On February 10, 2025, President Donald Trump announced 25% ad valorem tariffs for steel articles, aluminum articles, and steel and aluminum derivatives (i.e., “downstream” articles) that will enter into force on March 12, 2025.  These tariff actions use the initial Section 232 January 2018 reports and findings issued by the Department of Commerce (see  Steel Report and Aluminum Report) and provide updated statistics to: (i) increase the tariffs to 25% for all covered products, (ii) eliminate all country and general exclusions, (iii) prohibit new product exclusions requests, and (iv) terminate currently-in-force product exclusions as of their end date or when quotas are reached. 

These actions have been implemented pursuant to Section 232 of the Trade Expansion Act of 1962 that authorizes the President to impose import restrictions on goods based upon a determination of threat to U.S. national security.  As noted, during the previous Trump administration, the United States initially imposed section 232 tariffs of 25% on imported steel, and 10% on imported aluminum (see Thompson Hine Update of June 1, 2018).   In subsequent years and after ongoing negotiations with impacted countries, the Office of the U.S. Trade Representative (USTR) under President Trump modified, removed, reimplemented these steel and aluminum tariffs; imposed tariff-rate quotas for certain countries; and also imposed new Section 232 tariffs on certain derivatives of steel and aluminum products.  More recently, under the Biden Administration, in July 2024, the United States and Mexico announced measures designed to protect the North American steel and aluminum markets from unfair trade, duty evasion, and transshipment.

Under the February 10, 2025 tariff actions, the updated lists of steel and aluminum products that will be subject to tariffs will be identified in forthcoming Federal Register Notices, but the Presidential Proclamations make clear that all products currently subject to Section 232 tariffs will continue to be included and will now apply regardless of country of origin(i.e., no countries will be exempt).  Thus, after determining that “alternative agreements” previously reached with Argentina, Australia, Brazil, Canada, Mexico, European Union (EU) countries, Japan, South Korea, Ukraine, and the United Kingdom, have “failed to provide effective, long-term alternative means to address these countries’ contribution to the threatened impairment to the national security by restraining steel articles exports to the United States” all previous provisions related to imports of steel, aluminum or derivatives thereof from these countries are ineffective as of March 12, 2025.

New steel and aluminum derivative articles will be added to these updated tariff lists, including fabricated structural steel and prestressed concrete steel strand. Additionally, the Department of Commerce will establish a new process for U.S. steel and aluminum mills and derivative producers to identify new derivative products to be added to the tariff lists on an ongoing basis.  Importers of steel and aluminum derivatives will be required to provide Customs and Border Protection (CBP) with any information necessary to identify content used in manufacturing the derivative articles, and CBP will prioritize inspection of steel and aluminum articles and derivatives, and has been directed to assess monetary penalties in the maximum amount permitted for duty evasion, including no longer considering mitigating factors.  Further, no drawback shall be available with respect to the duties imposed. 

Importantly, these 25% duties on steel and aluminum articles and their derivatives are in addition to (i.e., cumulative) with the 25% tariffs announced last week against Canada, Mexico and China.  See Thompson Hine Update of February 3, 2025, announcing Tariffs on Canada, Mexico and China Under the IEEPA (with tariffs on Mexico and Canada suspended until March 4, 2025).

Further details below offer additional information on the Proclamation Adjusting Imports of Steel into the United States, the Proclamation Adjusting Imports of Aluminum into the United States, and Fact Sheet: President Donald J. Trump Restores Section 232 Tariffs, and the previous Section 232 Proclamations and actions regarding steel and aluminum. 

Please note that formal Federal Register Notices have not yet been published.  These Notices will provide Annexes I and II for each Proclamation that will detail the list of in-scope steel or aluminum articles and derivatives now subject to the tariffs.   

• • • • •

Based on the available information, the combined effect of the Steel and Aluminum Proclamations is as follows:

All Country Exclusions Eliminated: All country-specific alternative arrangements (aka country exclusions, voluntary restraints, quantitative limitations, etc.) for steel or aluminum articles and steel or aluminum derivatives including those from Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, member countries of the European Union, and the United Kingdom have been eliminated.  The special alternative arrangements for steel articles and steel derivatives from Ukraine likewise have been eliminated.  All prior customs entries subject to the Section 232 tariffs have been “grandfathered in” so there likely will not be retroactive duty issued beyond customary liquidation.  

Steel Articles: All steel articles presently designated in heading 9903, in subchapter III of Chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS), and covered by Proclamations, are now subject to 25% duties regardless of country of origin.

    In contrast to the provisions regarding derivative products, the provisions detailing “steel articles” do not include any new steel articles than previously covered (except for the elimination of country exclusions).  There is reference to “all” steel articles; however, “steel articles” is a defined term referring to the Annexes and no provision of the relevant Proclamation identifies a new steel article (or HTSUS Code) to be subject to tariffs .  Annexes I and II will need to be reviewed once issued to ensure that new steel articles (via new HTSUS codes or product descriptions) have not been added.

    Steel Derivatives: All steel derivatives that presently are designated in heading 9903, in subchapter III of Chapter 99 of the HTSUS, and included in prior proclamations and Annexes I and II, are now subject to 25% duties regardless of country of origin, except steel derivatives processed in another country that are “melted and poured” in the United States.   

    • Additional steel derivatives will be added in a forthcoming Annexes I and II.  The relevant Proclamation identifies fabricated structural steel, prestressed concrete strand, and “others” as potential new steel derivative articles subject to duties.

