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What Every Multinational Should Know About … Preserving the Right to IEEPA Tariff Refunds

Ali Fitzgerald — Fri, 05 Dec 2025 17:36:24 +0000

Any company that has imported goods subject to the Trump administration’s fentanyl-based tariffs or reciprocal tariffs — i.e., the tariffs levied pursuant to the International Emergency Economic Powers Act (the IEEPA tariffs) — needs to consider filing an action in the U.S. Court of International Trade (CIT) to preserve the possibility of recovering refunds of these tariffs. Deadlines for filing initiating an action depend on when the importer entered goods, with the earliest potential deadline coming up on approximately December 15, 2025. The deadlines, however, should be considered to be on a rolling basis, as each entry is on its own timeline.

Now that several dozen complaints have been filed by a variety of importers, including Costco Wholesale Corporation, we anticipate that there will be a large increase in such protective filings over the coming weeks.[1] The prospect of such refunds — which could collectively total 100 billion dollars or more — stems from the ongoing U.S. Supreme Court consideration of whether IEEPA allows President Trump to imposed broad-based tariffs. During last month’s oral argument on this issue, the justices identified several potential bases for striking the tariffs down.[2] Justice Kagan suggested that the administration’s implementation of the IEEPA tariffs via executive orders infringed on Congress’s power to impose taxes and regulate foreign commerce, while Justice Alito suggested that perhaps it was not even possible for Congress to delegate broad-based tariff-setting authority to the Executive Branch under the non-delegation doctrine. Chief Justice Roberts explored the impact of the “major questions doctrine,” which raises the issue of whether Congress is required to plainly state its intent to delegate such a major power as the authority to impose broad-based tariffs. The hearing also included questions on whether the Trump administration’s stated justifications for the fentanyl tariffs and reciprocal tariffs — respectively, the influx of opioids into the United States and long-standing trade imbalances between the United States and other countries — constitute the kind of emergencies Congress meant for IEEPA to address.

The Court’s decision, which is expected within the next few months (but could be delayed to as late as June 2026), could produce a variety of outcomes. The Court could determine that the IEEPA tariffs are indeed legal, either on narrow grounds or in full, leaving the Trump administration’s tariff directives to CBP untouched and rendering the issue of IEEPA tariff refunds moot. It could invalidate the tariffs but remand the case back down to the lower courts for further development of the issue of how refunds should be handled. Or it might explicitly address the issue of refunds. But the contingency that prudent U.S. importers should now be preparing for is any variation of a decision that strikes down the tariffs. This is because the issue of refunds — in the words of Justice Barrett — likely will create “a mess.”

As a general matter, importers can seek refunds of overpaid duties by filing a post-summary correction (PSC) or, after liquidation has occurred, filing a protest for each customs entry for which duties (or other aspects of the entry) are disputed. Liquidation generally must occur within a year, regardless of whether CBP has yet decided on any outstanding PSCs for the entry. Following liquidation, importers have 180 days to file a protest with CBP and, later, 180 days to appeal any adverse decision on a protest to the CIT. Upon a ruling favorable to the protesting importer, CBP “re-liquidates” the entry and refunds the overpaid duties.

But when it comes to the IEEPA tariffs, it is not clear whether these duties are protestable. 19 U.S.C. § 1514 only allows for protests where CBP has potentially exercised its own decision-making authority. Where CBP carries out non-discretionary or “ministerial” activities, it is possible to argue that there is no protestable decision of CBP because President Trump ordered CBP to assess the fentanyl and reciprocal tariffs, thus giving CBP no discretion to do anything else. In multiple cases, the international trade courts have determined that, where CBP is acting in a ministerial fashion and collecting tariffs that were set by law, the assessment of such tariffs is a non-discretionary activity for which protest is precluded.[3]

Against this background, filing an action at the CIT would be considered a form of insurance, as initiating an action at the CIT allows the importer to request a preliminary injunction that would bar CBP from liquidating any of the importer’s entries involving IEEPA tariffs, pending resolution of the Supreme Court’s IEEPA tariff ruling and any related remand. Once such a preliminary injunction is in place, CBP would have no alternative but to honor the court’s injunction, thus negating the risk that CBP could choose to disallow any protests against liquidation filed on the basis of the pending Supreme Court decision. Although the degree of risk of such a denial is unknown, given the size of the potential refunds at issue, for any major importer, the risk-reward calculus likely favors filing an action.

