for goods being imported for use in the U.S. defense industry? How about shipments to the Department of Defense? At this time, there is no such exemption nor any indication that such an exemption is in the works.

Are there any discussions relating to potential tariff relief for other sectors? So far, the only somewhat industry-specific reprieve has been the lifting of tariffs on USMCA-compliant goods, first for the auto manufacturing sector and then in general. If discussions regarding tariff relief for other sectors are occurring, they have not been announced.

Will the executive orders on tariffs be challenged in litigation? Challenges on behalf of private companies and by states such as California already are filed. But in general, the Court of International Trade and the Court of Appeals for the Federal Circuit tend to defer to the executive branch in matters of international trade policy. Also, the imposition of special tariffs in the first Trump administration were generally upheld by the trade courts. It is almost certain that the core issue of whether the president can broadly expand the definition of a 鈥漬ational emergency鈥� to support universal tariffs without action of Congress will be decided by the U.S. Supreme Court.

Have you heard of any plans to change Foreign Trade Zones (FTZ) laws? In general, no. Specific tariff announcements, however, have contained provisions relating to the FTZs, including that any goods that go into FTZs need to enter in 鈥減rivileged foreign status.鈥� This means the duty rate is fixed at the time the goods enter the zone, meaning even if the goods are further manufactured within the FTZ, the duty will be based on the original classification when they entered the FTZ.

Reciprocal Tariff FAQs

What are reciprocal tariffs? As originally announced, 鈥渞eciprocal tariffs鈥� were intended to equalize tariff rates, such as when a foreign country imposes a higher tariff on the United States than the United States does for the same product category. As actually announced, however, the reciprocal tariffs are almost completely based upon the relative trade deficit with individual countries.

Nonetheless, the original concept of the reciprocal tariffs is being applied in tariff negotiations and could work out in several ways. First, because the United States generally has low tariffs, this could mean that there are many opportunities either for U.S. HTS subheadings to increase or for comparable foreign HS subheadings to be reduced, with the impact varying by country. Second, because the announcement of the coming reciprocal tariffs states that it will take into account any form of discrimination against U.S. companies or programs that favor foreign companies, final reciprocal tariffs could remain quite high even if negotiated down. For example, most countries have Value Added Taxes that rebate any VAT payments when goods are exported. The Trump administration has indicated that this would be considered a form of subsidy that should be counteracted with reciprocal tariffs. Similar reasoning applies to subsidized electricity, currency manipulation, and so forth. Adding these concepts on top of equalizing tariffs across HTS categories could lead to major increases in tariffs 鈥� or major reductions in foreign tariffs or trade barriers. The final result awaits the announcement of the results of tariff renegotiations.

When will the negotiated rates be announced? The 90-day reciprocal tariff pause was announced on April 9, 2025 putting the 90-day mark at July 9, 2025. The Trump administration has indicated that it will start with major trading partners with large trade deficits, making it likely that many smaller trading partners will be given an additional 90-day extension to allow negotiation down the line.

Do the tariffs apply based on where the product comes from or the country of export? Tariffs are determined by the country where the product was originally made or where it was last substantially transformed, not the country of export. So, if an item is manufactured in China but sent to Vietnam, the importer still pays the Chinese tariffs. The same is true if it undergoes only a moderate amount of processing and is not substantially transformed in the third country. Importers relying on a China +1 strategy need to be certain they are correctly analyzing the substantial transformation requirements to properly claim tariffs based on the country of final manufacture.

If my product includes U.S.-made components, do I get a tariff discount? Potentially yes. If at least 20% of the product鈥檚 value comes from U.S.-origin parts and components (either fully produced or substantially transformed domestically), then only the portion of the product that is not U.S.-origin is subject to the reciprocal tariffs.

Are there any items excluded from these tariffs? Several categories of goods are excluded:

• Any goods subject to Section 232 tariffs 鈥� even if the goods are currently only under investigation 鈥� are excluded, because the carveout includes future Section 232 sectoral tariffs. This includes specific goods like certain types of copper, lumber, pharmaceuticals, and semiconductors, and products detailed in Annex II to the reciprocal tariffs.
• Items covered under 50 U.S.C. 搂 1702(b), such as personal communications, donations, and personal baggage, are excluded.
• Products from countries with which the U.S. lacks normal trade relations (Belarus, Cuba, North Korea, and Russia), which are already covered under high Column 2 rates, are excluded.
• Energy products and critical minerals that are not sourced domestically are excluded.