    The new Proclamation also orders the Secretary of Commerce to establish a process within ninety (90) days whereby steel article and steel derivative producers may identify imports of a steel derivative article that threatens the national security of the United States or “otherwise impairs the objectives” of the Section 232 actions so that such derivatives may be included in subsequent versions of Annexes I or II.  There will be a 60 day review period to make a determination as to inclusion on the Annexes.

    Aluminum Articles: All aluminum articles that presently are designated in heading 9903, in subchapter III of Chapter 99 of the HTSUS, and covered by prior Proclamations, are now subject to duties of 25% (increased from 10%) regardless of country of origin.  As with the steel articles, the new Proclamation does not expressly add any new aluminum articles via HTSUS codes or product descriptions, however, review of the revised Annexes, once issued, is warranted.   

    Aluminum Derivatives: All aluminum derivatives that presently are designated in heading 9903, in subchapter III of Chapter 99 of the HTSUS, and covered by prior Proclamations, are now subject to 25% duties (increased from 10%) regardless of country of origin, except aluminum derivatives processed in another country (excluding Russia), that are “smelted and cast” in the United States.

    • Similar to steel derivatives, additional aluminum derivatives will be added in a forthcoming Annexes I and II.The duties will only be imposed on the actual aluminum content of any aluminum derivative that is not a product of Chapter 76 of the HTSUS. 

    • The new Proclamation also includes the same instructions and timelines for the Secretary of Commerce to establish a process for submitting new aluminum derivative products.  

      Russia:  Any aluminum articles or derivatives of aluminum that use smelt or cast primary aluminum (defined as any new metal that is produced from alumina (or aluminum oxide) by the electrolytic Hall-Heroult process) from Russia are subject to the 200% duties previously imposed.

      All Product and General Exclusions Eliminated: All general exclusions for entire tariff lines for steel articles, aluminum articles, and steel and aluminum derivatives in Section 232 actions are terminated as of March 12, 2025.  All product-specific exclusions issued by the Department of Commerce for steel articles, aluminum articles, and steel and aluminum derivatives will be terminated at the end date provided in each specific exclusion notification or the date that any quantitative limit (i.e., “quota”) is reached, whichever is earlier.  As a result, current exclusions remain in force until their termination date, however, importers must monitor any quantitative limits for that foreign country’s imports into the United States. The Department of Commerce’s Bureau of Industry and Security (BIS) issued a notice on February 10, 2025 advising that it is no longer processing Section 232 exclusion requests, that pending requests should be assumed void, and that it would no longer accept requests for product exclusions. 

      Foreign Trade Zones; Drawback: Steel or aluminum articles and their derivatives, including those that may appear on the revised Annexes I and II, that enter foreign trade zones (FTZs), must do so under “privileged foreign status” (unless the articles have domestic status) and will be subject upon entry for consumption to any ad valorem rates of duty related to the classification under the applicable HTSUS subheading. No duty drawback will be available for these Section 232 tariffs.  

      Reporting and Enforcement:  All steel and aluminum articles and derivatives need to identify country of origin using the “melted and poured” or “smelted and cast” standard.  For illustration, according to CBP, “[c]ountry of melt and pour refers to the original location where the raw steel is first produced in a steel-making furnace in a liquid state and then poured into its first solid shape. The first solid state can take the form of either a semi-finished product (slab, billets, or ingots) or a finished steel mill product. The location of melt and pour is customarily identified on mill test certificates generated at each stage of the production process and maintained in the ordinary course of business. For imports of certain steel articles from all countries, when reporting the country of melt and pour, the International Organization for Standardization (ISO) country code where steel was originally melted and poured is mandatory.” 

      CBP will be issuing guidance regarding the reporting requirements for steel and aluminum derivatives, which previously only applied to Mexico.

      CBP has been instructed by President Trump to prioritize review of classifications of the steel and aluminum articles and derivatives.  If a misclassification is discovered, CBP is instructed to apply maximum monetary penalties without consideration of any mitigating factors.

      UPDATE: On February 7, President Donald Trump issued an executive order (EO) addressing the additional duties placed on imports into the United States of products of China. The article below stated that use of duty-free de minimis treatment on imports for shipments under $800 was being removed for shipments from China. The president has since rescinded this provision in his previous EO, and duty-free de minimis treatment under 19 U.S.C. 1321 is again available for these imports until the Secretary of Commerce informs President Trump “that adequate systems are in place to fully and expediently process and collect tariff revenue applicable” for such low-value shipments from China, at which time the de minimis duty-free exception will again be removed.

      On February 5, 2025, U.S. Customs and Border Protection (CBP) issued a Federal Register notice to implement an additional 10% tariff on products of China pursuant to President Donald Trump’s Executive Order (EO) of February 1, 2025. The CBP notice also notes that such imports “are no longer eligible for the administrative exemption from duty and certain tax at 19 U.S.C. § 1321(a)(2)(C)” (i.e., the de minimis exemption for goods valued at not more than $800).