The timing of when to file varies, depending on a particular importer’s import patterns. To ensure full coverage of all entries, importers need to act before even their earliest IEEPA tariff entries are liquidated. Because CBP typically liquidates customs entries approximately 314 days after entry, importers who paid under the earliest applications of the fentanyl tariffs, which went into effect on February 4, 2025, have upcoming tentative liquidations — and corresponding CIT filing deadlines — on and after December 15, 2025. Importers who paid duties pursuant to the earliest applications of the reciprocal tariffs, which went into effect as early as April 5, 2025, similarly have upcoming tentative liquidations on and after February 13, 2026.

In assessing this risk, it also is important to take into account the likely posture of the Trump administration, which has tended to take steps to retain tariffs even when one would expect a refund would be forthcoming. As an example, in some cases the administration imposed tariffs for only a few days before announcing that they would be suspended, generally on the basis of an agreement reached with a foreign government.[4] Even in the cases of tariffs that were repealed or suspended after a few days, the administration often has not refunded the extra tariffs collected during that short period, even though it could have chosen to do so. An additional example arises in the context of the de minimis exception, where the Trump administration revoked and then quickly reinstated the duty-free treatment of so-called de minimis imports without clarifying the possibility of refunds for goods imported during the short window when the tariffs applied.[5] Thus, one cannot overlook the possibility that the administration will order CBP to disallow any protests filed on the basis of the pending IEEPA tariff lawsuit.

Further, there is a class of tariff entries that are at particular risk, which is those entries that occurred prior to the issuance of the Supreme Court’s IEEPA tariff decision. Even if the Supreme Court strikes down IEEPA tariffs as unlawful, CBP could argue that any protests of IEEPA tariff liquidations prior to the Supreme Court decision were invalid. Their reasoning could be that, at the time the protest was due, CBP had no discretion to take any action other than imposing the duties because there was no court decision directing it to do otherwise. Given the uncertainty of the situation, and even some of the justices’ own comments on the unpredictability of how IEEPA tariff refunds will work,[6] we accordingly recommend that importers consider CIT preliminary injunction filings to fully protect their ability to collect potentially enormous refunds. The risk-reward calculus when balancing a large refund against even a small chance of losing out on the refund for many importers will dictate adopting a cautious approach.

In addition to filing in the CIT, U.S. importers can take other steps to preserve their ability to receive refunds. These include:

Tracking Customs guidance and CSMS messages on the topic of IEEPA refunds.
Preserving electronic and hardcopy records of all customs entries.
Filing requests for CBP to delay the liquidation of entries.
Immediately seeking CIT review for protests that go unanswered by CBP for more than 30 days.

If you have questions about these matters, please reach out to the authors or your ��; Larder relationship attorney.

[1] See Jenny Gross, Costco Sues Trump Administration for Refund of Tariffs, New York Times (Dec. 2, 2025), ; Costco Wholesale Corporation v. United States et al., Complaint (Nov. 28, 2025), Court of International Trade Case No. 1:25CV00316.

[2] Oral Argument – Audio and Transcript for Learning Resources, Inc. v. Trump, President of U.S., Supreme Court of the United States (Nov. 5, 2025), available at .

[3] See Rimco Inc. v. United States, 98 F.4th 1046, 1053 (Fed. Cir. 2024) (stating that CBP decisions are only protestable under 19 U.S.C. Section 1514(a) when CBP actually “engage[s] in some sort of decision-making process”); U.S. Shoe Corp. v. United States, 114 F.3d 1564 (Fed. Cir. 1997), ��ڴ�’d, 523 U.S. 360, 118 S. Ct. 1290, 140 L. Ed. 2d 453 (1998) (Where CBP was directed by Congress to apply a “Harbor Maintenance Tax” as if it were a duty, such an application was not protestable under Section 1514(a) because “Customs [had] not made any decision—it merely passively collect[ed] money in the amount required by the statute.”).

[4] For instance, between March 4 and March 6, 2025, a temporary 25% tariff was imposed on certain Mexican‑origin imports. Although the measure was suspended after only two days, CBP has taken the position that importers whose qualifying goods entered the United States during that brief period remain liable for the 25% duty.

[5] See David Lawder, Helen Reid, Lisa Baertlein and Lisa Barrington. Trump Pauses De Minimis Repeal as Packages Pile Up at U.S. Customs, Reuters (Feb. 7, 2025), .

[6] Oral Argument – Audio and Transcript for Learning Resources, Inc. v. Trump, President of U.S., Supreme Court of the United States (Nov. 5, 2025) at 153-54, (“JUSTICE BARRETT: [T]ell me how the reimbursement process would work. Would it be a complete mess? … It seems to me like it could be a mess.”).