Can importers claim duty drawback for the reciprocal tariffs? Yes. Duty drawback allows importers to reclaim up to 99% of duties paid if items do not remain in the U.S. Customs territory because they either were later exported or destroyed. Unlike certain other tariff proclamations, such as the Section 232 aluminum and steel tariffs, the reciprocal tariff proclamation does not specify whether the reciprocal tariffs qualify for duty drawback. However, CBP on April 8, 2025, instructed that drawback is available for reciprocal tariffs.

Are Chapter 98 imports affected by the new tariffs? In most cases, no 鈥� favorable Chapter 98 treatment still remains. But there is an exception for Chapter 98 as applied to goods exported for repair/processing and brought back. Here, the tariffs apply only to the foreign work鈥檚 value. At the same time, if the work performed abroad includes U.S.-origin parts and components, the tariffs apply only to the non-U.S. portion of the final value.

What about Foreign Trade Zones (FTZs)? Goods with U.S. origin or already-imported goods given 鈥渄omestic status鈥� under 19 C.F.R. 搂 146.43 remain unaffected. But beginning on April 9, 2025, any imported goods entering an FTZ are treated as having 鈥減rivileged foreign status鈥� under section 146.41, which means that the tariff rate that applied at the time of entry is locked in, even if the good is further manufactured or altered after it enters the FTZ.

Steel and Aluminum Tariff FAQs

How have the Section 232 aluminum and steel tariffs changed from the original 2018 version?

• The aluminum tariffs increased from 10% to 25%.
• All negotiated tariff-rate quotas for the EU, Japan, and the United Kingdom, as well as the quotas negotiated with Argentina, Brazil, and South Korea, are no longer applicable. The previous exemptions for Australia, Canada, Mexico, and Ukraine no longer apply.
• All product-specific exemptions that had been granted under the original aluminum and steel program are revoked.
• The 鈥渄erivative articles list鈥� is considerably expanded.
• On June 4, the Section 232 tariffs on steel and aluminum increased to 50%.

Are Chapter 72 articles still subject to Section 232 tariffs? Yes. Certain headings in Chapter 72 that were previously subject to the original Section 232 tariffs are still covered. All exclusions that previously applied to certain Chapter 72 products are now revoked.

Are iron products covered? Based on the description of the covered products in the Executive Orders, carbon alloy steel products 鈥� not iron 鈥� are covered by the exclusions.

How should we treat imports that fall under the 鈥渄erivative articles鈥� HTS codes but do not actually contain any aluminum or steel? In some cases, certain HTS classifications on the derivative aluminum and steel HTS classifications cover types of products that may not contain any aluminum or steel. For example, certain types of metal furniture are covered, but if these are made out of a metal other than steel, then they would not be covered even though they fall within an HTS that is listed in Annex 1 of the steel proclamation. In these cases, the foreign producer should include a statement on the commercial invoice, providing that the product does not contain aluminum or steel, to support why the tariffs are not due on the entry.

After the elimination of the product-specific exemptions, are there any remaining exemptions? The only exemption remaining is for derivative articles that are manufactured from steel melted/poured in the United States or aluminum smelted/cast in the United States. For such products, the importer should request a statement on the commercial invoice stating that the product contains aluminum smelted/cast in the United States or steel that was melted/poured in the United States. In case of a Customs inquiry, it would be appropriate to include copies of steel mill certificates or aluminum certificates of analysis in the 7501 Entry Summary packet.

For derivative articles, is the Section 232 tariff paid on the full value of the article? The Executive Orders state that the Section 232 tariff is paid on the 鈥渧alue鈥� of the aluminum or steel 鈥渃ontent鈥� of the 鈥渄erivative article.鈥� There are, however, no instructions as to how this value should be calculated. In accordance with normal Customs requirements, the value should be calculated using a reasonable method that is supportable. This could potentially be based on a calculation from the foreign supplier. Frequent importers of derivative products should monitor CSMS announcements to see if CBP issues instructions on this issue.

Is duty drawback available for the aluminum and steel tariffs? No, the executive orders state that duty drawback cannot be used.

Does Chapter 98 provide relief from the Section 232 aluminum and steel tariffs? The executive orders do not list any Chapter 98 exceptions for the new tariffs. This is consistent with the original Section 232 tariffs, which also did not contain any Chapter 98 exceptions.

Will there be an exclusion process? None has been announced or established. It is unlikely that the Trump administration would wipe out all product-specific exemptions, only to build them back up again.

Could the list of 鈥渄erivative articles鈥� expand? The executive orders directed the Department of Commerce to establish a process by May 11, 2025, to consider requests to add additional 鈥渄erivative articles.鈥� The established process opens up two-week comment windows several times a year to allow for such comments. We anticipate that U.S. aluminum and steel manufacturers will aggressively use this process to push for additional excluded derivative products.