      Per CBP’s Cargo Systems Messaging Service (CSMS) No. 63992482, effective February 4, 2025, such goods will not receive the de minimis clearance to enter the United States duty and tax free. “Requests for de minimis entry and clearance for ineligible shipments will be rejected. The filer/importer has the option of filing an appropriate formal or other informal entry and paying all applicable duties, taxes and fees.” The CSMS notice provides guidance on how the EO will be enforced in ACE by mode of transportation and clearance type. A second CSMS notice, No. 63988468, states that goods the product of China and Hong Kong entered for consumption in the United States, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Standard Time on February 4, 2025, will be subject to several Chapter 99 Harmonized Tariff Schedule of the United States (HTSUS) classifications and face additional duty rates. This notice reiterates that no drawback is available as to the additional duties imposed pursuant to President Trump’s EO and that the de minimis exemption will not apply to imports from China.

      Notably, CBP’s Federal Register notice states that even mail shipments are covered by the exclusion from the de minimis exemption: “In order to protect the revenue of the United States and effectively carry out the Executive Order’s instruction to exclude such articles from eligibility for the de minimis exemption, including with respect to shipments arriving by international mail from China, CBP has determined that … it is necessary to require formal entry for all mail shipments from China. Without regard to their value, no mail shipments from China will be cleared or released by CBP unless and until formal entry is properly filed.”

      The new Chapter 99 HTSUS codes do provide limited exceptions from the application of the additional 10% duty rate for: (i) donations of food, clothing, and medicine, intended to be used to relieve human suffering; (ii) informational materials; and (iii) products for personal use included in the accompanying baggage of persons arriving in the United States. There is also a savings clause for transactions already in process, allowing for articles that are the product of China and Hong Kong that: (1) were loaded onto a vessel at the port of loading, or in transit on the final mode of transport prior to entry into the United States, before 12:01 a.m. EST on February 1, 2025; and (2) are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on February 4, 2025, and before 12:01 a.m. eastern standard time on March 7, 2025. Such in transit items will not be subject to the additional duties.

      On February 4, 2025, when U.S. tariffs on goods produced by China increased by 10% (see Thompson Hine Update of February 3, 2025 and Federal Register Notice), China responded by undertaking several retaliatory trade and tariff actions. These actions include:

      • Implementing a 15% tariff on U.S. coal and liquefied natural gas, and a 10% tariff on crude oil, agricultural machinery, cars and pickup trucks;
      • Establishing export controls on more critical minerals;
      • Adding two U.S. companies to its unreliable entities list; and
      • Initiating an antimonopoly investigation into Google.

      The tariffs were announced by China’s Customs Tariff Commission of the State Council and will begin on February 10, 2025. See China Ministry of Finance, Tariff Announcement No. 1 of 2025. In announcing the tariffs, the Commission stated: “The US’ unilateral practice of imposing such additional tariffs has seriously violated the World Trade Organization rules” and, accordingly, China will challenge the most recent U.S. tariffs at the WTO.

      China’s Ministry of Commerce also imposed export controls on tungsten, tellurium, bismuth, molybdenum and indium. While not implementing a full ban on the export of these critical minerals, China will now require licenses to export 20 of these critical mineral-related products to “safeguard national security interests.” See China Ministry of Commerce, Announcement No. 10 of 2025. In addition, a U.S. clothing company and a biotechnology company were placed on China’s Unreliable Entities List for “violat[ing] the principle of normal market transactions, interrupt[ing] normal transactions with Chinese enterprises, and [taking] discriminatory measures against Chinese enterprises, seriously harming the legitimate rights and interests of Chinese enterprises.” See China Ministry of Commerce, Security and Control Directorate, Announcement 2025 No. 4. Placement on this list can trigger various restrictive or prohibitive measures, including import/export or investment restrictions. China’s State Administration for Market Regulation also announced that it was opening an antimonopoly investigation into a major U.S. technology company, Google.

      On February 4, 2025, President Donald Trump issued an Executive Order (EO) stating that Iran’s malign behavior and influence threaten the national interest of the United States and that it is “in the national interest to impose maximum pressure on the Iranian regime to end its nuclear threat, curtail its ballistic missile program, and stop its support for terrorist groups.” According to the EO, it is U.S. policy that: (i) Iran be denied a nuclear weapon and intercontinental ballistic missiles; (ii) Iran’s network and campaign of regional aggression be neutralized; (iii) the Islamic Revolutionary Guard Corps (IRGC) and its surrogates be disrupted, degraded, or denied access to the resources that sustain their destabilizing activities; and (iv) Iran’s aggressive development of missiles and other asymmetric and conventional weapons capabilities be countered. 

      To impose maximum pressure on Iran, the EO directs various cabinet secretaries to implement measures to impede Iran’s efforts to obtain a nuclear weapon and to counter that country’s malign influence. Among these measures are:

      • Treasury – the imposition of further sanctions on Iran and the implementation of a more robust sanctions enforcement regime;
      • State – the modification or rescission of certain sanctions waivers and the implementation of a robust and continual campaign to drive Iran’s export of oil to zero, including exports of Iranian crude to China;
      • U.S. Ambassador to the United Nations – working with allies to complete the snapback of all international sanctions and restrictions on Iran;
      • Commerce – the conduct of an export control enforcement campaign to restrict the flow of technology and components used by Iran for military purposes; and
      • U.S. Attorney General – the pursuit of all available legal steps to investigate, disrupt, and prosecute financial and logistical networks, operatives, or front groups inside the United States that are sponsored by Iran or an Iranian terror proxy.