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From the White House to the Workplace: Employment Law in the Second Trump Era

adachel@foley.com — Mon, 22 Sep 2025 20:44:45 +0000

The post From the White House to the Workplace: Employment Law in the Second Trump Era appeared first on ��; Lardner LLP.

Clearing the Path: Environmental Permitting in the Era of Renewed American Manufacturing

adachel@foley.com — Wed, 22 Oct 2025 17:28:46 +0000

Key Takeaways:

Environmental reviews can cause major project delays. Manufacturers must navigate complex federal, state, and local approvals that can stall construction if not planned early.
Some reforms are streamlining — but vary by state. A unanimous Supreme Court ruling and new federal guidance aim to speed NEPA reviews, while states take differing approaches to environmental review.
Proactive permitting strategies — through early consultation, smart siting, and community engagement — help manufacturers avoid delays and move projects forward with confidence.

Manufacturers expanding in the U.S. often plan for tax incentives, labor, and logistics—but not the time it takes to secure environmental approvals from state and federal regulators. Whether building new, expanding, or upgrading existing facilities, companies may encounter a complex mix of local, state, and federal permitting requirements—covering air emissions, stormwater and wastewater discharges, wetland impacts, water withdrawals, and impacts to wildlife or endangered species. In some cases, projects may also trigger review under the National Environmental Policy Act (NEPA) or a state-level equivalent.

These reviews are intended to protect air, water, and ecosystems and to help ensure that growth is sustainable. These processes are not just bureaucratic hurdles—they’re path critical. As the U.S. manufacturing renaissance accelerates, companies that plan ahead can turn environmental permitting from a source of delay into a competitive advantage. Some recent federal and state reforms can make reviews faster, more focused, and more predictable—if businesses know how to navigate them.

Environmental Approvals Can Cause Costly Delays

For decades, environmental permitting has long been a source of delay for complex construction projects, particularly those involving federal approvals or sensitive environmental resources. Delays in permitting can stall projects for months or even years, adding uncertainty and cost.

Take NEPA reviews, as just one example. NEPA, originally designed to ensure that federal agencies “look before they leap,” requires regulators to assess the environmental impacts of “major federal actions” before making permitting decisions. Under NEPA, and its state equivalents, agencies must prepare an Environmental Impact Statement—or EIS—when a project could significantly affect the environment; it’s a detailed report that evaluates potential impacts and alternatives before a final decision is made.

EISs once spanned hundreds of pages but now routinely run into the thousands of pages, and reviews and approvals can take years for agencies to complete. EISs are costly. They require retention of experts to study a host of potential issues including species, wetlands, noise, traffic, geological, and emission impacts.

In some cases, opponents to a proposed construction project use NEPA and its state counterparts strategically to delay or derail development by challenging the scope or sufficiency of the EIS.

A Unanimous U.S. Supreme Court Urges More Efficient Environmental Reviews

Recent actions by the U.S. Supreme Court and the Trump Administration signal a more streamlined, focused approach to environmental review—one that could help manufacturers move projects forward with greater speed and certainty.

Leading the way is a recent unanimous U.S. Supreme Court decision in Seven County Infrastructure Coalition v. Eagle County. Seven County assessed a lower court decision that invalidated a 3,600-page EIS for failing to analyze upstream and downstream environmental impacts not directly caused by the proposed railroad project at issue.[1] The unanimous Seven County Court called for a “course correction,” warning that NEPA had been transformed from a “modest procedural requirement” into a “blunt and haphazard tool” used to slow or stop infrastructure projects.[2]

The Court emphasized that agencies must focus on the project before them—not hypothetical ripple effects from other projects “separate in time or place.”[3] The Court made clear: “A relatively modest infrastructure project should not be turned into a scapegoat for everything that ensues from upstream oil drilling to downstream refinery emissions.”[4]

This decision does not mean environmental review is going away, but it may signal a more balanced approach to such reviews, at least at the federal level. Agencies still need to take a “hard look” at environmental impacts—but courts must give agencies room to make reasonable, scientific decisions. And when agencies stay within their lane, they should not be second-guessed for not analyzing attenuated impacts.

This clarification is significant for manufacturers, who often face NEPA-triggered delays even when their projects are environmentally sound and economically vital.

The Federal Government Aims for More Efficient Reviews, Too

The Seven County decision dovetails with changes from the White House Council on Environmental Quality (CEQ). On November 12, 2024, in Marin Audubon Society v. Federal Aviation Administration, the D.C. Circuit Court of Appeals held that CEQ lacks the authority to issue binding regulations.[5] This was a shocking ruling—CEQ has been promulgating NEPA regulations for almost 50 years under the auspices that its regulations were binding. Invalidating CEQ’s regulations erased EIS and NEPA rules that had been incorporated by many federal and state agencies.

