As the (Customs and Trade) World Turns: July 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, transportation, electric mobility, e-commerce, shipping and logistics, and compliance, as well as for in-house counsel, importers, and compliance professionals.

In this July 2025 edition, we cover:

1. Ninth Circuit ruling highlights trade compliance risks under the FCA.
2. Extension of higher reciprocal tariffs, trade deals, and tariff letters.
3. Evolving tariff guidance, CBP’s first IEEPA tariff ruling, and additional steel derivatives.
4. Supreme Court ruling on nationwide injunctions and its potential impact on tariff-related litigation.
5. Initiation of auto parts inclusion process under the ITA.
6. Trump Administration’s reversion of certain sanctions on Syria.
7. The United States’ reaffirmation of firm stance on Cuba.

1. Ninth Circuit Affirms $26 Million FCA Judgment Against Importer for Customs Duty Evasion: Key Takeaways for US Importers

On June 23, the Ninth Circuit issued a significant decision in Island Industries Inc. v. Sigma Corp., Case No. 22-55063, affirming a $26 million False Claims Act (FCA) judgment against Sigma Corp. for evading antidumping duties on imported pipe fittings. The ruling not only underscores the substantial financial risks importers face under the FCA, but also clarifies important jurisdictional and statutory questions at a time of heightened government enforcement and tariffs (see here).

The case began when Island Industries, a domestic competitor, filed a qui tam FCA suit alleging that Sigma and others misclassified Chinese imports to avoid paying steep antidumping duties. The US Department of Justice (DOJ) declined to intervene, but Island proceeded, ultimately securing a jury verdict against Sigma for knowingly making false statements on customs forms. The court trebled the damages and imposed penalties, as mandated by the FCA, resulting in a $26 million judgment, plus over $2.7 million in attorneys’ fees and costs.

Key Legal Findings

• Jurisdiction: The Ninth Circuit held that federal district courts have subject matter jurisdiction over FCA qui tam actions seeking recovery of fraudulently avoided customs duties, distinguishing such cases from those “commenced by the United States,” which fall under the exclusive jurisdiction of the US Court of International Trade (CIT).
• Statutory Overlap: The court rejected arguments that the Tariff Act’s Section 1592 is the exclusive remedy for recovering underpaid duties, finding that US Congress intended the FCA and Section 1592 to coexist.
• Scienter Standard: The court reaffirmed that FCA liability can be based on deliberate ignorance or reckless disregard, not just actual knowledge. Sigma’s failure to make basic inquiries about its duty obligations was sufficient for liability.
• Liquidation Does Not Bar Recovery: The Ninth Circuit also rejected Sigma’s argument that liquidation of entries precluded any obligation to pay duties. The court emphasized that an importer’s obligation to pay antidumping duties arises at the time of entry, not at liquidation.

And the Fox Says…: This decision highlights the growing use of the FCA as an enforcement tool in the customs context. Importers should be aware that competitors may use qui tam actions to challenge duty evasion, and that lack of actual knowledge is not a defense if compliance efforts are lacking. Companies are advised to review and strengthen their trade compliance programs to mitigate FCA exposure and consult with counsel.

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

2. Trade Deals for Tariff Relief: US Extends Tariff Hike Pause Paving Way for Trade Deals and Tariff Letters

The Trump Administration delayed the imposition of higher reciprocal tariff rates on all countries until August 1. In the meantime, the president announced several bilateral trade frameworks and sent out unilateral tariff letters to certain countries.

Trade Agreements

• The United Kingdom (UK): In mid-June, President Trump implemented some key aspects of the general terms of the trade deal with the UK.
  • Automotive and Automotive Parts: An annual tariff-rate quota of 100,000 (65,205 in 2025) automobiles from the UK will be subject to a 10% tariff. Imports exceeding the quota will incur a 25% tariff. Additionally, automotive parts from the UK for use in UK automobiles will be subject to a total tariff of 10%.
  • Aerospace Products: Certain UK aerospace products will no longer be subject to the reciprocal tariffs and Section 232 tariffs on aluminum and steel. These provisions took effect on June 30.
  • Aluminum and Steel Articles: A lower 25% rate has been established in connection to the Section 232 steel and aluminum tariffs, and tariff-rate quota for aluminum and steel articles and derivatives will be established at a future time.
• China: As reported in our May newsletter, the United States and China agreed to maintain a 10% reciprocal tariff rate until August 12. In late June, both parties agreed on a framework concerning rare earth minerals exports, though details remain scarce.
• Vietnam: President Trump announced on Truth Social that a deal with Vietnam has been reached. While no specific details have been published, the announcement stated that Vietnamese imports will be subject to 20% (40% if the goods are transshipped). It remains unclear when this will take effect.

