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

1. Easing the tariff pressure: Trump’s strategic tariff adjustments offer temporary respite for producers and importers, particularly from China.
2. Public process for inclusion of additional aluminum and steel derivatives is underway.
3. More de minimis changes: Trump Administration announces duty reductions for low-value imports.
4. New USTR docking fees proposal seeks to balance trade and boost US shipbuilding against Chinese dominance.
5. Newly implemented restrictions on sensitive government and personal data to countries of concern.
6. Five new Section 232 investigations pave the way for potential tariffs in the near future.
7. Legal challenges against Trump’s use of IEEPA to implement tariffs stack up.

1. Cooling the Fire: A Tariff De-Escalation Trend Emerges

After months of aggressive tariff activity, the Trump Administration has taken several steps that, at least for now, suggest a measured pivot toward relief and recalibration.

First, the White House issued an Executive Order (EO) establishing a “non-stacking” rule for overlapping tariffs. Effective retroactively to March 4, the order prevents multiple tariffs from applying simultaneously by creating a hierarchy. Section 232 auto tariffs take precedence, followed by International Emergency Economic Powers Act (IEEPA) fentanyl tariffs (on Canada/Mexico) and then Section 232 steel/aluminum duties. This brings long-requested clarity for importers facing duplicative tariff liability on the same products. The EO indicates that the refund procedures for these non-stacking rules will be announced by US Customs and Border Protection (CBP) by May 16.

Second, a new presidential proclamation provides automakers assembling vehicles in the United States with a partial offset against 25% Section 232 auto tariffs on imported parts. Eligible manufacturers can claim a temporary credit (up to 3.75% of the MSRP) to mitigate the cost of tariffs on imported auto parts not eligible for United States-Mexico-Canada Agreement treatment. Automakers may allocate portions of the offset to authorized importers of record, including suppliers in their US production chain. While it will not fully neutralize tariff burdens, it offers targeted relief and incentives to localize supply chains.

The Administration also announced the first reciprocal tariffs “trade deal” with the United Kingdom (UK). In exchange for the UK’s elimination of certain trade barriers for US goods, the US will allow the importation of the first 100,000 vehicles annually at a 10% rate rather than the 25% auto Section 232 rate. The parties plan to negotiate an alternative arrangement regarding Section 232 steel and aluminum tariffs. The 10% baseline tariff remains in effect for most other products.

Finally, a fresh EO announced a 90-day mutual tariff reduction between the United States and China, cutting recent IEEPA-based reciprocal rates from 125% to 10% during a 90-day pause starting May 14. After 90 days, the tariff rate for China will go back to 34% as originally set forth under the reciprocal tariff regime, unless the administration takes further action. (Other tariffs on Chinese products, such as the IEEPA “Fentanyl” or Section 301 tariffs, will continue to apply.) This pause in escalation, tied to ongoing negotiations, hints at a willingness to dial down tensions.

And the Fox Says…: While these changes do not undo the Administration’s broader tariff regime, they reflect a notable shift; short-term relief measures are being used to manage long-term pressure campaigns. Importers and supply chain managers should use this moment to reassess exposure and revisit structuring options and tariff mitigation strategies before the pendulum swings again.

Contributors: James Kim, Antonio J. Rivera, and Angela M. Santos

2. BIS Sheds Light on New Public Process for Inclusion of Additional Steel and Aluminum Derivative Products

As part of the changes to the Section 232 duties announced in February (see here), the US Department of Commerce’s Bureau of Industry and Security (BIS) was directed to establish a public process to add additional steel and aluminum derivative articles beyond those identified on Annexes I of President Trump’s EOs (steel and aluminum). On May 2, BIS published an interim final rule (IFR) that sheds additional light on this public process, which is likely to impact downstream products that contain steel or aluminum content and are classified outside of Chapter 73 and 76 of the Harmonized Tariff Schedule of the United States (HTSUS). The rule is effective as of April 30 and comments on the process are due no later than June 16.