      UPDATE: On February 7, President Donald Trump issued an executive order (EO) addressing the additional duties placed on imports into the United States of products of China. The article below stated that use of duty-free de minimis treatment on imports for shipments under $800 was being removed for shipments from China. The president has since rescinded this provision in his previous EO, and duty-free de minimis treatment under 19 U.S.C. 1321 is again available for these imports until the Secretary of Commerce informs President Trump “that adequate systems are in place to fully and expediently process and collect tariff revenue applicable” for such low-value shipments from China, at which time the de minimis duty-free exception will again be removed.

      On February 1, 2025, President Donald Trump issued three Executive Orders (EOs) implementing tariff actions pursuant to the International Emergency Economic Powers Act (IEEPA) against imported products of Canada, Mexico and China, beginning February 4, 2025, at 12:01 a.m. EST. In response, the three targeted countries announced plans to retaliate with tariffs against U.S. exports, with Canada announcing its initial tranche of $30 billion of retaliatory tariffs starting February 4 also. After President Trump spoke with Mexico’s President Claudia Sheinbaum on February 3, the leaders announced a suspension of their planned tariffs and any retaliation for 30 days, until March 4, 2025. After President Trump spoke later that day with Canada’s Prime Minister Justin Trudeau, the leaders also announced a 30-day suspension of their planned tariffs and any retaliation, with President Trump stating that “[f]urther time is needed, … to assess whether these steps constitute sufficient action to alleviate the crisis.” It is reported that the United States and China will speak on February 4 or 5 regarding the Trump administration’s planned 10% tariff on imports of Chinese goods. Currently, these tariffs on Chinese goods will enter into effect on February 4; the United States, however, has not yet issued a Federal Register notice providing guidance for these tariffs. 

      According to initial reports, Canada and Mexico have each agreed to deploy up to 10,000 additional security forces to their respective U.S. borders and implement a number of security and immigration-related measures. The Canadian government announced that it will invest $1.3 billion in border security funding, provide “24/7 Eyes” on the border, appoint a Canada-U.S. Joint Strike Force to combat organized crime, designate drug cartels as terrorists (as President Trump did via his “Day One” Executive Orders), and appoint a “Fentanyl Czar.” The specific details of Mexico’s negotiations with the United States have not been made public yet; however, Mexico’s acceptance of the “Remain in Mexico” policy and its increased southern border security have been publicly supported by members of the Trump administration. Additionally, media reports indicate that a leader of one of Mexico’s cartels was arrested by Mexican government authorities on the date the tariff suspension was announced. 

      These actions appear to be the beginning of the Trump administration’s implementation of its America First Trade Policy agenda (see Thompson Hine update of January 22, 2025). President Trump has already directed the U.S. Trade Representative (“USTR”) to review the “new NAFTA”/USMCA, and the United States has launched analyses of additional sectoral tariffs (e.g., steel, aluminum, semiconductors, copper, oil & gas, and pharmaceuticals). Global supplemental tariffs remain under consideration to reduce the trade deficit. 

      This 30-day suspension of tariffs in North America is just the beginning of a broader set of trade negotiations. This blog post provides a broad overview and summary of these actions, as they currently stand. 

      Timeline (as of February 3, 2025):

      • February 4, 2025 – 10% tariff on goods “produced by” China enters into effect.
      • March 4, 2025 – 10% tariff on energy products “produced by” Canada enters into effect; 25% tariff on all other goods “produced by” Canada enters into effect; 25% tariff on goods “produced by” Mexico enters into effect; Canada’s retaliatory CAD $30 billion of retaliatory tariffs enter into effect.
      • March 25, 2025 – Canada’s remaining retaliatory tariffs (for a total of CAD $150 billion) enters into effect.
      • April 1, 2025 – America First Trade Policy Memorandum reports due to President Trump.

      Trump Tariff EOs

      President Trump issued three (3) EOs on February 1, 2025, largely confirming prior reports that the United States would impose the tariffs pursuant to the IEEPA. These tariffs were to take effect on imported “products of” Canada, Mexico and China effective February 4, 2025, as follows:

      • The Canada EO implements a 25% tariff on all “products of Canada” but provides only a 10% tariff on “products of Canada” that are “energy resources” defined as crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals (as critical minerals are defined by 30 U.S.C. 1606 (a)(3)). 
      • The Mexico EO implements a 25% tariff on all “products of Mexico.”
      • The China EO implements a 10% tariff on all “products of China.”

      All of these tariffs are in addition to any other duties, fees, exactions or charges already existing on such imports. The definitions of “products of Canada,” “products of Mexico,” and “products of China” will be determined by the U.S. Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) as to be defined in forthcoming Federal Register notices. It is assumed that the rules surrounding country of origin (COO), which govern nearly all customs matters, will be used to define “products of.”

      Common aspects to the implementation of all three EOs include:

      1. No product exclusion process currently for these products.
      2. “Foreign privileged status” for these products entering foreign-trade zones (FTZs), “locking in” tariffs on the date the goods enter the FTZ rather than on the date when the goods may be withdrawn/sold.
      3. No duty drawback for these products.
      4. No use of duty-free de minimis treatment under 19 U.S.C. §1321, which largely exempts certain customs requirements for shipments under $800. 
      5. A tariff exemption for goods entered for consumption, withdrawn from a warehouse for consumption, after such time were loaded on a vessel at the port of loading, or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. EST on February 1, 2025, if the importer certifies to CBP in accordance with the yet-to-be-published Federal Register notice.

      Each EO notes that President Trump reserves the right to “increase or expand in scope the duties” should Canada, Mexico, or China retaliate. They also state that any prior Presidential Proclamation, Executive Order, or other Presidential Directive or guidance that is related to trade with Canada, Mexico or China that “is inconsistent” with these new EOs is “terminated, suspended or modified to the extent necessary.” 