Do Chinese-origin steel and aluminum products still face the previous tariffs? Yes. Products subject to Section 232 tariffs 鈥� like steel and aluminum 鈥� will continue to be charged the original 20% IEEPA tariff. However, they鈥檙e exempt from the new Reciprocal Tariffs. So for Chinese steel and aluminum, the total tariff remains 20%, plus the additional Section 232 duties as well.

Automotive & Medium- and Heavy-Duty Truck Tariffs

Why were these tariffs imposed so quickly? The automotive tariffs (which cover passenger vehicles, light-duty trucks like SUVs and pickup trucks, and automotive parts) references a 2019 Commerce Department investigation that concluded foreign auto imports, including their parts and components, pose such a threat to U.S. national security. The Trump administration was able to leverage this determination to issue tariffs without further investigation, picking up on the previous findings detailed in Proclamation 9888 (issued May 17, 2019). Other Section 232 investigations are starting from a clean slate and thus require the completion of new investigations.

Can companies get a refund of duties if they re-export the imported goods? No. These tariffs are not eligible for duty drawback.

Is using an FTZ a viable strategy for these tariffs? Yes. Once the tariffs are in force, all applicable vehicles and parts entering an FTZ must be placed under privileged foreign status, pursuant to 19 C.F.R. 搂 146.41, unless the items qualify for domestic status under section 146.43.

Do these new tariffs stack on top of others already in place? Yes, except for the reciprocal tariffs. The Section 232 auto tariffs stack on existing duties, including those under Section 301, Section 201 (safeguards), and any Chapter 1-97 tariffs. The global and reciprocal tariffs, however, are either-or tariffs that are carved out by the reciprocal tariff announcement.

Will parts and components be added or subtracted? Yes, to the former; unlikely for the latter. The proclamation instructs the Department of Commerce to establish a process, within 90 days, whereby U.S. producers or industry groups can request additions to the original list of covered HTS subheadings. At this time, there has been no announcement of a means for importers to seek product exclusions.

When will the medium- and heavy-duty sectoral tariffs be announced? This Section 232 investigation commenced on April 23, 2025. Section 232 investigations take 270 days under the statute, which would put the announcement day on January 18, 2026. There are indications, however, that the Section 232 announcements may be made earlier than the full 270-day period.

USMCA/Canada and Mexico Tariff FAQs

How will tariffs effect the IMMEX/Maquiladora imports from Mexico? Because the Maquiladora, Manufacturing, and Export Services Industry (IMMEX) program is a figure of Mexican law, we anticipate Mexico will do all it can to protect companies that operate using the program.

Will the Canada and Mexico tariffs be lifted when the USMCA review occurs? Unclear. We do note, however, that the United States lifted the prior aluminum and steel tariffs as part of the negotiation of the USMCA under the first Trump administration. We anticipate that even though the second Trump administration is taking a much harder line on tariff and international trade issues, that there will be a push for a 鈥淔ortress North America鈥� to fend off Chinese goods (including Chinese parts and components), resulting in a form of free trade within the USMCA region while erecting mutually reinforcing walls against Chinese goods. The true result will have to wait for the conclusion of the 2026 USMCA review.

Force Majeure and Surcharges FAQs

The Foley Supply Chain team also has published a set of FAQs regarding contractual issues, which we are repeating here for convenience.

What are the key doctrines to excuse performance under a contract? There are three primary defenses to performance under a contract. Importantly, these defenses do not provide a direct mechanism for obtaining price increases. Rather, these defenses (if successful) excuse the invoking party from the obligation to perform under a contract. Nevertheless, these defenses can be used as leverage during negotiations.

Force Majeure

Force majeure is a defense to performance that is created by contract. As a result, each scenario must be analyzed on a case-by-case basis, depending on the language of the applicable force majeure provision. Nevertheless, the basic structure generally remains the same: (a) a listed event occurs; (b) the event was not within the reasonable control of the party invoking force majeure; and (c) the event prevented performance.

Commercial Impracticability (Goods)

For goods, commercial impracticability is codified under UCC 搂 2-615 (which governs the sale of goods and has been adopted in some form by almost every state). UCC 搂 2-615 excuses performance when: (a) delay in delivery or non-delivery was the result of the occurrence of a contingency, of which non-occurrence was a basic assumption of the contract; and (b) the party invoking commercial impracticability provided seasonable notice. Common law (applied to non-goods, e.g., services) has a similar concept, known as the doctrine of impossibility or impracticability, that has a higher bar to clear. Under the UCC and common law, the burden is quite high. Unprofitability or even serious economic loss is typically insufficient to prove impracticability, absent other factors.