On February 25, 2025, following the Marin Audubon decision and an Executive Order from President Trump (EO 14154), CEQ withdrew its binding NEPA regulations and is now issuing non-binding guidance to help agencies align their procedures with recent case law.[6] While not binding, CEQ encourages agencies to emphasize:

Shorter timelines for EISs,
Clearer scoping to avoid analysis of speculative or unrelated impacts,
Greater interagency coordination, and
Public transparency throughout the review process.

The bottom line: federal agencies are being encouraged to move faster, stay focused, and avoid speculative analysis.

Some States Are Following Suit While Others Stay the Course

As federal agencies move toward faster, more focused environmental reviews, many states are modernizing their own permitting systems with digital tools, clearer timelines, and greater transparency. But not all states are moving in the same direction.

Standardization in Virginia—Virginia’s Department of Environmental Quality launched a major overhaul of its stormwater permitting process which took effect July 1, 2024. The new handbook consolidates and modernizes regulatory guidance for new development, redevelopment, and upgrades to existing sites. It seeks to (a) streamline permit review timelines, (b) standardize best management practices (BMPs), and (c) incorporate stakeholder feedback through a new committee. Its goal is to create a more predictable and transparent permitting framework.

Digitalization in Arizona—Arizona’s Department of Environmental Quality (ADEQ) implemented a fully digital environmental permitting and compliance portal. It allows businesses to apply for permits, submit reports, and track compliance online, significantly reducing administrative burdens and improving transparency. Arizona’s mission is to deliver “government at the speed of business.”[7] Early reports indicate that the online portal has reduced permit processing times by 93%, digitized 98% of services, and reaped an annual economic benefit of about $164 million.[8]

Project-Specific Streamlining in California & Massachusetts—Streamlining environmental reviews at the state level is often driven by specific project types. In June, California signed into law revisions to the California Environmental Quality Act that would exempt certain housing projects from environmental review.[9] Similarly, Massachusetts is in the middle of a rulemaking to streamline environmental reviews for certain housing, ecological restoration, and urban renewal plans.[10]

Others Push Back—Not all states are embracing the federal trend. Nineteen state attorneys general opposed CEQ’s withdrawal of its NEPA regulations,[11] and some states are strengthening their own environmental review laws.[12]

The takeaway for manufacturers? State-level permitting dynamics vary widely. Understanding where a state stands—whether it’s streamlining or adding new layers of review—should be a key part of any site selection strategy.

Change in NEPA Approach May be a Relief for Industry

For manufacturers, recent changes to NEPA and environmental reviews at the federal level—and in some states—offer real business value: faster time to market, fewer legal surprises, and greater confidence in long-term planning. For manufacturers investing in clean technologies, advanced manufacturing, and energy transition infrastructure, a streamlined permitting environment also helps level the playing field—while still ensuring meaningful environmental oversight.

Of course, NEPA is just one piece of the puzzle. Manufacturers must still navigate a range of other environmental approvals and resource considerations. Permitting strategy should be integrated into early-stage planning, not treated as a post-site-selection hurdle. But with the right strategy, permitting can be managed and growth can move forward with confidence.

Other Environmental Permitting and Resources Integral to Development

While the Trump Administration and U.S. Supreme Court have signaled a move to more streamlined environmental reviews and a major overhaul of NEPA, many development projects or expansions that lack a federal nexus and do not otherwise implicate NEPA or its state counterparts may nevertheless need to secure a panoply of other environmental permits at the local, state or federal level and may require significant environmental resources that will be essential to making siting decisions and that can have a significant impact on project cost and timing.

An expansion project or new development could require permits for air emissions, stormwater discharges, wastewater discharges, wetlands impacts, impacts to endangered species or their habitat, and impacts to shorelands, among others. Local governments may have additional permitting requirements related to zoning.

Beyond permitting, companies will need to consider their natural resource needs when siting a project. For example, semi-conductor manufacturers and data centers, which require significant volumes of water for their operations, will need to ensure they have an adequate water supply prior to developing or expanding in an area. Whether supplying water through contracts with an existing water supplier, seeking a new surface water right, or pumping groundwater, each may trigger additional regulatory requirements.

