/>iWelcome to the January 2025 issue of “As the (Customs and Trade) World Turns,” our monthly newsletter where we compile essential updates from the customs and trade world over the past month. We bring you the most recent and significant insights in an accessible format, concluding with our main takeaways — aka “And the Fox Says…” — on what you need to know.
This edition provides essential insights for sectors including International Trade, Aluminum and Steel Industries, Fashion and Retail, E-commerce, Automotive, and Compliance, as well as for in-house counsel, importers, and compliance professionals.
In this January 2025 edition, we cover:
- Federal Circuit deliberates on Section 301 tariffs: a landmark case for importers.
- Aluminum extrusions import dispute: CIT to review ITC’s negative determination.
- CBP’s proposed rule for low-value shipments: CBP’s attempts to enhance efficiency and security.
- Forced labor enforcement intensifies: new challenges and strategic shifts.
- Mexico’s textile and apparel tariff hikes: navigating new import challenges.
- CFIUS controversy: presidential block on Nippon-US Steel deal sparks legal battle.
- Temporary sanctions relief: OFAC authorizes limited transactions, maintaining key restrictions.
1. Section 301 Tariffs Appeal: Federal Circuit Hears Oral Argument
On January 8, the US Court of Appeals for the Federal Circuit (CAFC) heard the oral argument in HMTX Industries LLC v. United States, a pivotal case challenging the legality of tariffs imposed on Chinese-origin goods under Lists 3 and 4A of the Section 301 tariff regime. These tariffs, which cover approximately $320 billion in goods, have been challenged by over 4,000 importers.
Central to the case is whether the US Trade Representative’s (USTR) actions expanding tariffs to the Lists 3 and 4A qualify as a permissible “modification” of the original Section 301 action (covering Lists 1 and 2) under Section 307 of the Trade Act of 1974. The plaintiffs argued that the term “modify” allows only moderate or minor adjustments to the original tariffs, which targeted $50 billion in goods. The judges explored whether the statutory language supports such limits and considered distinctions between this case and prior rulings interpreting a different section of the Trade Act that limited “modification” to smaller adjustments.
The panel also examined whether China’s retaliatory tariffs, which formed the basis for USTR’s tariff increases under Lists 3 and 4A, were sufficiently linked to the intellectual property violations initially investigated under Section 301. The plaintiffs argued these actions were distinct, while the government claimed they were part of the broader context of unfair practices. A final issue was whether USTR’s authority to modify tariffs when an action is “no longer appropriate” could justify broader increases, with the judges probing the potential limits of this provision.
And the Fox Says…: The CAFC is expected to issue a decision before the end of this year, though further appeals could extend the litigation into 2026. A final ruling for the plaintiffs could lead to refunds of tariffs paid under Lists 3 and 4A for those participating in the litigation, and to the end of any Lists 3 and 4A tariffs. More broadly, the decision could constrain future tariff actions, particularly those being contemplated by President-elect Donald Trump in his second term or validate such escalation of tariffs.
2. Challenging the US International Trade Commission’s Decision: Implications of the Appeal on Aluminum Extrusions Imports
On November 26, 2024, the petitioners, US Aluminum Extruders Coalition (USAEC) and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), filed a summons with the US Court of International Trade (CIT), contesting the US International Trade Commission’s (ITC) final negative determination in the aluminum extrusions’ antidumping and countervailing duty (AD/CVD) proceedings against multiple countries. As we discussed previously, on October 30, 2024, the ITC had reached a negative determination in its final phase of the antidumping and countervailing duty investigations concerning aluminum extrusions from China, Colombia, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates, and Vietnam.
The CIT will either affirm the underlying decision by the ITC, which can then be appealed to the US Court of Appeals for the Federal Circuit, or it can remand the decision back to the ITC for further consideration of certain matters. Remand could lead to a new vote from the Commissioners sitting on the Commission at that time. If the decision by the Commission becomes affirmative, and the CIT affirms, AD/CVD orders will be issued. The appeal may be taken to the US Court of Appeals for the Federal Circuit.
And the Fox Says…: Importers should closely monitor the CIT appeal. If the case is remanded and the ITC makes an affirmative determination which is affirmed by the CIT, AD/CVD orders will be imposed and estimated AD/CVD duties will have to be deposited and ultimately collected at liquidation. Please contact the AFS team if you are uncertain whether the product you import containing aluminum extrusions is within the scope of the investigations and therefore potentially subject to AD/CVD duties if the CIT remands the case and the ITC makes an affirmative determination.
3. CBP Proposes Enhanced Entry Process and Other New Rules for De Minimis Shipments
US Customs and Border Protection (CBP) has announced a notice of proposed rulemaking (NPRM) aimed at modernizing the entry process for low-value shipments, specifically those valued under $800. The proposed Entry of Low-Value Shipments (ELVS) rule is intended to increase the efficiency and security of processing these shipments in response to the rise of e-commerce. Through this process, CBP aims to expedite clearance and improve its ability to target high-risk shipments, such as those containing illicit drugs.