Frustration of Purpose

Under common law, performance under a contract may be excused when there is a material change in circumstances that is so fundamental and essential to the contract that the parties would never have entered into the transaction if they had known such change would occur. To establish frustration of purpose, a party must prove: (a) the event or combination of events was unforeseeable at the time the contract was entered into; (b) the circumstances have created a fundamental and essential change; and (c) the parties would not have entered into the agreement under the current terms had they known the circumstance(s) would occur.

Can we rely on force majeure (including if the provision includes change in laws), commercial impracticability, or frustration of purpose to get out of performing under a contract? In court, most likely not. These doctrines are meant to apply to circumstances that preventperformance. Also, courts typically view cost increases as foreseeable risks. Official comment of Section 2-615 on commercial impracticability under UCC Article 2, which governs the sale of goods in most states, says:

鈥�Increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance. Neither is a rise or a collapse in the market in itself a justification, for that is exactly the type of business risk which business contracts made at fixed prices are intended to cover. But a severe shortage of raw materials or of supplies due to a contingency such as war, embargo, local crop failure, unforeseen shutdown of major sources of supply or the like, which either causes a marked increase in cost or altogether prevents the seller from securing supplies necessary to his performance, is within the contemplation of this section. (See Ford & Sons, Ltd., v. Henry Leetham & Sons, Ltd., 21 Com. Cas. 55 (1915, K.B.D.).)鈥� (emphasis added).

That said, during COVID and Trump Tariffs 1.0, we did see companies use force majeure/commercial impracticability doctrines as a way to bring the other party to the negotiating table to share costs.

May we increase price as a result of force majeure? No, force majeure typically does not allow for price increases. Force majeure only applies in circumstances where performance is prevented by specified events. Force majeure is an excuse for performance, not a justification to pass along the burden of cost increases. Nevertheless, the assertion of force majeure can be used as leverage in negotiations.

Is a tariff a tax? Yes, a tariff is a tax.

Is a surcharge a price increase? Yes, a surcharge is a price increase. If you have a fixed-price contract, applying a surcharge is a breach of the agreement.

That said, during COVID and Trump Tariffs 1.0, we saw many companies do it anyway. Customers typically paid the surcharges under protest. We expected a big wave of litigation by those customers afterward, but we never saw it, suggesting either the disputes were resolved commercially or the customers just ate the surcharges and moved on.

Can I pass along the cost of the tariffs to the customer? To determine if you can pass on the cost, the analysis needs to be conducted on a contract-by-contract basis. 贵辞濒别测鈥檚 Supply Chain team can leverage AI to pull key provisions (including delivery terms, pricing, and taxes) from your contracts and analyze them to see what each contract says about tariff responsibility.

If you increase the price without a contractual justification, what are customers鈥� options?

The customer has five primary options:

Accept the price increase: An unequivocal acceptance of the price increase is rare but the best outcome from the seller鈥檚 perspective.

Accept the price increase under protest (reservation of rights): The customer will agree to make payments under protest and with a reservation of rights. This allows the customer to seek to recover the excess amount paid at a later date. Ideally, the parties continue to conduct business and the customer never seeks recovery prior to the expiration of the statute of limitations (typically six years, depending on the governing law).

Reject the price increase: The customer will reject the price increase. Note that customers may initially reject the price increase but agree to pay after further discussion. In the event a customer stands firm on rejecting the price increase, the supplier can then decide whether it wants to take more aggressive action (e.g., threatening to stop shipping) after carefully weighing the potential damages against the benefits.

Seek a declaratory judgment and/or injunction: The customer can seek a declaratory judgment and/or injunction requiring the seller to ship/perform at the current price.

Terminate the contract: The customer may terminate part or all of the contract, depending on contractual terms.

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[1] Please note that the implementation of the various tariff programs remains in flux, and thus the status of these program should be monitored closely. The included table is current as of the date of publication of this article.

If you have questions about this topic, please feel free to reach out to any of the authors or your 天美传媒; Lardner attorney. If you would like to see future updates regarding 鈥淲hat Every Multinational Company Should Know鈥� about operating in today鈥檚 complicated international trade world, please sign up for our Tariff & International Trade blog 鈥�

Last month, the Department of Justice put trade, customs, and tariff fraud squarely in the spotlight. This isn鈥檛 just another line item on the compliance checklist, it鈥檚 a loud-and-clear signal that import-related enforcement is no longer just an administrative concern. It鈥檚 now a front-and-center DOJ priority.