Practical Permitting Strategies

Manufacturers should proactively strategize to ensure a comprehensive, though efficient, plan is in place for securing all necessary permits. Missing a single permit, or underestimating how long a permit could take to secure, could put an indefinite hold on a project and increase costs as a result. To avoid such pitfalls, some things manufacturers might consider are:

Early consultation. Getting experts involved early in the process can help determine the universe of applicable environmental permits. Likewise, engaging with relevant state and federal regulators early can help things move more smoothly going forward, and many agencies require pre-permit reviews prior to permit application submittal.
Site selection. As noted above, not all sites are created equal. For example, a facility requiring a major source air permit located in an area designated as being in “nonattainment” will trigger more burdensome requirements, including the potential need for emission credits, which can be scarce or prohibitively expensive to acquire in many areas. Siting in an area with endangered or threatened species, wetlands, or historical artifacts could trigger additional, potentially lengthy, agency consultations and procedures.
Public involvement. States and agencies also have different procedures for when and how the community may get involved in project development or expansion. In some cases, a project opponent can contest the issuance of a permit, triggering a lengthy administrative process similar to a court proceeding. Some states have provisions that allow a permittee to abbreviate this process. In Texas, for example, a permit-seeker that knows it will likely be challenged can opt to send its permit application directly to an administrative body, bypassing the months-long process of establishing who, if anyone, is sufficiently affected by the permit to bring a challenge. More fundamentally, building a relationship with the relevant community may create opportunities for a permittee to address concerns without having to go through a hearing in the first place.

It’s an exciting time for American manufacturing and development. Environmental review and permitting requirements can be complex and highly technical, and can be a thorn in the side of development and expansion. However, with the right permitting strategy these requirements can be managed and met in due course rather than creating a stumbling block for new growth.

[1] Seven Cnty. Infrastructure Coal. v. Eagle Cnty., 605 U.S. ___ (2025).

[2] Id. at slip op. at 12, 13.

[3] Id. at slip op. at 19.

[4] Id.

[5] Marin Audubon Soc’y v. Fed. Aviation Admin., 121 F.4th 902 (D.C. Cir. 2024).

[6] Council on Env’t Quality, Memorandum for Heads of Federal Departments and Agencies: Implementation of the National Environmental Policy Act (Sept. 29, 2025), .

[7] Ariz. Gov’t Transformation Off., The Arizona Management System: An Evaluation of Continuous Improvement in State Government 1–2 (Dec. 2022), .

[8] Ariz. Dep’t of Env’t Quality, Project Investment Justification: myDEQ Underground Storage Tank Applications Improvements – FY24, at 9–10 (June 21, 2023), .

[9] Cal. Assembly Bill No. 130, 2025, .

[10] Mass. Exec. Off. Energy & Envt’l Affairs, Background Document on Proposed Regulations by Massachusetts Environmental Policy Act (MEPA) Office, Oct. 7, 2025, .

[11] Comments of Attorneys General re: Interim Final Rule – Removal of National Environmental Policy Act Implementing Regulations, Mar. 27, 2025, Docket No. CEQ-2025-0002.

[12] See, e.g., New York Dep’t of Envt’l Conservation, The Environmental Justice Siting Law, last visited Oct. 20, 2025, (agency undergoing rulemaking to implement law requiring agencies, as part of their environmental review, to consider whether an action may cause or increase a disproportionate pollution burden on a disadvantaged community); Held v. Montana, 419 Mont. 403 (2024) (finding unconstitutional a provision of the Montana Environmental Policy Act that precluded an analysis of greenhouse gas emissions during environmental reviews).

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D.C. U.S. Attorney’s Office Seizes on Crypto Crime Enforcement Opportunity with Announcement of Strike Force

Ali Fitzgerald — Mon, 24 Nov 2025 14:47:36 +0000

Cryptocurrency investment scams perpetrated by transnational criminal organizations (TCOs) located in Southeast Asia are on the rise. Colloquially known as “pig-butchering” scams, TCOs build trust with victims, convince victims to invest in real cryptocurrency, and then con victims into transferring the real cryptocurrency into fake cryptocurrency investments. The TCO scammers then launder the cryptocurrency through sophisticated methods to include the utilization of accounts that are outside of U.S. jurisdiction. According to the U.S. Secret Service (“USSS”), “this scam industry defrauds Americans of nearly $10 billion per year.”[1] Now, the U.S. Attorney’s office for the District of Columbia has announced it has a plan to stop them.

On November 12, 2025, U.S. Attorney for the District of Columbia Jeanine Ferris Pirro announced the creation of the Scam Center Strike Force (“Strike Force”) in partnership with several law enforcement and Federal agency partners.[2] The Strike Force’s stated goal is to “secure America against Southeast Asian cryptocurrency-related fraud and scams”[3] by recovering stolen assets used to evade sanctions and facilitate scams and returning those assets to victims.

