As the (Customs and Trade) World Turns: March 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 March 2025 edition, we cover:

1. The latest on the IEEPA Tariffs on China, Canada, and Mexico, and the last-minute USMCA reprieve.
2. Global tariffs of 25% on steel and aluminum (as well as derivative products) are now in effect — what you need to know.
3. No signs of tariff fatigue yet: Reciprocal tariffs, commodity-specific tariffs, and EU tariffs may be on deck.
4. Forced labor enforcement: CBP’s enforcement statistics and recent activity from the House Select Committee on the Chinese Communist Party suggests increased forced labor enforcement efforts.
5. FCA enforcement: Another tool for combatting customs fraud.
6. Upcoming Section 232 investigations into imports of copper and imports of timber, lumber, and their derivative products.
7. Proposed new docking fees from $500,000 to $1.5 million for Chinese ships could have major impacts on the shipping and logistics industry.

1. IEEPA Tariffs on China, Canada, and Mexico: Adapting to the New Norm of Uncertainty

The trade community continues to grapple with the potential imposition of tariffs on goods from key trade partners like Canada, Mexico, and China. As we previously reported, President Trump is leveraging his authority under the International Emergency Economic Powers Act (IEEPA) to implement these tariffs. Below is an update on the current status of IEEPA tariffs.

Key Updates:

• China: As of March 4, IEEPA tariffs on Chinese-origin goods have increased from 10% to 20%.
• USMCA Exemption: Starting March 7, goods that qualify under the United States-Canada-Mexico Agreement (USMCA) and claim USMCA at entry are exempt from IEEPA tariffs. This exemption currently has no official end date, but is expected to apply until April 2 when reciprocal tariff reports are due under the America First Trade Policy. It should be noted that there is a gap period between March 4 and March 7 during which importers were unable to avail themselves of the USMCA exemption.

And the Fox Says…: Recent developments suggest that President Trump is committed to imposing additional tariffs, even on close trade partners like Canada and Mexico. In the short term, companies importing goods from these countries should reassess their import compliance programs to ensure whether their goods are eligible for USMCA preferential treatment and can claim for purposes of the IEEPA exemption. See our recent alert on the “USMCA Advantage” for more actionable steps companies can take in this regard. Further guidance is needed from the US Customs and Border Protection (CBP) to confirm whether the USMCA IEEPA exemption can be claimed post-importation.

For comprehensive and up-to-date information on tariffs, visit ArentFox Schiff’s Tariff Tracker.

Contributors: Lucas A. Rock and Antonio J. Rivera

2. Grappling With the New Steel and Aluminum Tariffs: What Importers Need to Know

Global tariffs of 25% on steel and aluminum, as well as on certain derivative products, are now in effect. (This is true for Canadian steel and aluminum as well, after President Trump retracted his threat to double tariffs to 50% in response to Ontario’s surcharge on electricity exports.)

Following the sweeping executive orders imposing the new Section 232 tariffs on steel and aluminum, on March 5, the US Department of Commerce’s (Commerce) Bureau of Industry and Security issued two Federal Register notices (see here and here) implementing the steel and aluminum tariffs. Steel and aluminum products that are subject to the additional duties and outlined in Annex 1 of the respective notices took effect on March 12 for most products. For some steel and aluminum derivative products not classified under Chapters 73 and 76 of the tariff schedule, the additional duties also took effect on March 12, after Commerce issued a notice certifying that adequate systems are in place to collect the tariffs.

In addition, CBP issued two cargo systems messaging services (CSMS) (see here and here) providing additional guidance on the Section 232 duties on steel and aluminum. In particular, the CSMSs set forth the process to value the steel and aluminum content for goods that are not classifiable under Chapters 73 and 76. The CSMSs also reiterate a very limited carveout from the tariffs. Specifically, for imports of some new aluminum derivatives that were smelted and cast in the United States and some new steel derivatives that were melted or poured in the United States, importers may report the imports under a Harmonized Tariff Schedule of the United States (HTSUS) subheading that will allow the imports to avoid Section 232 duties.

And the Fox Says…: Given the government’s repeated warnings for strict compliance with the Section 232 duties on steel and aluminum imports, importers should carefully review their imports to ensure whether their products are subject to the additional duties and, if so, whether they are accurately reporting those imports under the appropriate HTSUS numbers. The AFS team has extensive experience with Section 232 duties and can assist clients on compliance with these new requirements.