Under the IFR, US producers and their trade associations (representing one or more producers) may request to add derivative articles during three annual filing windows in May, September, and January. Each request must be concise (i.e., no more than 30 pages), yet data-rich, providing HTSUS classifications, import statistics, and a national-security narrative. BIS posts public versions of qualifying requests on regulations.gov, triggering a 14-day comment period in which other stakeholders may file comments for or against inclusion of such derivative articles. Within 60 days, BIS will publish a public notice either approving or denying the request and summarizing the reasons behind the decision. If an inclusion request is granted, the Federal Register notice will then be issued to add any included products to the annexes of the relevant presidential proclamations.

The first inclusion window opened May 1 and closes May 14; comments for or in opposition may be filed between May 15-28.

And the Fox says…: Producers and importers of downstream steel and aluminum derivative products should be aware of this 14-day comment and rebuttal windows currently ongoing in May, followed by a similar process in September and January 2026 as it has the potential to include additional products with the scope of the Section 232 duties. Parties should be prepared to act during the tight BIS comment windows, because once the gate closes, the tariff bite will be swift and steep.

Contributors: Andrew McArthur, Mario A. Torrico, and Antonio J. Rivera

3. Key Updates for Low-Value Shipments: De Minimis Revocation Takes Effect With Changes

As we previously reported, the de minimis exemption for low-value shipments of China origin was revoked as of May 2. However, recent negotiations between the United States and China have led to adjustments in the tariffs applied to these low-value shipments. On May 12, the White House announced significant changes to the tariff structure affecting low-value imports originating from China and Hong Kong.

Key Updates

According to the president’s May 2 EO, carriers delivering postal shipments must collect and remit duties based on either (1) an ad valorem duty rate or (2) a specific duty amount. The president’s May 12 EO lowers the duties imposed on low-value shipments delivered through the postal network:

1. Ad Valorem Duty: A decrease in the ad valorem duty rate from 120% to 54%.
2. Specific Duty: Where carriers collect a specific duty amount, the existing duty of $100 per postal item containing goods remains in effect. The anticipated increase to $200 per item on June 1 will not take effect.

The general applicable tariffs regimes will continue to apply to other non-postal low value shipments.

And the Fox Says…: While these changes provide some relief for importers of low-value shipments, the reinstatement of the de minimis exemption for products of Chinese or Hong Kong origin remains unlikely. Companies that previously relied on the de minimis program should focus on developing robust customs compliance processes to adhere to CBP regulations. Now that an entry processing and tariff collection process for low value goods has been developed, the government could further restrict the de minimis program for other countries and goods. Companies that continue to use this program should prepare to shift to formal or informal entries should the government further restrict the de minimis program.

Contributors: Lucas A. Rock and Angela M. Santos

4. Sailing Through Change: USTR’s New Proposal for Port Fees on Chinese Ships

In our March edition, we discussed the US Trade Representative’s (USTR) proposed docking fees for Chinese vessels at US ports, ranging from $500,000 to $1.5 million. This arose from a Section 301 investigation under the Biden Administration requested by US shipbuilding and metal unions. The investigation found China’s practices unreasonable, reducing competition, creating dependencies, and burdening US commerce.

However, the original proposal received stiff opposition from US shipping, agricultural, and energy sectors. In response, USTR has proposed an alternate remedy. The current plan imposes port fees on Chinese-operated and -built ships, exempting US-owned vessels, to counter China’s shipbuilding dominance. Fees start at $50 per net tonnage for Chinese vessels, increasing $30 annually over three years. Operators of Chinese-built ships face fees of $18 per net tonnage or $120 per container beginning in 180 days, with rates rising incrementally over three years. Fee remission is possible if US-built vessels of equivalent size are ordered. Fees are assessed once per voyage to the United States, avoiding multiple fees during US port calls. A fee on foreign-built car carrier vessels starts at $150 per car equivalent unit.

