As the (Customs and Trade) World Turns: August 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, national security, aluminum and steel industries, fashion and retail, automotive, life sciences, electronics, artificial intelligence, transportation, electric mobility, e-commerce, shipping and logistics, and compliance, as well as for in-house counsel, importers, and compliance professionals.

In this August 2025 edition, we cover:

1. New executive orders add tariffs, may impact origin rules, and extend the China tariff status-quo for importers.

2. AI export control rules remain unclear as new executive orders leave key questions unanswered.

3. Recent DOJ settlements highlight costly risks of customs fraud and the need for strong importer compliance.

4. While certain steps have been taken to ease export controls targeting China, enforcement actions and penalties remain strict. 

5. Trade talks with EU, Japan, China, and tech firms yield shifting, uncertain agreements.

6. Congress advances bill for detailed annual reporting on export licenses to arms embargoed countries. 

7. CFIUS blocks Chinese acquisition of US tech firm years after closing, signaling tougher scrutiny.

8. New executive order suspends de minimis treatment effective August 29.

1. The Trump Trade Order Expands: More Tariffs, More Questions

The ink was barely dry on the July 31 Executive Order modifying the reciprocal tariffs when the White House and US Customs and Border Protection (CBP) rolled out a flurry of follow-up actions. If you missed our full alert on the original EO, you can catch up here. Here is what’s happened since.

New Additional Tariffs on Imports from India Over Russian Oil

On August 6, President Trump issued a second Executive Order targeting India — this time imposing an additional 25% tariff, effective August 27, in response to India’s continued imports of Russian oil. The new tariff stacks on top of the 25% reciprocal tariff that already took effect on August 7. Products subject to existing Section 232 actions (i.e., steel/aluminum and copper) and those already exempt from the reciprocal tariffs (i.e., those listed on Annex II) are exempt from these additional tariffs.

CBP Implementation Guidance

CBP issued CSMS #65829726 to guide importers on the modified reciprocal tariffs. Highlights include details on the in-transit exemption for goods in route prior to August 7 and the 40% additional tariff on “transshipped” goods.

Transshipment Redefined?

US Department of Commerce Secretary Howard Lutnick suggested that goods with more than 30% content from a third country such as China could be treated as transshipped and assessed a 40% tariff, even if significant processing occurred elsewhere. This hints at a new potential value-content standard for origin determinations for purposes of application of the reciprocal tariffs, raising major compliance concerns. This would be a major departure from the traditional interpretation of transshipment, which follows country-of-origin rules. The Administration has yet to clarify how CBP would enforce such a standard or whether formal rulemaking would follow.

China Tariff Extension

Finally, as anticipated, a new EO extends the 10% reciprocal tariff on Chinese goods under HTSUS 9903.01.25 through November 10, delaying a reversion to higher country-specific rates and signaling continued engagement with Beijing.

And the Fox Says… The Trump Administration continues to rewrite the rules of global trade, one executive order at a time. With new tariffs layered atop old ones — and origin rules possibly shifting beneath our feet — importers need to stay nimble, informed, and ready for more.

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

2. AI Diffusion Rule Remains in Limbo Despite White House Announcements on AI Exports

When reports began circulating that the White House would be releasing artificial intelligence (AI)-related directives in late July, businesses thought that the wait for guidance on the rescission of the Framework for Artificial Intelligence Diffusion would soon be over. Instead, on July 23, the Trump Administration unveiled “America’s AI Action Plan” and three related executive orders, including one aimed at “Promoting the Export of the American AI Technology Stack,” none of which mention the AI Diffusion rule.

Pillar III of the AI Action Plan addresses US leadership in AI Diplomacy and Security and calls on federal agencies to collaborate with the industry to explore leveraging location verification features on chips, expand controls on semiconductor manufacturing subsystems, pressure allied countries to adopt similar rules, and make use of tools such as the Foreign Direct Product Rules and so-called secondary tariffs to achieve greater international alignment.

The EO calls for the establishment of an “AI Exports Program” administered by the US Department of Commerce. Under this program, Commerce will solicit industry proposals for the deployment of “full-stack AI export packages” that are essentially business proposals targeting AI-related use cases in certain countries or regions. The “packages” would cover what types of items need to be exported (including computer hardware, data storage, cloud services, and networking), whether those items are made in the United States, security measures, and the intended users and applications.

And the Fox Says… Despite the purportedly business-friendly posture of the AI Action Plan and the EO, many of the underlying details remain murky. Those hoping the Trump Administration’s announcements would provide long-overdue answers about the rescission of the AI Diffusion rule or what its replacement will look like will have to keep waiting.

Contributors: Megan Barnhill and Derek Ha

3. DOJ Targets Customs Fraud, Recent Settlements Highlight Risks of Duty Evasion and Importance of Proactive Compliance

The US Department of Justice (DOJ) recently announced two significant settlements involving customs fraud on imports from China. In the first case, Grosfillex Inc., a patio furniture company, agreed to pay $4.9 million to resolve allegations that it violated the False Claims Act (FCA) by evading antidumping and countervailing duties (AD/CVD) duties on extruded aluminum parts from China. The government alleged that Grosfillex knowingly submitted false customs forms to CBP, misclassifying certain aluminum parts as not subject to AD/CVD and, in some instances, disguising the parts as furniture “kits” to avoid detection.