Contributors: Mario A. Torrico, Tyler J. Kimberly, and Antonio J. Rivera

3. The Low-Down on Potential New Tariffs on the Horizon

Amid this unprecedented level of tariff activity, President Trump and his Administration continue to threaten new potential tariffs that are both commodity and country specific. In late February, President Trump signaled potential tariffs on vehicles, chips, semiconductors, pharmaceuticals, and lumber products, starting at 25% and potentially increasing over the year. His Administration has also threatened new tariffs on dairy and Chinese ships. Additionally, he signed a memorandum directing the US Trade Representative (USTR) to renew digital services tax investigations under Section 301, focusing on regulations like the Digital Markets Act in the European Union (EU) and other practices that may unfairly target US businesses.

Earlier this month, the USTR sought public comments to identify unfair or non-reciprocal trade practices, concentrating on major economies like G20 countries and those with significant US trade deficits, as part of the America First Trade Policy. During the State of the Union address on March 4, President Trump announced that reciprocal tariffs would take effect on April 2, alongside tariffs on agricultural products and foreign cars, though specific tariff rates have not been set.

In addition, other countries such as Canada, the EU, and China have taken retaliatory tariff measures in response to US actions. President Trump has indicated that he will increase tariffs based on any retaliatory tariffs… we appear to be gearing up for a trade war.

And the Fox Says…: Given the volume of activity in this area, including both threatened and realized tariffs, it has become increasingly difficult to separate fact from fiction or distinguish official policy from mere rumors. We are monitoring developments closely through our Tariff Tracker and helping companies prepare an effective tariff response via our AFS Tariff Playbook in this fluid and unpredictable trade environment. Multinational companies must also monitor the retaliatory actions of other countries where they import products and how any supply chain shifts may be impacted by the trade war.

Contributors: Natalie Tantisirirat, James Kim, and Angela M. Santos

4. Spotlight on Forced Labor Enforcement Amidst Tariff Chaos

While tariffs have understandably dominated media headlines and strategic planning, it is crucial not to overlook the ongoing enforcement of forced labor regulations. With the Trump Administration and the 119th US Congress settling into office, there is potential for increased enforcement activity.

UFLPA Enforcement Statistics

The Uyghur Forced Labor Prevention Act (UFLPA) Statistics Dashboard reveals that CBP is primarily targeting shipments from the automotive and aerospace sector in fiscal year 2025. Out of the 5,400 shipments reviewed under the UFLPA in FY 2025, 4,816 of those shipments are from the automotive and aerospace sector. This trend persisted in February, with 915 out of 970 shipments under review focused on the automotive and aerospace sector.

House Committee Continues Focus on China

The House Select Committee on the Chinese Communist Party issued a letter to USTR Jamieson Greer, Attorney General Pam Bondi, and Homeland Security Secretary Kristi Noem regarding China’s unlawful practices that restrict US commerce. The letter urges the USTR to open an investigation into China’s practices under Section 301 of the Trade Act of 1974. The letter highlights concerns about China’s transshipment of textiles and apparel to bypass US enforcement mechanisms and duties, including the UFLPA.

And the Fox Says…: After a surge of additions to the UFLPA Entity List in 2024, the pace of additions to the list has diminished. This may be due to changes within the US Department of Homeland Security and UFLPA Forced Labor Enforcement Task Force, as new members adjust to their roles.

CBP’s focus on automotive and aerospace shipments underscores the importance of supply chain due diligence in these sectors. As anticipated in our 2025 Guide, Section 301 could be used as a tool to combat forced labor. The House Select Committee’s recent messages suggest that the textile and apparel industries may face heightened scrutiny soon. Companies importing goods from these sectors should ensure their supply chain due diligence programs are robust and proactive in monitoring these risks.

Contributors: Lucas A. Rock and Angela M. Santos

5. Navigating New Trade Policies: The Trump Administration’s FCA Enforcement and Its Impact on Customs Compliance

The Trump Administration’s evolving international trade policy, including tariffs under Section 301 and Section 232, now intersects with increased enforcement of the False Claims Act (FCA) against customs fraud. The US Department of Justice (DOJ) has announced plans to aggressively enforce the FCA, urging importers to ensure accuracy in information provided to CBP, such as value, country of origin, and US Harmonized Tariff Schedule (HTS) codes.

The FCA is a powerful tool against fraud involving government funds, imposing treble damages and penalties for false claims. The FCA targets any entity receiving government funds, directly or indirectly, including those involved in customs fraud.