Exemptions include vessels in US Maritime Administration programs, short sea shipping, vessels with lower shipping capacity, and specific US-owned companies’ vessels. To support US shipbuilding, USTR plans to require US vessels for a portion of liquefied natural gas exports within three years. The agency will hold a hearing on May 19 regarding this proposal at the US International Trade Commission in Washington, DC.

And the Fox Says…: Whether USTR adopts this proposal or proposes another remedy, those using Chinese-built vessels will likely see higher operational costs. Rising fees may prompt importers to rethink logistics and explore cost-effective shipping alternatives. Staying informed and engaging in public comment opportunities is crucial as the Administration has demonstrated a willingness to address public concerns.

Contributors: Joy Marie Virga, Tyler J. Kimberly, and John Gurley

5. New DOJ Rule Restricts Some and Prohibits Other Exports of Sensitive Government Data and Personal Data to Countries of Concern and Covered Persons

On January 8, the US Department of Justice (DOJ) introduced the Rule on Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons. The Rule creates export-like restrictions and prohibitions on the transfer of certain types of sensitive personal data to countries of concern (i.e., China (including Hong Kong and Macau), Iran, North Korea, Cuba, Venezuela, and Russia). The Rule went into effect on April 8. We discuss the Rule in more depth in our alert published on April 29.

The Rule identifies specific categories of sensitive personal data (i.e., covered data), including human omic data, biometric identifiers, precise geolocation data, personal health data, personal financial data, and even demographic data, IP addresses, and advertising IDs. The Rule’s restrictions and prohibitions take effect when the transfer of the bulk data to a country of concern or covered person reaches the designated bulk threshold for the specific type of data (i.e., where a type of data of more than a specified number of US persons or devices is transferred). The Rule also covers government-related data, which includes information linked to current or recent former US government employees or officials. There is no bulk threshold for US government related data.

To ensure compliance, US entities engaging in “restricted” data transactions (in connection with vendor agreements, employment agreements, or investment agreements) must (among other things) comply with Cybersecurity and Infrastructure Security Agency data security requirements, establish data compliance programs, conduct annual audits, maintain detailed records of their data transactions, and retain reports on data transactions for a decade. Data transactions with countries of concern or covered persons involving “data brokerage”— a very broadly defined term — are prohibited outright, and such transactions causing covered data to go to other countries require onward transfer contractual provisions and reporting of violations. There are exemptions, including for certain corporate group transactions and certain types of data transactions involving financial services.

And the Fox Says…: On April 11, (i.e., three days after the Rule went into effect) the DOJ published new guidance on the rule including FAQs, a Compliance Guide, and an Implementation and Enforcement Policy. Our main takeaways from the new guidance are:

• The DOJ paused civil enforcement of the Rule until July 8 (but requires US persons to make good faith efforts to comply, or come into compliance with, the Rule during that period).
• The DOJ did not delay criminal enforcement.
• The DOJ emphasized the need for a comprehensive written compliance program akin to an export compliance program.
• The DOJ provided new sample language to prohibit onward transfer of covered data to a country of concern or covered person.

Contributors: D. Reed Freeman Jr. and Maya S. Cohen

6. Short-Lived Reprieve: Commerce Initiates Five New 232 Investigations on Imports of Semiconductors, Pharmaceuticals, Critical Minerals, Trucks, and Commercial Aircrafts

On April 2, when the Trump Administration issued EO 14257 announcing universal reciprocal tariffs, a number of products were exempted from these duties. Among the excluded imports were aluminum, steel, and automobiles already subject to additional duties under Section 232 of the Trade Expansion Act, while investigations on copper and lumber were ongoing. Since then, the US Department of Commerce has launched five additional Section 232 investigations.