Civil Forfeiture As A Long-Armed Enforcement Tool

The Strike Force will use civil forfeiture actions to reclaim not just the stolen funds but also the infrastructure utilized to facilitate the scams, such as satellite terminals used for internet connection. While the seizure of property does require judicially authorized warrants, subsequent civil forfeiture actions do not require any initiation of criminal proceedings. These actions are against the property itself and do not require the property to be owned or in the actual custody of the perpetrators of the alleged criminal activity at the time of the seizure. The government must only explain in the warrant by a preponderance of the evidence, or more likely than not, that the property is linked to criminal activity. If the government can meet this low burden, law enforcement officials have the authority to seize and take control of the property for eventual forfeiture.

The DOJ’s civil forfeiture authority is extremely broad and can pose significant complications for those whose property is seized. Property owners with no actual knowledge of the alleged criminal activity may still lose possession of their items, which can be difficult and time-consuming to contest, as the property owners must both establish ownership of the property and in some instances prove that the property was not connected to a crime. However, proponents counter that civil forfeiture is an essential tool in combating organized crime as the seizure of criminal enterprises’ assets and proceeds materially disrupts their operations.

Despite their arguments to the contrary, foreign-based cryptocurrency exchanges are not beyond the reach of U.S. jurisdiction in the context of civil forfeiture. Statutes empowering the Strike Force to engage in civil forfeiture, such as the terrorism subsection of the Civil forfeiture statute, [4] explicitly extend to foreign and domestic assets. DOJ has strong policy and enforcement incentives to use civil forfeiture proceedings under this statute against TCOs, particularly those designated as Foreign Terrorist Organizations.

Targets and Trends

The Strike Force is identified and focused on Chinese-organized crime affiliates with operations in Cambodia, Laos, and Burma as key leaders of these cryptocurrency investment schemes. The Strike Force has already conducted operations in Myanmar, Indonesia, and Thailand, and has seized and forfeited over $400 million dollars in scam-obtained cryptocurrency funds. As part of U.S. Attorney Piro’s November 12 Strike Force announcement, she noted the Strike Force has initiated civil forfeiture proceedings seeking another $80 million in stolen funds.

Though the Strike Force is focused on Southeast Asia, the rise of cryptocurrency investment scams is a global trend. For example, on November 14, 2025, the Department of Justice announced five guilty pleas and over $15 million in civil forfeiture actions against the Democratic People’s Republic of Korea for “multimillion-dollar virtual currency heists at four overseas virtual currency platforms in 2023,” among other charges.[5] In addition, on October 14, 2025, the DOJ announced the largest ever forfeiture action against approximately $15 billion in Bitcoin tied to a multinational business conglomerate’s alleged involvement in cryptocurrency investment fraud schemes run through forced labor compounds.[6] The Bitcoin was previously stored in unhosted digital wallets whose private keys the chairman and founder of the conglomerate had in his possession.

Moreover, the Strike Force is aligned with a broader shift in U.S. strategy for addressing cryptocurrency scams. In April 2025, U.S. Deputy Attorney General Todd Blanche published a memorandum titled “Ending Regulation by Prosecution,” which outlined the DOJ’s approach to digital asset enforcement under the Trump Administration.[7] Blanche stated that the DOJ would “focus on prosecuting individuals who victimize digital asset investors, or those who use digital assets in furtherance of criminal offenses such as terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.”[8] Further, DOJ prosecutors would start prioritizing cases “that hold accountable individuals who (a) cause financial harm to digital asset investors and consumers; and/or (b) use digital assets in furtherance of other criminal conduct.”[9] The Strike Force is a clear step in this direction.

How To Prepare for the Strike Force’s Increased Enforcement

Corporations operating in sectors related to cryptocurrency or any companies dealing in large sums of digital assets on foreign exchanges should consider the creation of the Strike Force a warning sign that their assets may be at risk of being frozen even absent direct criminal exposure. Notably, the laws authorizing the Strike Force’s activity can be applied to persons that arguably facilitate violations or are strictly liable, including situations where the person “should have known” that they were facilitating a violation.

Given the heightened enforcement risk, those in the cryptocurrency space should engage in the following best practices:

Implement robust anti-money laundering (AML) and know your customer (KYC) programs to ensure regulatory compliance.
Maintain detailed records surrounding trades, transactions, and internal communications to assist in challenging government-initiated forfeiture actions.
Consider utilizing blockchain analytic tools to ensure compliance with regulatory measures and establishing relationships with cryptocurrency forensic experts in order to ensure adequate preparation for contested forfeiture proceedings should there be a need to challenge government tracing methodologies or to assert “innocent owner” defenses.
Establish mechanisms for responding to any U.S. or foreign government inquiries and legal process demands, as cryptocurrency-related investigations frequently involve international cooperation among law enforcement and government agencies. This is particularly true for non-U.S. companies.

