As the (Customs and Trade) World Turns: April 2025

We are navigating an unpredictable and fast changing trade landscape and what we are reporting today may change by tomorrow (or in the next hour). However, our team is regularly issuing reports and alerts to help our clients and friends stay up to date. Sign up here for regular updates and to receive this newsletter each month. In addition, our Trump 2.0 Tariff Tracker can be found here and information regarding navigating the new tariffs can be found here.

This edition provides essential insights for sectors including international trade, aluminum and steel industries, fashion and retail, automotive, electric mobility, e-commerce, shipping and logistics, and compliance, as well as for in-house counsel, importers, and compliance professionals.

In this April 2025 edition, we cover:

1. US reciprocal tariffs have arrived, sparking global countermeasures for an imminent trade war impacting US importers and multinational companies.
2. New Section 232 tariffs on autos and auto parts introduce new challenges for importers, reshaping automotive supply chains.
3. De minimis revoked for Chinese products, including new rules for postal shipments.
4. Trump redefines a new sanctions strategy through new Executive Order targeting countries that import Venezuelan oil.
5. Forced labor enforcement updates.
6. FCA Enforcement: Multimillion dollar settlement highlights the extensive reach of the Trump Administration in FCA enforcement and compliance.
7. BIS tightens export controls with new entity list designations targeting China.

1. Tit for Tat: Reciprocal Tariffs Roll In

The Trump Administration’s long-awaited reciprocal tariffs policy is no longer just a threat — it is hitting US importers and multinational companies hard. Effective April 5, the US imposed a 10% baseline tariff on nearly all imports, excluding Canada, Mexico, Harmonized Tariff Schedule of the United States (HTSUS) Column 2, and Annex II products. Starting April 9, higher country-specific tariffs began applying to goods from targeted nations, but on the same day Trump announced a 90-day “pause” of the higher country-specific rates (except for China) in light of ongoing trade negotiations.

The new tariffs stack with Section 301 duties and previous duties imposed under the International Emergency Economic Powers Act (IEEPA) but do not stack with Section 232 steel, aluminum, or auto tariffs (or any future Section 232 tariffs). One partial relief; products containing at least 20% US-origin content will be assessed a tariff only on their non-US value. It is still unclear, however, what valuation methodology will be applied in determining the value of US content.

Global reactions and threatened countermeasures have been swift. In an ongoing tit for tat with China since the reciprocal tariffs were first announced, the US reciprocal tariff on China has gone from 34% to 84%, and then to 125% in response to Chinese retaliatory tariffs on US goods. Canada has already imposed a retaliatory surtax on certain products of United States origin on two lists, has proposed additional tariffs, and plans to impose a 25% tariff on US autos which will impact United States-Mexico-Canada Agreement (USMCA) and non-USMCA qualifying autos. The European Union plans phased countermeasures, and the United Kingdom is consulting on retaliatory tariffs. Meanwhile, reports suggest some quiet diplomacy is underway with dozens of meetings requested by various countries.

And the Fox Says…: The reciprocal tariff regime marks a major escalation in US trade strategy, and the pushback has already begun. A Florida court challenge questions the president’s IEEPA authority (Simplified v. US, filed April 3), Senator Rand Paul (R-KY) has reintroduced legislation to curb unilateral tariff powers, and the US Senate passed a joint resolution to block some of the Canada IEEPA tariffs. While the Administration claims firmness, legal and political cracks are showing. For importers, early action remains the best defense in a volatile trade storm.

While challenges to these tariffs have started, it could take months or years for them to be resolved, if at all. Importers should move fast to minimize their exposure to these substantial tariffs. Check country exposure, leverage in-transit exceptions, and explore mitigation strategies like the use of Foreign-Trade Zones and drawback, as well as duty savings programs. There is also some gray area regarding certain aspects of the tariffs but very little guidance from the government. Importers should consult with their advisors as we expect an emphasis on enforcement.

Contributors: James Kim, Mario A. Torrico, Lucas A. Rock, and Angela M. Santos

2. Section 232 Auto Tariffs Go Into Effect for Vehicles; Tariffs on Auto Parts No Later Than May 3

On March 26, the Trump Administration announced a new 25% tariff on imported passenger vehicles and light trucks, along with parts used in those vehicles, under Section 232 of the Trade Expansion Act of 1962. The action, already in effect for vehicles as of April 3, is aimed at reshoring automotive production and addressing foreign supply chain vulnerabilities. Automotive parts tariffs are scheduled to follow shortly, with implementation set for no later than May 3. Importers face the additional complexity of needing to identify, at the time of entry, whether imported parts are ultimately destined for passenger vehicles and light trucks.