Customs fraud, traditionally a less common FCA focus, is expected to rise, especially with new tariffs under the Trump Administration. Michael Granston of the DOJ emphasized the focus on using the FCA to combat customs and duties evasion. Common FCA liabilities in customs include undervaluing goods, misclassifying goods, and misrepresenting the country of origin.

In recent years, the government has obtained high-dollar settlements in connection with customs fraud, including against Precision Cable Assemblies Inc. and Global Engineered Products, Inc. for $10 million and Alexis, LLC, for $7.6 million. These enforcement actions demonstrate the importance of ensuring that importers are accurately reporting information to CBP.

And the Fox Says…: Given the DOJ’s FCA focus and new tariffs, import diligence is crucial, especially for high-risk supply chains. Companies should review and update import compliance policies, review HTS classifications, and review supply chains for risks like forced labor. Training employees on customs laws, particularly regarding value, origin, and classification is essential. The AFS team has extensive experience with FCA exposure and compliance issues.

For more information on FCA enforcement, please refer to our recent alert here.

Contributors: Nadia Patel, Jackson David Toof, and Mario A. Torrico

6. Steel, Aluminum, and Beyond: The Growing Impact of Section 232 Tariffs

Section 232 investigations once again gain prominence with old (i.e., steel and aluminum) and new Section 232 investigations set to increase the tariff burden on US importers. On February 25 and March 1, the president directed Commerce to investigate the national security implications of imports of copper and timber, lumber, and their derivative products (see here and here). Section 232 allows the president to adjust imports if Commerce determines they threaten to impair US national security. Commerce issued pre-publication Federal Register notices for copper and lumber and timber with an investigation initiation date of March 10. Comments are due by April 1 and Commerce must issue a report to the president within 270 days, which takes us to roughly December 5. The president then has 90 days to take action.

During his first term, President Trump initiated eight Section 232 investigations, imposing tariffs on steel and aluminum. Commerce determined these imports threatened national security based on an analysis of current and future requirements for national defense and 16 specific critical infrastructure sectors. Six more investigations followed, including on autos, uranium, and vanadium, though no tariffs resulted. President Trump favored negotiations with Japan over titanium sponge rather than imposing restrictions. Commerce also investigated grain-oriented electrical steel, leading Mexico to set up a monitoring system to avoid potential tariffs.

And the Fox Says…: Section 232 is one of several policy tools, part of a broader Administration agenda aimed at addressing bilateral trade deficits, tariff disparities, and spurring domestic manufacturing. The link between national security and timber/lumber or copper imports may be arguably weaker than in prior cases. However, the undefined scope of “national security” provides Commerce broad interpretative flexibility, potentially leading to further tariffs. With Section 232 investigations, there is a notice and comment process, and relevant stakeholders should consider participating.

Contributors: Diana Dimitriuc Quaia, Mario A. Torrico, and Angela M. Santos

7. US Government Proposes New Docking Fees to Counter Chinese Shipbuilding Dominance

The US government is contemplating imposing docking fees ranging from $500,000 to $1.5 million for ships docked at US ports. The fees would be imposed on Chinese vessels, but also on other foreign made vessels if the operators’ fleets include any percentage of Chinese made vessels. This proposal arises from a Section 301 investigation initiated under the Biden Administration and requested by US shipbuilding and metal unions. The investigation concluded that China’s practices are unreasonable, displacing foreign firms, reducing competition, and creating dependencies, which burden US commerce.

The proposed fees aim to counter China’s dominance in shipbuilding and logistics and incentivize US shipbuilding, as the proposal also allows for a refund of fees per entry into a US port of a US-built vessel. However, some fear that the proposal could drive up costs for US importers and make US exporters less competitive. It may also lead to strategic shifts in shipping routes, with potential business moving to Canadian and Mexican ports to avoid additional fees.

Stakeholders are encouraged to provide feedback to USTR on the appropriateness and effectiveness of the proposed fees and restrictions. The Federal Register notice, made public on February 21, outlines the proposed actions and invites public comments. A hearing is scheduled for March 24, with requests to appear due by March 10. Comments and requests to appear can be submitted until March 24 here, under docket numbers USTR-2025-0002 and USTR-2025-0003, respectively.

And the Fox Says…: The outcome could reshape international shipping dynamics, with significant economic implications for the US and global markets. Currently, Chinese vessels account for more than half of all ships built in 2023, and the proposal would have major impacts on shipping and logistics companies. While there may be an increase in US shipbuilding over the long run, in the interim, higher shipping costs would be anticipated.

Contributors: Joy Marie Virga and James Kim