      The stated purpose of these EOs is: (i) for Canada, its failure “to devote sufficient attention and resources or meaningfully coordinate with United States law enforcement partners to effectively stem the tide of illicit drugs;” (ii) for Mexico, its failure “to devote sufficient attention and resources to meaningfully stem the tide of unlawful migration and illicit drugs;” and (iii) for China, its failure “to stem the ultimate source of many illicit drugs distributed in the United States.” Under each EO, the Secretary of Homeland Security, in coordination with the Secretary of State, the Attorney General, the Assistant to the President for National Security Affairs, and the Assistant to the President for Homeland Security, will recommend any additional actions that may be deemed necessary. The Secretary of Homeland Security, again in consultation with these other officials, may also inform President Trump if Canada, Mexico and/or China have “taken adequate steps to alleviate” these crises so that President Trump can determine if tariffs should be removed. 

      In announcing these EOs and tariffs, the White House issued a Fact Sheet on these trade actions.

      Authority under the IEEPA

      These EOs impose these tariffs under the IEEPA, which authorizes the President “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.” President Trump declared such a national emergency on January 20, 2025. The three EOs expand that emergency action and include repeated references to fentanyl, opioids, drugs, methamphetamine, cocaine, border security, human trafficking, smuggling, the purported relationship between drug cartels and the Mexican government, and China’s fentanyl traffickers’ purported relationship with the Chinese government, the strain on the U.S. public health system and many other emergency issues. 

      The IEEPA requires the President to consult with Congress “in every possible instance” before acting under the statute. The President must also perform certain post-imposition actions such as publishing the action in the Federal Register. The main “check” against IEEPA abuse is Congress, which can issue a joint resolution removing the underlying national emergency. 

      Legal questions may arise regarding the use of the IEEPA to impose these tariffs. Typically, the emergency authority under the IEEPA is used to impose sanctions and seizures (e.g., terrorism-related asset seizures); there is only one instance of imposing tariffs under the IEEPA: President Richard Nixon used it under a predecessor statute in the early 1970s to impose “surtaxes” (i.e., tariffs) to address currency issues. 

      Canada, Mexico and China Retaliatory Tariffs and Reactions

      Shortly after the announcement of U.S. tariffs on Canada, the Canadian government announced retaliatory tariffs of 25% against CAD $155 billion of U.S. goods, with $30 billion to begin February 4, 2025, and the remaining CAD $125 billion to be implemented within the next twenty-one (21) days. These Canadian tariffs will be tailored to specific products in politically important congressional districts (e.g., Republican districts), largely in Ohio, Michigan and Florida. They include, but are not limited to: beer, wine, bourbon, fruits and fruit juices, vegetable, perfume, clothing, household appliances, and lumber. Currently, non-tariff measures such as restrictions on energy and critical minerals are being considered but not imposed. 

      Mexico has only stated that it will retaliate with a “carousel” of tariffs, where products are drawn from all sectors and cycle on and off the list at set periods. Mexico also has advised that it may impose non-tariff actions. As of Monday, February 3, 2025, the United States and Mexico agreed to “pause” tariffs on each other’s goods for 30 days pending further negotiations after Mexico’s President Sheinbaum agreed to place 10,000 Mexican soldiers on the border to assist in halting the flow of fentanyl and illegal migrants into the United States. Later that day, the United States and Canada entered into a similar 30-day pause. 

      China only broadly responded by stating that it will take countermeasures and file a complaint at the World Trade Organization (WTO) as the “unilateral imposition of tariffs by the U.S. seriously violates the rules of the WTO.” The U.S. and China are purportedly scheduled for talks on February 5 or 6, 2025. 

      On January 24, 2025, President Donald Trump issued an Executive Order (EO) revoking numerous EOs and actions implemented during the administration of former President Joseph Biden. Included in this action was the revocation of Executive Order 14115 of February 1, 2024 (Imposing Certain Sanctions on Persons Undermining Peace, Security, and Stability in the West Bank) (see Thompson Hine Update of February 2, 2024). The previous EO sought to address the increase in violence, including attacks on civilians, in the West Bank. It targeted, and subsequently the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated and sanctioned, persons involved in activities that threaten peace, security, and stability in the region.

      To implement President Trump’s revocation of EO 14115, OFAC has removed the West Bank-Related Sanctions program from its website and removed all persons designated under EO 14115 from the Specially Designated Nationals (SDN) List. As a result, all property and interests in property blocked under EO 14115 are unblocked. For additional details on those persons and entities removed from the SDN List, see here.