Reciprocal Tariffs and Tariff Letters

The Trump Administration issued an executive order (EO) delaying the imposition of specific reciprocal tariff rates until at least August 1. Meanwhile, the president sent letters to numerous countries threatening to impose reciprocal tariffs if a trade deal is not reached. Below is an overview of the threatened reciprocal rates based on letters sent as of July 10.

And the Fox Says…: The Trump Administration has shown that it will leverage threatened tariffs to negotiate deals with trade partners. We expect that more trade deals will be reached before the August 1 deadline.

Contributors: Denny Peixoto, Lucas A. Rock, and Fernando Ramírez

3. Tariff Talk: IEEPA Ruling, Smelt/Cast Reporting Guidance, and Steel Derivatives

In the past month, the US Customs and Border Protection (CBP) and US Department of Commerce have been active on the tariff front, with developments on both the International Emergency Economic Powers Act (IEEPA) and Section 232 steel/aluminum tariffs.

CBP Headquarters Ruling on IEEPA Tariffs

In the first ruling published on the IEEPA tariffs since their imposition, CBP confirmed that the substantial transformation test applied when determining the country of origin for trade remedy purposes, including the IEEPA tariffs. In addition, CBP found that a religious statue and altar imported from China were exempt from IEEPA-fentanyl and IEEPA-reciprocal tariffs because the products were appropriately classified in a duty-free Harmonized Tariff Schedule Chapter 98 provision covering religious artifacts.

Updated Section 232 Instructions on Smelt/Cast Reporting

CBP has also updated its instructions for importers reporting the country of smelt and/or cast for their imported products. In guidance issued on June 13, CBP stated that importers who do not know the country of smelt and/or cast for their aluminum and derivative products must report “unknown,” which will subject the product to a 200% duty rate — the rate applied to Russian aluminum products.

Additional Steel Derivatives Added

On June 16, the Bureau of Industry and Security (BIS) added eight steel derivative products (11 Harmonized Tariff Schedule of the United States (HTSUS) codes) subject to Section 232 duties, amending Annex 1 of Proclamation 10896. The 50% tariff on these new derivatives came into effect June 23. Additional derivatives, for both aluminum and steel, are expected to be announced as early as this month when BIS determines which of the hundreds of requests made during the first window of the formal inclusion process will be granted.

And the Fox Says…: Importers and the trade community should continue to closely monitor agency publications and guidance to ensure they are up to date on the latest requirements and reporting instructions as they relate to the tariffs. CBP rulings are also essential resources to consult to ensure that companies are exercising reasonable care when making imports, especially with the increasing complexity of these tariff regimes.

Contributors: Lucas A. Rock, James Kim, and Fernando Ramírez

4. Trump v. Casa: What the Restriction on Nationwide Injunctions Means for Tariff-Related Litigation

On June 27, the US Supreme Court issued a landmark decision in Trump v. Casa, Case No. 24A884, restricting federal courts’ authority to issue universal injunctions (nationwide injunctions). The ruling determined that injunctions must be limited to the lawsuit parties. The case arose from three lawsuits filed in different federal district courts. The plaintiffs challenged President Trump’s EO 14160 on birthright citizenship. The courts issued universal preliminary injunctions to block the order, prompting the government to appeal for a stay of the sweeping relief.

The Supreme Court examined whether the Judiciary Act of 1789 grants federal courts the equitable authority to issue such injunctions. The majority reasoned that when a federal court grants a nationwide injunction against the government, it “improperly intrudes” on the government, preventing policy enforcement against nonparties. The Court ruled that these injunctions exceed the equitable authority that Congress gave to federal courts and granted the government’s application for a partial stay of the injunctions, limiting relief to plaintiffs with standing. Although the case involved preliminary injunctions, the Supreme Court, in its reasoning, only mentioned universal injunctions without clarifying whether the scope of its ruling was restricted to preliminary injunctions or also applied to permanent injunctions.

And the Fox Says…: The Casa decision has broader implications, potentially affecting federal court lawsuits challenging executive directives. The IEEPA tariffs have sparked multiple federal court challenges, including one case that was initiated at the CIT and the other at the US District Court for the District of Columbia.

Commentators have noted that Casa is not likely to impact injunctions issued by the CIT, which is a court of national jurisdiction and will likely maintain its ability to issue nationwide injunctions on issues over which it has jurisdiction, such as tariff applicability. Notably, only the CIT decision involved a permanent, nationwide injunction, while the DC District Court’s injunction was limited to the plaintiffs in the case (both orders have been stayed pending appeal, see our alert here for more). For non-CIT litigation involving tariffs, however, nonparty importers should evaluate the feasibility of joining the case. A viable option addressed by the Supreme Court in Casa was class actions, but this instrument has its own limitations.