The ELVS rule would create a new “Enhanced Entry Process,” based on lessons learned from the Section 321 Data Pilot and Entry Type 86 test, requiring the advance electronic submission of various data elements, including the shipment contents, origin, destination, and a 10-digit Harmonized Tariff Schedule of the United States (HTSUS) classification, amongst others. An HTSUS Waiver Privilege is also included in the proposal, allowing certain filers to bypass the requirement to submit an HTSUS classification, subject to certain requirements, including documented internal controls ensuring certain compliance measures. Goods that are regulated by other federal agencies and mail importations must go through the Enhanced Entry Process.
Additionally, the “Release from Manifest Process” will be renamed the “Basic Entry Process” and revised to include additional data elements for verifying eligibility for duty- and tax-free entry. Another key change is the specification that the “one person” eligible for the de minimis exception is only the owner or buyer of the goods and no longer a consignee receiving the goods. Where a person receives multiple shipments that exceed the $800 threshold in the aggregate on a single day, none of the shipments would be eligible for the de minimis program.
And the Fox Says…: The deadline to file comments to the NPRM is March 15. The ELVS rule is the first of two NPRMs announced by the Biden Administration in September 2024. A second NPRM is expected at a later date and will likely continue to build on CBP’s aggressive multi-pronged strategy. Stay tuned for a more in-depth analysis on the NPRM and its impacts.
4. Forced Labor Enforcement Updates: CIT Case to Challenge Forced Labor Finding, Auto Industry Targeted for Detentions, More Entities Added to UFLPA Entity List, Reports Scrutinize Global Supply Chains, USTR Issues Trade Strategy to Combat Forced Labor
Kingtom Challenges Forced Labor Finding
On December 23, 2024, aluminum extrusions exporter Kingtom Aluminio, a Chinese-owned company based in the Dominican Republic, filed a complaint with CIT to challenge CBP’s forced labor finding, which authorizes CBP to seize the company’s imports of aluminum extrusion and profile products at the port. In filing the suit, the company claims in part that CBP’s issuance of the finding was arbitrary or capricious and that CBP bypassed administrative steps in failing to first issue a Withhold Release Order. See Kingtom Aluminio v. US, CIT # 24-00264.
Auto Industry Targeted for UFLPA Detentions in FY 2025
Significantly, the Uyghur Forced Labor Prevention Act (UFLPA) dashboard statistics for FY 2025 published thus far show that CBP primarily targeted the automotive and aerospace sector, with 1,239 shipments stopped for suspected violation of the UFLPA in December alone, with a total of 2,042 shipments in the first three months of FY 2025. By way of comparison, in the entirety of FY 2024, only 197 shipments in this sector were stopped. This follows scrutiny from US Congress resulting from Sheffield University and Human Rights Watch non-governmental organization (NGO) reports alleging connections to Xinjiang in every part of the auto supply chain. These statistics may reflect a shift in the industries targeted for enforcement, which have historically focused on electronics, apparel and footwear, and industrial and manufacturing materials.
DHS Adds 37 Companies to UFLPA Entity List
On January 14, the US Department of Homeland Security (DHS) announced the addition of 37 companies to the UFLPA Entity List. These entities include companies that grow Xinjiang cotton, manufacture textiles, manufacture inputs for solar modules and the energy industry, and supply critical minerals and metals. The UFLPA Entity List is nearly 150 companies.
Reports Scrutinize Supply Chains for Forced Labor Concerns
Several reports were issued last month discussing supply chains and forced labor risks:
- UMASS Amherst Labor Center issued a report covering REI’s published supplier list and alleged connections to forced labor.
- Transparentem issued a report covering its investigation into conditions on cotton farms in Madhya Pradesh, India. The report warned that the NGOs could not definitively link the problematic farms to the specific supply chains of brands and retailers.
- The Financial Times published a report discussing billions of dollars invested by environmental, social, and governance funds linked to forced labor in Xinjiang.
- In its first ever Quadrennial Supply Chain Review, the White House recommended upgrades to trade legislation to strengthen supply chains.
USTR Issues Trade Strategy to Combat Forced Labor
On January 13, USTR issued a trade strategy to combat forced labor that outlines the actions the United States is taking and considering to address forced labor in global supply chains. We will outline the USTR’s strategy in our forthcoming 2025 forced labor guide for global businesses.
And the Fox Says…: Forced labor enforcement has shown no signs of slowing down, and we anticipate that enforcement will remain steady or even increase as the Trump Administration assumes office later this month, particularly due to US Sen. Marco Rubio’s (R-FL) nomination as Secretary of State. Companies in the solar, textile, and apparel industries specifically should review the recent additions to the UFLPA Entity List to confirm whether any entities listed are in their supply chains.
Recent reports have focused on the global supply chains of fashion and apparel brands and critical industries, underscoring the importance for companies in the United States and globally to monitor these reports to ensure their supply chains are not associated with forced labor risks. While companies have been encouraged to release their supplier lists, this comes with some risk, as NGOs have scrutinized the labor practices of publicly disclosed suppliers.