      On January 20, 2025, President Donald Trump released a Presidential Memorandum setting forth an “America First Trade Policy.” In the memorandum, Trump announces these trade actions:

      • Addressing Unfair and Unbalanced Trade
        • Directing the Secretary of Commerce, Secretary of the Treasury and the U.S. Trade Representative to “investigate the causes of our country’s large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits, and recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits.”
        • Directing the Secretary of the Treasury, Secretary of Commerce and the Secretary of Homeland Security to “investigate the feasibility of establishing and recommend the best methods for designing, building, and implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues.”
        • Directing the U.S. Trade Representative, Secretary of the Treasury, Secretary of Commerce, and the Senior Counselor for Trade and Manufacturing to “undertake a review of, and identify, any unfair trade practices by other countries and recommend appropriate actions to remedy such practices under applicable authorities.”
        • Directing the U.S. Trade Representative to commence a public consultation process as to the United States-Mexico-Canada Agreement (USMCA) in preparation for the July 2026 review of the USMCA. This review should “assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses and make recommendations regarding the United States’ participation in the agreement.”
        • Directs the Secretary of the Treasury to “review and assess the policies and practices of major United States trading partners with respect to the rate of exchange between their currencies and the United States dollar” and recommend appropriate measures “to counter currency manipulation or misalignment that prevents effective balance of payments adjustments or that provides trading partners with an unfair competitive advantage in international trade, and shall identify any countries that he believes should be designated as currency manipulators.”
        • Directs the U.S. Trade Representative to “review existing United States trade agreements and sectoral trade agreements and recommend any revisions that may be necessary or appropriate to achieve or maintain the general level of reciprocal and mutually advantageous concessions with respect to free trade agreement partner countries.”
        • Directs the U.S. Trade Representative to “identify countries with which the United States can negotiate agreements on a bilateral or sector-specific basis to obtain export market access for American workers, farmers, ranchers, service providers, and other businesses” and make recommendations on potential agreements.
        • Directs the Secretary of Commerce to review “policies and regulations regarding the application of antidumping and countervailing duty (AD/CVD) laws, including with regard to transnational subsidies, cost adjustments, affiliations, and ‘zeroing.’” This review will cover procedures for conducting verifications, assess “whether these procedures sufficiently induce compliance by foreign respondents and governments involved in AD/CVD proceedings” and consider modifications, as appropriate.
        • Directs the Secretary of the Treasury, the Secretary of Commerce, the Secretary of Homeland Security, the Senior Counselor for Trade and Manufacturing, and the U.S. Trade Representative, to assess “the loss of tariff revenues and the risks from importing counterfeit products and contraband drugs, e.g., fentanyl, that each result from the current implementation of the $800 or less, duty-free de minimis exemption,” and to recommend “modifications as warranted to protect both the revenue of the United States and the public health by preventing unlawful importations.”
        • Directs the Secretary of the Treasury, Secretary of Commerce and the U.S. Trade Representative to investigate whether any foreign country subjects U.S. citizens or corporations to discriminatory or extraterritorial taxes.
        • Directs the U.S. Trade Representative to review “the impact of all trade agreements — including the World Trade Organization Agreement on Government Procurement — on the volume of Federal procurement covered by Executive Order 13788 … (Buy American and Hire American),” and make recommendations “to ensure that such agreements are being implemented in a manner that favors domestic workers and manufacturers, not foreign nations.”
      • Economic and Trade Relations with the People’s Republic of China (PRC)
        • Directs the U.S. Trade Representative to review “the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China to determine whether the PRC is acting in accordance with this agreement,” and recommend appropriate actions, “including the imposition of tariffs or other measures as needed.”
        • Directs the U.S. Trade Representative to assess the May 14, 2024 report, “Four-Year Review of Actions Taken in the Section 301 Investigation: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” and consider potential additional tariff modifications as needed – “particularly with respect to industrial supply chains and circumvention through third countries, including an updated estimate of the costs imposed by any unfair trade practices identified in such review — and [recommending actions] to remediate any issues identified in connection with this process.”
        • Directs the U.S. Trade Representative to “investigate other acts, policies, and practices by the PRC that may be unreasonable or discriminatory and that may burden or restrict United States commerce,” and make recommendations regarding appropriate responsive actions.
        • Directs the Secretary of Commerce and the U.S. Trade Representative to “assess legislative proposals regarding Permanent Normal Trade Relations with the PRC and make recommendations regarding any proposed changes to such legislative proposals.”
        • Directs the Secretary of Commerce to assess “the status of United States intellectual property rights such as patents, copyrights, and trademarks conferred upon PRC persons” and make recommendations to “ensure reciprocal and balanced treatment of intellectual property rights with the PRC.”
      • Additional Economic Security Matters
        • Directs the Secretary of Commerce, Secretary of Defense and the heads of any other relevant agencies to “conduct a full economic and security review of the United States’ industrial and manufacturing base to assess whether it is necessary to initiate investigations to adjust imports that threaten the national security of the United States.”
        • Directs the Assistant to the President for Economic Policy, the Secretary of Commerce, the U.S. Trade Representative, and the Senior Counselor for Trade and Manufacturing to review and assess “the effectiveness of the exclusions, exemptions, and other import adjustment measures on steel and aluminum” in responding to threats to the national security of the United States and make recommendations based upon the findings.
        • Directs the Secretary of State and Secretary of Commerce, in cooperation with the heads of other agencies with export control authority, to review “the United States export control system and advise on modifications in light of developments involving strategic adversaries or geopolitical rivals as well as all other relevant national security and global considerations. Specifically, the Secretary of State and the Secretary of Commerce shall assess and make recommendations regarding how to maintain, obtain, and enhance our Nation’s technological edge and how to identify and eliminate loopholes in existing export controls -– especially those that enable the transfer of strategic goods, software, services, and technology to countries to strategic rivals and their proxies. In addition, they shall assess and make recommendations regarding export control enforcement policies and practices, and enforcement mechanisms to incentivize compliance by foreign countries, including appropriate trade and national security measures.”
        • Directs the Secretary of Commerce to review and recommend “appropriate action with respect to the rulemaking by the Office of Information and Communication Technology and Services (ICTS) on connected vehicles, and shall consider whether controls on ICTS transactions should be expanded to account for additional connected products.”
        • Directs the Secretary of the Treasury, Secretary of Commerce and, as appropriate, the heads of any other relevant agencies to review “whether Executive Order 14105 … (Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern) should be modified or rescinded and replaced, and assess whether the final rule entitled “Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern,” 89 Fed. Reg. 90398 … includes sufficient controls to address national security threats” and make recommendations, including potential modifications to the Outbound Investment Security Program.
        • Directs the Director of the Office of Management and Budget (OMB) to assess “any distorting impact of foreign government financial contributions or subsidies on United States Federal procurement programs and propose guidance, regulations, or legislation to combat such distortion.”
        • Directs the Secretary of Commerce and Secretary of Homeland Security to assess “the unlawful migration and fentanyl flows from Canada, Mexico, the PRC, and any other relevant jurisdictions and recommend appropriate trade and national security measures to resolve that emergency.”