Contributors: Denny Peixoto and James Kim

5. New Commerce Process Opens Door for Auto Parts Tariff Inclusions

Starting July 1, Commerce will begin accepting requests to expand the scope of the 25% Section 232 tariffs to additional imported auto parts. The move follows President Trump’s March 26 proclamation directing Commerce to create a formal process for domestic producers to request tariff coverage for new auto parts articles.

The International Trade Administration (ITA) will administer the process, opening 14-day submission windows every January, April, July, and October. Each valid request will be posted publicly for a 14-day comment period. Final decisions must be issued within 60 days, and any approved inclusions will be published in the Federal Register.

Although the Federal Register notice laying out the detailed procedures is still pending, the ITA’s press release makes clear that the new process will resemble the steel and aluminum derivative inclusion process. Applicants must submit:

• A description of the part and its HTSUS classification.
• An explanation of why it qualifies as an auto part.
• Domestic production and import data.
• An argument for why increased imports threatens US national security or Section 232 objectives.

At the time of this writing, some details remain unknown, particularly regarding how “auto part article” will be defined (e.g., parts used in both automotive and non-automotive applications). But based on past experience, we expect a highly discretionary and potentially contentious process that will require close coordination between legal, trade, and supply chain teams.

And the Fox Says…: With new inclusion authority in hand, Commerce is poised to expand the reach of auto tariffs beyond the initial list. Companies with vulnerable supply chains should monitor these developments closely and prepare to engage in the inclusion or comment process where needed.

Contributors: Antonio J. Rivera and James Kim

6. Sanctions and Export Control Relief for Syria

On June 30, President Trump issued an EO removing most remaining US sanctions on Syria and beginning the rollback of export controls targeting that country.

The order revokes previous executive actions authorizing comprehensive sanctions against Syria, like the prohibition against US persons providing services to Syria. Last month’s General License 25 lifted many of these sanctions temporarily (see our summary here). The order makes that reprieve permanent. The US Department of Treasury’s Office of Foreign Assets Control removed the names of 500+ individuals and entities that had been blocked under the terminated Syria sanctions from the list of Specially Designated Nationals. However, 100+ individuals and entities — primarily members or supporters of Bashar al-Assad’s fallen government — remain blocked under the new Promoting Accountability for Assad and Regional Stabilization Sanctions.

Export controls appear headed for a similar rollback, but more remains to be done. The order waives restrictions required by the Syria Accountability Act and the Chemical and Biological Weapons and Warfare Elimination Act, while announcing a review of Syria’s designation as a state sponsor of terrorism. These actions set the stage for removing export controls against Syria, at least for EAR99 items. However, until BIS issues new regulations (likely in the coming months), the export, re-export, and transfer to or within Syria of all items subject to the Export Administration Regulations (EAR), except EAR99 food and medicine, remains restricted.

And the Fox Says…: Businesses can now largely operate in Syria without fear of sanctions repercussions, with two important caveats. First, keep screening all end users, counterparties, banks, and other parties involved in transactions. Second, until BIS takes further action, it remains imperative to seek authorization to export, re-export, or transfer to Syria any items subject to the EAR.

Contributors: Matthew Tuchband, Megan Barnhill, and Derek Ha

7. President Trump Signals Changes to the Cuba Sanctions Program

On June 30, President Trump re-issued the National Security Presidential Memorandum (NSPM-5) and a corresponding fact sheet to “strengthen the policy of the United States toward Cuba.” The original NSPM-5 was issued by President Trump on June 16, 2017, and this re-issuance repeats the original almost word-for-word, including some now-erroneous references to the “Administrator of the United States Agency for International Development” (an agency that the current Trump Administration has shuttered and which officially ceased as of July 1), and a five-year recordkeeping requirement (that was changed during the Biden Administration to 10 years).

The memorandum includes policy statements calling for the embargo to remain in place, ensuring that the “Wet Foot, Dry Foot” policy remains terminated, and enforcing the restrictions on unauthorized travel to Cuba. The memorandum directs the Secretaries of Treasury and Commerce, together with the Secretaries of State and Transportation, to initiate a process to adjust current regulations regarding transactions with Cuba by July 30.

And the Fox Says…: This memorandum is a shift back to the stricter Cuba policy of Trump’s first term and away from the liberalizations made during the intervening Biden Administration. It remains to be seen what the various agencies will do by July 30 to implement this new directive. Some of the changes made during the first Trump Administration, such as the Cuba Restricted List administered by the US Department of State, remain intact, so there may be little to do on that front. But Treasury is likely to reverse many, if not all, of the liberalizing regulatory amendments it made over the last four years (e.g., authorization for “U-turn” transactions in 515.584(d) of the Cuban Assets Control Regulations).

Contributors: Matthew Tuchband, Megan Barnhill, and Maya S. Cohen