Finally, as we previously discussed, the Kingtom Aluminio CIT litigation joins other cases where importers and affected companies have filed suit against CBP for issues related to forced labor enforcement. As forced labor enforcement efforts intensify, we should continue to expect legal disputes over forced labor allegations in global supply chains. To date, we have not seen a final decision on any of the cases.
5. Mexico Takes Aim at Textile and Apparel Sector With IMMEX Restrictions Focused on E-commerce and Increased Tariffs
Effective December 20, 2024, Mexican President Claudia Sheinbaum Pardo announced a decree imposing significant changes to the import regime for certain apparel and textile products, including tariff increases and restrictions on temporary imports under Mexico’s Manufacturing, Industry, Maquila and Export Services (IMMEX) program.
Mexico applied temporary tariff increases on goods imported into Mexico through April 23, 2026, as follows:
- Increase to 35% for 138 Harmonized Tariff Schedule (HTS) codes covering finished textile and apparel products, including items under Chapters 61, 62, 63, and 94.
- Increase to 15% for 17 HTS codes covering textile inputs, including items under Chapters 52, 55, 58, and 60.
The decree also imposes restrictions on the temporary importation of certain textile and apparel products under the IMMEX program, which allows companies to defer duties on imported products, raw materials and components, enabling duty-free importation for manufacturing, assembly, export services such as e-commerce sales, or other programs, before re-exporting. The decree imposes restrictions on finished clothing and textile articles classified under HTS Chapters 61, 62, and 63 are excluded from the IMMEX program.
Shortly after the decree was published, Mexico’s Ministry of Economy revised the decree and exempted the IMMEX restriction for six months for goods classified in HTS chapters 61, 62, 63, and subheadings 9404.40 and 9404.90, as long as certain requirements are met.
And the Fox Says…: These changes are part of Mexico’s broader strategy to bolster its domestic textile and apparel industries, tackle compliance challenges under the IMMEX program, shield its textile and clothing sectors from alleged unfair trade practices, and possibly retaliate against the incoming administration’s proposed tariffs. Mexico’s decree could significantly affect textile and apparel importers utilizing the IMMEX program to bring goods into the United States.
Companies should reassess their import strategies, explore alternative sourcing to mitigate tariff impacts, and collaborate with trade compliance experts to navigate new regulations and optimize supply chain efficiency. The AFS team is well-equipped to assist businesses in adapting to these changes, offering expert guidance on global supply chains and duty mitigation.
6. Nippon No-Go: President Uses CFIUS Authority to Block Nippon-US Steel Acquisition, Parties Sue
On January 4, President Biden issued an executive order prohibiting the acquisition of US Steel by Japanese firm Nippon Steel, pursuant to his Committee on Foreign Investment in the United States (CFIUS) authorities. CFIUS is an interagency committee charged with reviewing certain foreign investments in the United States for national security risks. If CFIUS finds that such a risk arises from a given transaction, it can recommend that the president prohibit the transaction. President Biden’s order follows a contentious CFIUS review process of the approximately $14 billion deal, which resulted in a “split recommendation.” Split recommendations to the president result when CFIUS cannot come to agreement whether a transaction creates national security risks. In response to the order, US Steel and Nippon Steel filed multiple lawsuits alleging, among other things, political interference in the process.
And the Fox Says…: CFIUS has entered into uncharted territory. Presidential prohibitions on their own are extremely rare; “split recommendations” by CFIUS are rarer still; and CFIUS litigation is almost unheard of. Regardless of the outcome, this case is likely to significantly shape CFIUS’ evolving role in the national security and investment space for many years to come. The results are unpredictable: buyer (and seller) beware.
7. General License Gives Temporary Sanctions Relief to Post-Assad Syria
The US Department of Treasury’s Office of Foreign Assets Control (OFAC) issued General License 24 on January 6, authorizing for the next six months:
- Transactions with governing institutions in Syria following December 8, 2024.
- Transactions in support of the sale, supply, storage, or donation of energy, including petroleum, petroleum products, natural gas, and electricity to or within Syria.
- Transactions that are ordinarily incident and necessary to processing the transfer of noncommercial personal remittances to Syria, including through the Central Bank of Syria.
The license — which aims to ensure that US sanctions “do not impede essential governance-related services in Syria following the fall of Bashar al-Assad on December 8, 2024” — covers transactions that are otherwise prohibited under Syria Sanctions Regulations, the Global Terrorism Sanctions Regulations, and the Foreign Terrorist Organizations Sanctions Regulations.
There are several important exceptions to the authorization, including most — but, crucially, not all — financial transfers to blocked persons (like Hay’at Tahrir al-Sham, the organization in control of the post-Assad government) and new investments in Syria. Note that comprehensive export controls against Syria are still very much in place. Check out our full client alert here.
And the Fox Says…: Companies and individuals relying on General License 24 must make sure that their activities are in one of the three approved categories and do not fall into one of the exceptions. In the meantime, OFAC’s wait-and-see approach offers temporary but much-needed sanctions relief to the Syrian people.
William G. Stroupe II, Natalie Tantisirirat, Sylvia G. Costelloe, and Matthew Tuchband contributed to this article.