      The results of these reviews and investigations are due in April 2025. 

      Despite prior statements that he would immediately implement certain tariffs – particularly on China, Canada and Mexico – Trump in his memorandum does not issue such directives but notes the possibility of new tariffs and other appropriate actions. In comments to the press, Trump said that he may still implement such tariffs, stating, “We’re thinking in terms of 25 percent on Mexico and Canada … [possibly by] February 1, ” and acknowledged that former President Joe Biden had left in place tariffs on China. Regarding potential universal tariffs on all goods coming into the United States, Trump said, “We may, but we’re not ready for that just yet.”

      Thompson Hine’s international trade attorneys and non-legal professionals are closely monitoring these developments and will continue to report on any significant trade actions.

      Trump Trade Appointees

      1. Secretary of Commerce – Howard Lutnick is pending Senate confirmation.
      2. Secretary of State – Marco Rubio was confirmed on January 21, 2025.
      3. Secretary of the Treasury – Scott Bessent is pending Senate confirmation.
      4. U.S. Trade Representative — Juan Millán has been named acting U.S. Trade Representative, pending Senate confirmation of Jamieson Greer as the USTR.
      5. Secretary of the Department of Homeland Security – Kristi Noem is pending Senate confirmation.

      On January 13, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced controls on advanced computing integrated circuits (ICs) and certain closed artificial intelligence (AI) model weights. “To strengthen U.S. security and economic strength,” the Biden-Harris administration released an Interim Final Rule (IFR) titled “Framework for Artificial Intelligence Diffusion.” The rule aims to balance national security interests with the promotion of AI innovation and responsible diffusion of technology. Below, we delve into the specifics of what items are controlled, the destinations affected, and the exceptions and authorizations provided under this new rule.

      Effective Date & Comment Period

      The IFR was technically effective immediately on January 13, 2025. However, compliance with the new requirements is not mandatory until May 15, 2025, giving companies time to familiarize themselves with the changes. BIS is accepting comments on the revisions and additions in this rule until May 15, 2025. The immediately effective and meaningful changes are the modifications to the Commerce Control List (CCL).

      Controlled Items

      The new export controls focus on two primary categories: (1) advanced computing ICs and (2) AI model weights. These items are classified under specific Export Control Classification Numbers (ECCNs), including 3A090.a and 4A090.a and items in the corresponding .z ECCNs, and new created ECCN 4E091.

      • ECCN 3A090.a controls integrated circuits with one or more digital processing units having either: (1) a ‘total processing performance’ of 4800 or more; or (2) a ‘total processing performance’ of 1600 or more and a ‘performance density’ of 5.92 or more.
      • ECCN 4A090.a controls computers, “electronic assemblies,” and “components” containing integrated circuits, any of which meets or exceeds the limits in 3A090.a. ECCN 4A090.b controls computers, “electronic assemblies,” and “components” containing integrated circuits, any of which meets or exceeds the limits in 3A090.b.
      • New ECCN 4E091: Controls model weights of certain advanced closed-weight AI models. Model weights are numerical parameters within an AI model that help determine the model’s outputs in response to inputs. This control applies to AI models trained using computational power of 1026 or more computational operations.

      This IFR updates foreign direct product rules (FDPR) for these items. BIS expanded the country and destination scope of controls on ECCN 3A090.a and 4A090.a items and the advanced computing FDPR to apply worldwide, replacing specific country group references with the term “worldwide” and specifying that foreign-produced items destined for or incorporated into non-EAR99 parts, components, computers, or equipment are covered globally. Additionally, the rule creates a new FDPR that applies these controls to certain model weights produced abroad using advanced computing chips made with U.S. technology or equipment.

      Destination Controls

      The rule introduces a three-tier country classification system, each with different levels of restrictions for the advanced AI chips:

      1. Generally Unrestricted Countries: This list includes 18 U.S. allies. These countries are:
        • Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan, and the United Kingdom.
      2. Completely Restricted Countries: These are countries identified in Country Group D:5 of Supplement No. 1 to Part 740 of the Export Administration Regulations (EAR), which are subject to a U.S. arms embargo, and Macau. The full list includes:
        • Afghanistan, Belarus, Burma, Cambodia, Central African Republic, China (including Macau), Cuba, Democratic Republic of the Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Libya, Nicaragua, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela, and Zimbabwe.
      3. Countries Subject to “Limited Quantities”: All other countries fall under this category.