In the second case, Global Plastics LLC and Marco Polo International LLC, both subsidiaries of MGI International LLC, agreed to pay $6.8 million to resolve their civil liability under FCA for knowingly failing to pay customs duties on plastic resin imported from China. The companies voluntarily disclosed to CBP and the DOJ that, beginning in 2019, they had failed to declare the correct country of origin and value for certain imports, resulting in unpaid duties. The DOJ credited the companies for their cooperation, including timely self-disclosure, internal investigation, and remedial actions, which mitigated the consequences of the violations.

And the Fox Says… These settlements underscore the DOJ’s continued focus on customs fraud and the significant risks for importers who misclassify goods, misstate country of origin, or otherwise evade duties. Companies should ensure robust internal controls over import documentation, including accurate classification, valuation, and country-of-origin declarations. Importers should also consider the benefits of voluntary self-disclosure if violations are identified, as demonstrated by the credit given to MGI International and its subsidiaries. Whistleblower actions remain a key enforcement tool, so fostering a culture of compliance and transparency is critical to mitigate both legal and reputational risks.

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

4. Export Controls: US Regulators Give an Inch but Warn Against Taking a Mile

While the Trump Administration has taken some significant steps in recent months to ease export controls targeting China to facilitate ongoing trade negotiations, enforcement against export control violations seems to be as harsh as ever.   

The most high-profile example of the Administration’s seemingly softened stance is the announcement that it would grant export licenses allowing the sale of Nvidia’s H20 AI chips to China, a move that has been met with bipartisan criticism in Congress.  The Commerce Department’s Bureau of Industry and Security (BIS) also revoked several “is-informed” letters issued to US companies earlier this year that had imposed license requirements on sales to Chinese customers. The revocation of these letters freed up shipments of items such as electronic design automation (EDA) software, as well as aerospace- and petrochemical-related shipments. Taken together, can a conclusion be made that these developments portend an overall softer approach toward China (at least while trade negotiations between the United States and China unfold)?

Not exactly.

On July 28, BIS and the DOJ announced penalties against Cadence Design Systems netting just north of $140.6 million dollars. BIS and the DOJ charged Cadence with violating export controls by knowingly supplying hardware, software, and technology, including EDA equipment and semiconductor design technology, to a front company for the National University of Defense Technology, an institution placed on the Entity List back in February 2015. This enforcement action comes on the heels of June’s $4,250,000 civil penalty against a California-based company for providing digital power products to Huawei, also on BIS’s Entity List, without a license.

And the Fox Says… The ratcheting down of certain new controls imposed by the Trump Administration with respect to dealings with China does not go hand in hand with a lack of enforcement. With recent actions resulting in hefty fines against export controls violators, US regulators signal that they remain committed to rigorously enforcing US export regulations.

Contributors: Sylvia G. Costelloe, Megan Barnhill, Terry M. Frederick, and Derek Ha

5. Players at the Negotiating Table - August Plot Twists

Since the modified reciprocal tariffs dropped on July 31, new details have emerged on the recent trade “deals,” with both nation states and private companies being a part of the fray.

• Japan:  What US Trade Representative (USTR) staff initially called a “stackable” 15% reciprocal duty has quietly morphed into an all-inclusive ceiling, much like in the European Union (EU) deal, without which Japanese beef imports would be facing a 41.4% total tariff. Refunds are promised for excess duties, but certain autos and parts still sit at 25% due to the Section 232 action.

• European Union:  The July 27 framework caps most goods at 15% (meaning no reciprocal tariffs apply if the MFN rate is 15% or above), but no draft text has yet emerged. Steel, aluminum, and copper remain subject to 50% tariffs. The EU will reciprocate by eliminating duties on all US industrial goods, with further negotiations expected.

• China: With the August 11 Executive Order extending another 90-day pause and delaying higher rates on Chinese goods until November 10, President Trump suggested that China is taking “significant steps” to address US economic and national security concerns, citing ongoing discussions to remedy non-reciprocal trade arrangements. Trump has indicated that a deal is close and a meeting with President Xi Jinping could take place before the end of the year.

• Side Deals: President Trump confirmed in a Monday press conference that Nvidia has agreed to pay the government 15% of China chip sale revenues to secure BIS licenses to sell its H20 chips to China, and press reports are saying that AMD has agreed to a similar deal for its MI308 AI chips. This is the first pay-to-export model of its kind, raising concerns from both a legal and policy standpoint. In addition, US-India trade talks reportedly included negotiating objectives normally outside the scope of trade deals, including concessions for individual companies such as Chevron.

And the Fox Says… The takeaway from recent developments is that a deal is not truly “done” until there’s an agreed-upon text blessed by both sides. With the goal posts constantly on the move, it remains to be seen if these recent “framework” deals will hold firm or fall apart once the details need to be hammered out. We are monitoring announcements on other “deals” that may reportedly conclude by October.