As discussed in prior alerts, Section 232 investigations aim to restrict imports that threaten to impair the national security of the United States. The latest products under scrutiny are (1) semiconductors and semiconductor manufacturing equipment; (2) pharmaceuticals and pharmaceutical ingredients; (3) medium-duty and heavy-duty trucks, along with their parts and derivative products; (4) critical minerals and their derivatives; and (5) complete commercial aircraft, jet engines, and their components. Within 270 days of initiating an investigation, Commerce must deliver a comprehensive report to the president, assessing whether these imports occur “in certain quantities or under such circumstances” that impair the national security. This report must also include recommendations for actions the president should pursue in response to the identified threats.

In producing the report, Commerce will consider various factors, including the domestic production capabilities, foreign dependencies, vulnerabilities within supply chains, the economic repercussions of international trade practices, and the implications for domestic industries. For each of these investigations, Commerce is accepting written comments on the timelines below.

And the Fox Says…: Since the America First Trade Policy Memorandum identified Section 232 among the primary trade policy tools, Commerce has been initiating these investigations with remarkable speed. What the seven new investigations have in common are (1) abbreviated timeframes — often 21 days — to provide public comments; (2) no opportunity for a hearing, even if the statute provides for it; and (3) unclear scope given that almost all investigations also cover “derivative products” that are not defined. This perceived preference for speed over public feedback suggests that tariffs or quotas could be implemented shortly after Commerce’s report to the president. Importers and other stakeholders should act promptly to express their concerns and provide insights to ensure their perspectives are taken into consideration.

Contributors: Diana Dimitriuc-Quaia and Fernando Ramírez

7. See You in Court… Seven Legal Challenges to Trump’s Use of IEEPA So Far

In an unprecedented move, President Trump imposed a wide variety of tariffs on goods from China, Canada, Mexico, and the rest of the world under the IEEPA in response to “unusual and extraordinary” threats to the national security of the United States and its economy. With few exceptions, the tariffs affected a broad range of products and industries prompting a number of federal lawsuits challenging President Trump’s authority to unilaterally enact such tariffs under IEEPA.

As of May 9, seven lawsuits have been filed; three in the US Court of International Trade (CIT) and four in US Federal District Courts. These lawsuits uniformly contest the imposition of reciprocal tariffs, with some also targeting the Section 232 duties on aluminum and steel, and others challenging the IEEPA tariffs on Canada and Mexico linked to the so-called “border crisis.” Despite some differences in scope and structure, these cases share overlapping themes and arguments, including the pursuit of declaratory and injunctive relief sought by the plaintiffs. The main arguments hinge on the understanding that, without explicit congressional authorization, IEEPA duties violate both statutory and constitutional constraints on presidential powers. The plaintiffs also challenge the president’s rationale for imposing global tariffs, arguing that the EO’s justification — addressing trade deficits — fails to meet the criteria of an emergency or an “unusual and extraordinary” threat necessary to invoke IEEPA. This week, more than 140 house Democrats filed an amicus brief to support the tariff challenge initiated by 12 States’ Attorneys General, arguing that US Congress has the exclusive legislative power to impose tariffs and regulate commerce.

During the May 13 initial hearing for V.O.S Selections v. Trump, the CIT raised questions on defining an “unusual and extraordinary” emergency, the court’s authority to review such matters, and the applicability of the major questions doctrine. After hearing, the plaintiffs noted that the court’s avoidance of case-specific issues might suggest a willingness to consider a broader injunction against the tariffs.

And the Fox Says…: The mounting legal challenges against Trump’s use of IEEPA to impose tariffs will be cases of first impression for the CIT. As the DOJ seeks to consolidate all court challenges at the CIT, any ruling is expected to be appealed, potentially advancing to the US Supreme Court. Importers and other stakeholders must carefully assess their litigation strategies and closely monitor the progression of these cases. They should consider intervening or submitting amicus briefs to actively participate in the proceedings, thereby influencing the outcome and safeguarding their interests.

Contributors: Mario A. Torrico, Angela M. Santos, and Fernando Ramírez