      Exceptions & Authorizations

      To ensure that the new controls do not disrupt innovation or supply chains, the rule includes several exceptions and authorizations:

      • License Exception Artificial Intelligence Authorization (AIA) / Exceptions for Certain Allies and Partners: Permits the export, reexport, or transfer (in-country) of advanced computing chips and otherwise controlled closed AI model weights without an authorization. This exception applies to a set of allies and partners (the Generally Unrestricted Countries listed above), as well as companies headquartered in the United States and these allies and partners. However, this exception does not cover exports to arms-embargoed countries.
      • Exception for Open AI Models: Models with widely available model weights (i.e., open-weight models) are not subject to controls. Additionally, the model weights of closed models that are less powerful than the most advanced open-weight models, even if they exceed the 1026 threshold, are not controlled.
      • License Exception Advanced Compute Manufacturing (ACM) / Exceptions for Supply Chains: Allows for the export, reexport, or transfer (in-country) of advanced computing chips, without an authorization, for the purposes of development, production, and storage of these chips, except to arms-embargoed countries. This license exception builds on the Temporary General License from October 2023 rule to prevent disruption of supply chains.
      • License Exception Low Processing Performance (LPP) / Low Volume Exception: Allows limited amounts of computing chips to flow globally, except to arms-embargoed countries.
      • Data Center Validated End User (VEU) Program: This program is bifurcated into:
        • Universal VEUs (UVEU): Provides U.S. and certain allied and partner country entities with the opportunity to obtain a single authorization that will allow the company to build data centers around the world without additional authorizations, except in arms-embargoed countries.
        • National VEUs (NVEU): Provides entities headquartered outside arms-embargoed countries the opportunity to obtain an authorization that will allow the company to build data centers in specified locations without additional authorizations, except in arms-embargoed countries.

      By implementing a comprehensive framework that includes specific controls, destination restrictions, and various exceptions, BIS aims to protect U.S. national security while fostering global AI innovation. Compliance with most portions of the new rule is required by May 15, 2025, and interested parties may submit public comments until that date.

      On January 15, 2025, the Department of Commerce’s inflation-adjusted civil monetary penalties for 2025 went into effect. The adjustments, which the Department of Commerce (“Commerce”) published in the Federal Register on December 30, 2024, update the penalty rates for violations of laws and regulations enforced by the agency and its bureaus. 

      While over 40 civil monetary penalty levels have been adjusted, the following are highlighted because of their central importance to trade compliance:

      • False Claims Act violation: minimum penalty increased to $14,308, and the maximum penalty increased to $28,619.
      • Bureau of Economic Analysis:
        • International Investment and Trade in Services Act; failure to furnish information: minimum penalty increased to $5,911, and the maximum penalty increased to $59,114.
      • Bureau of Industry and Security:
        • International Emergency Economic Powers Act (IEEPA): maximum penalty increased to $377,700.
        • Export Control Reform Act of 2018 (ECRA): maximum penalty increased to $374,474.
      • Census Bureau:
        • Collection of Foreign Trade Statistics maximum daily delinquency to report penalty increased to $1,740, and the maximum penalty per violation increased to $17,412.
      • International Trade Administration:
        • Foreign Trade Zone: maximum penalty increased to $3,650.

      On January 16, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule prohibiting the sale and importation of connected vehicles incorporating certain hardware and software components (or those components sold separately) with a sufficient nexus to the People’s Republic of China (PRC) or Russia. The new prohibitions go into effect on March 17, 2025.

      BIS’s action follows its proposed rule released in September 2024. Unlike the proposed version, the final rule excludes from the scope of the prohibitions any vehicle with a gross vehicle weight rating (GVWR) of over 10,000 pounds. BIS warned, however, that this was simply due to the complexity of the commercial vehicle supply chain, and that it intends to issue a separate rulemaking addressing the national security risks presented in the commercial vehicle supply chain, “including trucks and buses,” in the near future.

      The final rule prohibits (i) the importation of vehicle connectivity system hardware (or vehicles containing such hardware) and (ii) the importation and sale of vehicles that contain vehicle connectivity system or automated driving system software with sufficient nexus to the PRC or Russia. According to BIS’s press release, vehicle connectivity systems covered by the rule include “telematics control units, Bluetooth, cellular, satellite, and Wi-Fi modules.” As such, any software-enabled or programmable hardware component that directly enables the function of and is directly connected to vehicle connectivity systems would be covered by the prohibitions. The final rule would also prohibit transactions involving any “covered software,” which encompasses software-based components enabling the function of vehicle connectivity systems or automated driving systems at the vehicle level, to the extent such covered software has a sufficient nexus to China or Russia.

      Notably, the final rule also prohibits manufacturers of connected vehicles who are owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia, from knowingly selling in the United States any connected vehicles that incorporate vehicle connectivity system hardware or covered software, regardless of whether such software or hardware components were designed or developed by a person with sufficient nexus to the PRC or Russia.

      BIS’s prohibition of the sale and importation of covered software takes effect with Model Year 2027. Hardware-related prohibitions will take effect with Model Year 2030, or January 1, 2029 for units without a model year. To facilitate compliance with the rules, BIS requires importers and manufacturers to submit annual declarations of conformity to the BIS. The final rule allows BIS to issue general authorizations for certain type of transactions. Regulated parties can also seek specific authorizations from BIS to engage in transactions otherwise prohibited by the final rules or advisory opinions for BIS to address the legality of prospective transactions.