On May 12, DOJ Criminal Division Chief Matthew Galeotti announced 10 high-impact white-collar enforcement priorities. Sitting alongside health care fraud, corporate recidivism, and national-security-linked corruption was something you would not have seen from prior administrations: customs and trade fraud, including tariff evasion.

It鈥檚 not a surprising move 鈥� at least not to us. Back in March, our International Trade team at Foley predicted this turn in two separate publications:

• Criminal Enforcement of Trade, Import, and Tariff Rules: A Growing Risk for Businesses
• The Rising Risk of Customs False Claims Act Actions in the Trump Administration

We noted then that customs enforcement was moving out of the regulatory shadows and toward the aggressive tactics historically reserved for FCPA, health care, and financial crimes. With this new DOJ announcement, that evolution is now official policy.

What鈥檚 Driving the DOJ鈥檚 Shift?

This enforcement focus is no accident. It reflects the broader 鈥淎merica First鈥� priorities of the Trump administration, a strategy aimed at reshaping global trade in favor of U.S. interests, as well as a means of collecting additional revenue. From sweeping tariffs to heightened scrutiny of Chinese imports, the administration is using every tool at its disposal 鈥� civil, criminal, and regulatory 鈥� to protect domestic industry, to close perceived trade loopholes, and to ensure collection of all tariffs. As the DOJ鈥檚 new approach, 鈥淸t]rade and customs fraudsters, including those who commit tariff evasion, seek to circumvent the rules and regulations that protect American consumers and undermine the Administration鈥檚 efforts to create jobs and increase investment in the United States. Prosecuting such frauds will ensure that American businesses are competing on a level playing field in global trade and commerce.鈥� For companies that import goods, the message is clear: Compliance with trade laws is no longer just a regulatory obligation, it鈥檚 a frontline national priority.

What In-House Counsel Should Do Now: A Practical Framework

In response, manufacturers should elevate trade compliance to the same level of urgency as anti-corruption or sanctions compliance. Drawing from our comprehensive white paper, Managing Import and Tariff Risks During a Trade War, here鈥檚 a practical framework for GCs and compliance officers:

Identify Your Risks

• Retrieve and analyze your company鈥檚 ACE (Automated Commercial Environment) import data.
• Conduct a customs risk audit, focusing particularly on ensuring that HTS classifications and countries of origin are accurately (and consistently) reported to Customs for all imports.
• Map supply chain and broker relationships.

Plan for Disruption

• Diversify sourcing and build supply chain flexibility.
• Collaborate with finance to model tariff impact scenarios.
• Establish rapid-response strategies for emerging duties or bans.

Manage Contractual Exposure

• Build tariff pass-through mechanisms into commercial agreements.
• Include change-in-law clauses that allow flexibility in sourcing.
• Clearly define responsibility for customs classifications and compliance.

Minimize Legal Exposure

• Review and correct import declarations regularly.
• Confirm compliance with UFLPA and other partner agency rules.
• Implement internal controls around broker instructions and tariff engineering.

Identify Cost-Saving Opportunities

• Explore bonded warehouses, FTZs, and drawback programs.
• Assess opportunities for tariff engineering and preferential treatment under trade agreements like USMCA.
• Consider use of temporary importation bonds (TIBs) where appropriate.

Strengthen Supply Chain Integrity

• Perform due diligence on upstream suppliers.
• Map materials and origin to avoid forced labor violations.
• Implement traceability protocols and audit programs.

This isn鈥檛 just a customs compliance issue anymore, it鈥檚 a corporate integrity and reputational risk issue. The whistleblower incentives are real, especially under the False Claims Act. The penalties are large. And the prosecutorial appetite is growing.

The Takeaway

We鈥檝e said it before, and we鈥檒l say it again: Customs fraud has moved from the margins to the mainstream of DOJ enforcement.

If your company imports goods, trade compliance should be a priority. DOJ is not waiting for egregious cases; it is actively looking for systemic vulnerabilities, misclassifications, and tariff evasion strategies dressed up as 鈥渓ogistical creativity.鈥�

The time for general counsel to engage is now. Audit. Adjust. Contract. Train. Fix. Because enhanced enforcement is not coming someday 鈥� it鈥檚 already here.

Additional content on all things Customs and international trade is found on our Tariff & International Trade Resources page. For more insights or a tailored compliance review, reach out to the author or International Trade or International Investigations teams at 天美传媒; Lardner LLP. We鈥檝e been tracking this shift since before it was fashionable.