If you have questions or concerns about the issues raised in this article, please reach out to any of the authors or your ��; Lardner attorney.

The Foley International Government Enforcement Defense & Investigations Team is monitoring all international trade, government enforcement, and regulatory developments, which we are posting as they occur on our Tariff & International Trade Resources blog. For additional resources surrounding the mitigation of risks posed by the Administration’s crackdown on FTOs and the DOJ’s utilization of civil forfeiture authorities, our article on “Foreign Terrorist Organization Designations Provide DOJ With New Civil Forfeiture Authorities and Opportunities/,” provides additional compliance assessment information. If you would like to see future updates on related topics, please sign up for our Tariff & International Trade blog —

[1] Press Release, New Scam Center Strike Force Battles Southeast Asian Crypto Investment Fraud Targeting Americans, U.S. Secret Serv. (Nov. 12, 2025), .

[2] The Strike Force is a collaboration between the U.S. Attorney’s Office for the District of Columbia, the Department of Justice (“DOJ”) Criminal Division, the Federal Bureau of Investigation (“FBI”), USSS, the State Department, the Department of Treasury’s Office of Foreign Assets Control, and the Department of Commerce. Id.

[3] Id.

[4] See 18 U.S.C. Section 981(a)(1)(G).

[5] See Press Release, Justice Department Announces Nationwide Actions to Combat Illicit North Korean Government Revenue Generation, U.S. Dep’t Just. (Nov. 14, 2025), .

[6] See Chairman of Prince Group Indicted for Operating Cambodian Forced Labor Scam Compounds Engaged in Cryptocurrency Fraud Schemes, U.S. Department of Justice (Oct. 14, 2025),

[7] Memorandum from Deputy Attorney General Todd Blanche, Ending Regulation By Prosecution (Apr. 7, 2025), .

[8] Id. at 1.

[9] Id. at 2.

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What Every Multinational Should Know About … Best Practices for a Customs Disclosure in the New Tariff Environment

adachel@foley.com — Thu, 23 Oct 2025 20:32:32 +0000

In the current global trade environment, importers are facing an unprecedented convergence of pressures. A sharp rise in new tariffs, the increasingly sophisticated data-mining of entry data by U.S. Customs and Border Protection (CBP), and a more aggressive government-enforcement posture have made even minor compliance failures potentially costly. In this context, the voluntary self-disclosure mechanism — long recognized by trade professionals as a key risk-mitigation tool — has taken on new urgency. For importers that uncover potential underpayments of tariffs, a properly executed voluntary disclosure can significantly limit financial liability, demonstrate good faith, and enhance the importer’s broader compliance program.

This article explores the evolving importance of voluntary disclosures, identifies the key benefits they offer and sets forth best practices for maximizing their effectiveness. By adopting a thorough and well-documented approach, importers can turn a compliance failure into an opportunity for strengthening their compliance environment, all while minimizing or eliminating the risk of penalties.

I. Drivers of the Rising Importance of Voluntary Disclosures

Several recent developments have converged to increase the strategic value of voluntary self-disclosures for importers:

Tariff Escalation Amplifies Risk Exposure. The imposition of high tariffs under Section 232 (national security tariffs) and Section 301 (special China tariffs), along with elevated global and reciprocal tariffs covering every country (with some up to 50 percent) has magnified the monetary consequences of compliance failures. Errors that once triggered minimal duty corrections can now give rise to substantial liabilities. For example, a seemingly minor misclassification or undervaluation error may, when aggregated across multiple entries, result in significant unpaid duties and interest. Failure to apply the country-of-origin rules or United States-Mexico-Canada Agreement (USMCA) requirements correctly can have a major tariff impact, because failing to understand qualification rules can result in triggering certain Trump tariffs. Importers that fail to proactively correct customs errors may face unexpected bills for back-tariffs and additional penalties.
Enhanced Data Analytics and Enforcement Algorithms. CBP has taken full advantage of the fact that importers are required to submit detailed tariff-related information in the Automated Commercial Environment system (more commonly referred to as ACE). Using sophisticated data mining and AI, CBP can flag anomalies in declared values, country of origin, classification, valuation, USMCA compliance, and other tariff-impacting data fields. Importers whose transactional data deviates from industry-sector norms, the entry declarations of their competitors, or historical patterns are increasingly subject to post-entry reviews, with CBP having the ability to confirm potential errors by issuing Form 28 Requests for Information or Form 29 Notices of Action.
Increased Emphasis on Trade Enforcement. Federal agencies, particularly CBP and the Department of Justice (DOJ), have been directed to adopt a more aggressive enforcement posture. Executive orders and Presidential Proclamations have called for heightened tariff collection and stiffer penalties for trade violations. DOJ has increased staffing for trade-related enforcement action; anecdotal information from importers shows an increasingly aggressive enforcement posture. In this high-penalty, high-tariff environment, proactive disclosures are the best available option for limiting exposure and potentially costly penalties.
Greater Possibilities for Whistleblower Actions. DOJ has announced that it will be increasing the use of the False Claims Act (FCA) to target tariff underpayments. FCA actions can be initiated by the government or in reaction to whistleblower tips. It is a certainty that plaintiff law firms will be looking to bring more of these cases to further implement the high-tariff, high-penalty, high-enforcement environment priorities of the Trump trade team. In this environment, FCA cases (and whistleblower payouts) potentially are much more lucrative.