Contributors: James Kim, Mario A. Torrico, and Fernando Ramírez

6. Bill Requiring Commerce to Report Export License Application Information to Congress Proceeds

On July 22, the US Senate passed the Maintaining American Superiority by Improving Export Control Transparency Act, sending it to President Trump for signature. This Bill appears to respond to concerns that BIS has approved numerous license applications to restricted entities in arms embargoed countries like China, despite a general presumption of denial.  We discuss the bill in further detail in our August 8 alert.

The Bill (if signed into law) mandates BIS to submit annual reports to the House Committee on Foreign Affairs and the Senate Committee on Banking, Housing, and Urban Affairs, beginning one year after the Bill becomes law. Reports must detail license applications, including applicant names, item descriptions with Export Control Classification Numbers, end-user details, license values, BIS decisions, and submission dates. They must also include end-use check details and aggregate statistics on all applications.

Reporting applies only to arms embargoed destinations listed in Country Group D:5 of the Export Administration Regulations (EAR). It covers license applications for exports, re-exports, releases, or in-country transfers to entities in D:5 countries on the BIS Entity List or Military End-User List. Applications involving entities not explicitly listed, such as subsidiaries or affiliates, are excluded from the reporting requirements.

And the Fox Says… Although the reports that would be required if the bill becomes law will be exempt from public disclosure, Congressional access to this information may increase scrutiny and the likelihood of BIS end-use checks. Companies applying for licenses to Entity List or Military End-User entities in China and other D:5 countries should prepare comprehensive information addressing denial presumptions and specific concerns, ensuring due diligence supports their justifications. They should also consider the benefits of an export license against potential public scrutiny and reputational risks.

Contributors: Sylvia G. Costelloe, Kay C. Georgi, Megan Barnhill, Christopher H. Skinner, and Maya S. Cohen 

7. Trouble in the Solar System: CFIUS Blocks Jupiter Acquisition Five Years After the Fact

On July 8, President Trump issued an Executive Order (EO) blocking the February 2020 acquisition of Jupiter Systems, LLC, and its subsidiaries in Hong Kong and China — a provider of video wall processors and displays — by Suirui International Co., Limited, a Hong Kong company majority-owned by China’s Suirui Group Co. We report in-depth on this EO in our August 7 alert.

The EO and accompanying statement contain limited details on the underlying basis for prohibiting the transaction, describing the transaction as presenting “a national security risk … relating to the potential compromise of Jupiter’s products used in military and critical infrastructure environments.”

The EO requires divestment within 120 days of all interests and rights in Jupiter and Jupiter’s tangible or intangible assets and property, with limited exceptions for assets and operations of the Jupiter subsidiaries in China and Hong Kong acquired or created after completion of the transaction, among other obligations. Those other obligations include restrictions on Jupiter’s involvement in ownership or operation of the excepted assets, data access restrictions, and physical and technical access restrictions, as well as regular certifications that the parties are in compliance with the EO.

And the Fox Says… As the Committee on Foreign Investment in the United States (CFIUS) has become more aggressive, so too has its willingness to take once rare actions like prohibiting acquisitions long after the fact. The EO is a clear example of the importance of conducting a thorough review of CFIUS considerations in transactions involving foreign investment, particularly where such investment involves countries of interest like China or where the target US business collects sensitive personal data, has critical technology, or exposure to critical infrastructure. Investors must be sure to understand the risks of declining to seek and obtain CFIUS clearance for such transactions.

Contributors: Sylvia G. Costelloe, Megan Barnhill, and William G. Stroupe II

8.Say Goodbye to De Minimis as Duties on Low-Value Shipments Challenge E-Commerce

The $800 de minimis exemption that has long fueled cross-border e-commerce is officially closing. A new Executive Order signed on July 30 suspends duty-free imports under Section 321 for nearly all imports, from every country, effective August 29, 2025. Those shipments must now be entered through traditional import formalities. However, a transitional regime has been implemented for transportation carriers and the similar delivering postal items shipped through the international postal system. During this six-month transition period, carriers may choose between collecting the full International Emergency Economic Powers Act (IEEPA) duty rate applicable to the country of origin or a flat charge of $80, $160, or $200 per item, depending on the applicable reciprocal tariff rate. After the six-month period, the country-of-origin reciprocal tariffs will apply across the board.

And the Fox Says…: For companies that have built their direct-to-consumer models around inexpensive, quick deliveries from overseas suppliers, the implications are immediate and expensive. CBP was processing more than four million de minimis packages each day. Now forcing these shipments through formal entry will add paperwork, broker fees, and most critically, duties that can exceed the value of merchandise for low-cost goods.

Operationally, companies should expect congestion at express hubs and postal facilities as systems built for information entries collide with formal entry requirements. In the short term, importers can lessen pain by consolidating parcels into larger shipments and leveraging available duty mitigation programs. A more in-depth review of the revocation of the de minimis exemption and impact on e-commerce and fashion companies is forthcoming.

We expect there will be some operational difficulties in implementing the formal entry requirements for low-value shipments. Companies should prepare sooner rather than later to address not only logistical difficulties but also higher costs.   

Contributors: Angela M. Santos, Andrew McArthur, and Yusra H. Siddique