The release of Annex I on April 2 expanded the expected scope of the tariffs for automotive parts beyond what was initially indicated. In addition to engines, transmissions, and electrical components, the list now includes items such as tires, steering wheels, and brake assemblies, among other parts. While the Proclamation offers a partial tariff exemption for USMCA-qualifying vehicles based on US content and it appears the same will be carved out for parts (while permitting a full exemption for the USMCA-qualifying parts in the interim), importers are still awaiting crucial guidance. The US Department of Commerce has yet to define the process for submitting documentation and receiving approval to apply the tariff to only the non-US content in a vehicle, and create a similar process for auto parts. The use of the substantial transformation test (rather than USMCA origin rules) to calculate the US content in a vehicle or part promises to add further complexity to compliance efforts.

And the Fox Says…: The tariffs are now live, and they have arrived with significant operational consequences. These tariffs will most heavily impact foreign automakers and suppliers relying on minimal US content, many of whom now face substantial new costs. Importers should urgently review their supply chains, determine exposure, and prepare for strict enforcement as the industry awaits further clarity on compliance pathways and possible future expansions. For more detailed analysis, refer to our full-length alert here.

Contributors: James Kim and Antonio J. Rivera

3. De Minimis Program Axed on China Origin Goods

On April 2, President Trump issued an executive order (EO) that formally (and maybe finally) revoked the de minimis exemption for low-value shipments of China origin (including Hong Kong) effective May 2. This action follows its initial elimination in February, only to be reinstated days later because the US Customs and Border Protection (CBP) could not process millions of new entries per day.

Except for postal shipments, shippers of China origin goods under $800 will go from paying no duties and taxes to paying standard Most Favored Nation duties + Section 301 tariffs (7.5-25% if applicable) + 145% (cumulative new applicable China tariffs) and will be required to file an entry. With respect to postal shipments, in response to China’s imposition of reciprocal tariffs, on April 9 the president issued an EO amending the de minimis announcements. It requires carriers delivering shipments to collect and remit duties based on either of the following duty collection methodologies for all shipments: (1) either 120% of the value of the shipment or (2) $100 from May 2 through June 1 and $200 thereafter per postal item. The order also specifies that carriers must have an international carrier bond and CBP may require carriers to submit advance electronic data to CBP for verification and enforcement purposes.

The order follows two notices of proposed rulemaking (NPRM) issued during the Biden Administration aimed at modernizing the entry process for low-value shipments and enhancing efficiency and security. The Entry of Low-Value Shipments (ELVS) NPRM proposed a new “Enhanced Entry Process” requiring the advance electronic submission of various data elements, including origin and classification, among others. The second NPRM proposed to eliminate eligibility for the de minimis exemption for shipments subject to specific trade or national security actions, and to require an HTSUS classification for all shipments entering under the “Basic Entry Process.” The final rules are expected to be published later this year. The ELVS rule and the second NPRM would apply to shipments from all countries, not just China, meaning the Trump Administration may attempt to use these two NPRMs to complement the order revoking the de minimis exemption for China-origin goods.

And the Fox Says…: It is not clear if President Trump is using this EO to fill a gap until US Congress legislates on the issue. We also expect that the de minimis program may close for imports from Canada and Mexico once Commerce confirms that there is a method to collect duties on those shipments, as dictated by prior EOs. It is important for companies affected by this order to stay up to date and prepare for the operational adjustments needed to comply with these new restrictions.

Contributors: Andrew McArthur, James Kim, and Angela M. Santos

4. President Trump Authorizes Secretary of State to Impose 25% Tariffs on Countries Importing Venezuelan Oil

On March 24, President Trump issued an EO on “Imposing Tariffs on Countries Importing Venezuelan Oil.” The EO gives the US Secretary of State the authority to impose an additional 25% tariffs on or after April 2 on all goods from any countries that the US Secretary of Commerce determines directly or indirectly imports Venezuelan oil (defined to include crude oil or petroleum products extracted, refined, or exported from Venezuela).

It appears from the wording of the EO that the tariffs can only be placed on all goods, although there may be room for creative interpretation allowing tariffs on a subset of goods. Any tariff imposed on a country will expire one year after the last date on which the country imported Venezuelan oil. Further, the Secretary of Commerce has the authority to remove the tariffs at any time. Finally, the EO’s definition of the terms “Venezuelan oil” and “indirectly” suggest an intention that there will be no exception for crude or petroleum products that are substantially transformed in a third country, and there is no de minimis exception provided. However, the EO provides the Secretary of Commerce substantial authority to issue regulations and guidance, so there may be some flexibility that Commerce can exercise in crafting how the “imports Venezuelan crude” criterion will be applied.

And the Fox Says…: While the US Department of Treasury is typically the agency in charge of imposing the Venezuela sanctions, it has little to no role in the implementation of this EO. Instead, the EO’s implementation is largely done through the Secretary of Commerce and the Secretary of State due to its focus on tariffs. It is unclear if the Trump Administration intends to continue using this seemingly novel method of using tariffs for future sanctions actions, or if this is an isolated event.

Contributors: Maya S. Cohen and Matthew Tuchband

5. Forced Labor Enforcement: Navigating the Complexities of Compliance

Recent developments have cast uncertainty regarding the complexities in forced labor compliance and the government’s forced labor priorities, marked by in the issuance of a withhold release order (WRO), elimination of funding for certain non-governmental organizations (NGOs), litigation over supplier contracts, and a continued focus on detentions in the auto and aerospace sector.

Recent Litigation is a Reminder to Update Contractual Safeguards

Recently, the Ninth Circuit restored a supplier’s lawsuit against a retailer, alleging breach of contract due to the retailer canceling shipments over forced labor concerns. This suit could have significant implications for importers who are prudently looking to safeguard themselves from any connections to forced labor in their supply chains.

WRO and Enforcement Activity

In early April, CBP issued a WRO against Taepyung Salt Farm located in South Korea, banning the importation of its sea salt products. This follows the WRO issued on a supplier of Frankincense in Somalia and indicates that CBP is expanding its efforts outside of China.

CBP has continued to focus its enforcement efforts on the auto and aerospace sector, which accounts for the vast majority of targeted shipments in February as well as in FY 2025.

NGO Funding

The US Department of Labor (DOL) and Department of Government Efficiency have terminated all grants under the DOL’s Bureau of International Labor Affairs (ILAB) program. These grants have been used in part by NGOs that support CBP and the US Department of Homeland Security in detecting forced labor indicators, which may impact enforcement.

And the Fox Says…: Despite recent government cuts, enforcement of the forced labor import prohibitions continues. Importers should continue rigorous supply chain due diligence to ensure compliance with the Uyghur Forced Labor Prevention Act and any potential future enforcement initiatives. Forced labor enforcement could be exercised as another political lever against certain countries like China. Importers should also consider updating their supplier agreements and terms and conditions to ensure they are protected.

Contributors: Derek Ha, Lucas A. Rock, and Angela M. Santos

6. Customs Crackdown: Evolutions Flooring Settles $8.1 Million Duty Evasion Case

Evolutions Flooring Inc., a South San Francisco, California-based importer, and its owners have agreed to pay $8.1 million to settle allegations of evading customs duties on multilayered wood flooring imported from China. The settlement addresses claims under the False Claims Act (FCA) that the company knowingly avoided paying antidumping, countervailing, and Section 301 duties between September 2019 and July 2022. This settlement follows the Trump Administration’s recent policy announcement to aggressively enforce the FCA in customs compliance.

The US Department of Justice emphasized that “[f]raud in international commerce deprives the United States of vital revenue and creates an unfair advantage over businesses that operate legitimately. The settlement sends a message that we will not stand aside when companies try to cheat the system.”

As part of its investigation into whether the company submitted false information to CBP about the manufacturers and the country of origin of the imported goods, the government conducted site visits to factories in Thailand, reviewed import records and data, and interviewed witnesses.

Notably, the case was initiated by Urban Global LLC under the whistleblower provisions of the FCA, allowing private entities to sue on behalf of the government and share in the recovery. Urban Global LLC will receive approximately $1.2 million from the settlement.

And the Fox Says…: This settlement highlights the extensive reach of government investigations in FCA enforcement and the incentive that competitors may have to identify potential false claims. Importers, especially those with high-risk supply chains, should conduct periodic due diligence to ensure accurate reporting to CBP, including Harmonized Tariff Schedule classification, country of origin, and value.

Contributors: Mario A. Torrico and Nancy A. Noonan

7. In Export Controls News: BIS Holds Annual Update Conference, Enhances Entity List Sanctions Against China and Others, and (Reportedly) Reinstates Licensing Pause

At its annual export control update conference from March 18 through 20, Commerce’s Bureau of Industry and Security (BIS) made clear that the agency will play a critical role in reshaping and enforcing a US trade policy that has become increasingly focused on “fair” trade over “free” trade (with particular, if not exclusive focus on China). In a fiery opening speech, Secretary of Commerce Howard Lutnick urged US companies to defend “the intellectual frontline” and preserve “the glory of the Western way of life.”

On March 25, BIS issued two final rules (available here and here) making dozens of new Entity List designations, of which the overwhelming focus was on China. The majority of the 80 newly identified entities, whether located in China or other countries, were designated for China-related reasons such as developing artificial intelligence/supercomputers for China’s military-industrial complex, acquiring or trying to acquire US-origin items for China’s military modernization, or selling to Chinese parties on the Entity List.

Additionally, per International Trade Today’s Export Compliance Daily newsletter, unofficial reports indicate that BIS has reinstated a pause on licensing decisions despite earlier assurances to the contrary. The reason for the pause is unclear, but BIS’s last official word on the matter (as of April 2) is that “licenses are being reviewed and processed[.]” Nonetheless, at least one BIS official expressed optimism that pending license applications will see some movement in the imminent future, perhaps after newly confirmed US Under Secretary Jeffrey Kessler has had a chance to review.

And the Fox Says…: Notwithstanding the (hopefully temporary) licensing pause, the BIS Update Conference and the two rules published since make clear that the agency intends step up export controls enforcement and to focus much of its efforts on China.

Contributors: Derek Ha, Maya S. Cohen, Terry M. Frederic, and Kay C. Georgi