II. The Legal and Strategic Value of Voluntary Disclosures

Voluntary self-disclosures offer a pathway for importers to resolve past import violations with significantly reduced or eliminated penalties, provided the disclosure meets certain procedural and substantive requirements. Given the high-tariff, high-enforcement environment detailed above, voluntary self-disclosures represent a significant form of risk reduction. The governing regulation, 19 C.F.R. § 162.74, specifies that voluntary disclosures made before the commencement of a formal investigation are a mitigating factor in CBP’s penalty determinations. In cases involving negligence or mistakes (as opposed to fraud), CBP generally issues no penalty at all if the importer discloses the violation, completes a comprehensive disclosure, and repays any back-tariffs owed (plus interest).

Key Benefits of Voluntary Disclosures Include:

Penalty Mitigation: To achieve the most direct benefit of paying no penalty, the timing of the disclosure is critical; to qualify, a disclosure must precede any CBP investigation related to the disclosed conduct. Notably, a disclosure can still lock in voluntary self-disclosure credit even after receiving a Form 28 Request for Information or Form 29 Notice of Action, provided that CBP has not initiated a formal investigation.
Demonstration of Good Faith: A voluntary disclosure signals to CBP that the importer takes its compliance obligations seriously. This can enhance the company’s credibility in future audits, inquiries, or applications for trusted trader programs, such as CTPAT.
Control of Narrative and Scope: A disclosure enables the company to present the facts in its own words, control the disclosure of the violation, and propose corrective measures to prevent a recurrence of the issue. Proceeding as a voluntary self-disclosure allows a more proactive framing than allowing CBP to uncover the violation and draw its own conclusions, especially since, in the latter scenario, the importer likely is facing stricter deadlines and has less control over how the review unfolds.
Strengthened Internal Compliance Framework: The process of preparing a disclosure typically involves developing a methodology to identify all import errors, a root cause analysis, a compliance systems review, and a corrective compliance action plan. In addition to allow the accurate completion of the customs review, these steps also allow the importer to improve internal controls and reduce the likelihood of future violations.

III. Best Practices for Effective Voluntary Disclosures

To maximize the benefits of a voluntary disclosure and ensure it is accepted by CBP, importers must ensure the completed disclosure is timely, complete, and supported by robust documentation. Below are key best practices for importers to consider:

Timely Action and Use of Marker Letters. Importers should act promptly upon discovering a potential violation. If additional time is needed to conduct an internal investigation, the company should consider submitting a marker letter. This preliminary notice, submitted before any CBP inquiry has begun, preserves the company’s eligibility for penalty mitigation while allowing time to gather necessary data and conduct a thorough review.
Monitoring CBP Correspondence. Even while thinking about filing a disclosure, importers must remain vigilant for signs that CBP may already be aware of the issue. Notices such as Form 28 Requests for Information or Form 29 Notices of Action may indicate that the agency has detected potential discrepancies. Even when such notices are received, the importer may still submit a disclosure, provided CBP has not yet initiated a formal investigation. Submitting a marker letter promptly after receiving such correspondence (i.e., before the response is due) can preserve the benefits of disclosure.
Deciding on the Scope: Limited vs. Comprehensive Disclosures. Importers must determine whether to disclose only specific errors (a limited disclosure) or to conduct a full review and disclosure of all potentially affected entries over a full five-year review period. A limited disclosure may focus on specific ports, specific products or product lines, issues, or date ranges, and is appropriate when internal controls are strong and the issue is contained. A comprehensive disclosure, by contrast, should be undertaken when the scope of the violation is uncertain, when internal compliance controls have been weak, or when systemic issues are suspected. The choice involves a strategic balancing of legal risk, resource investment, and the desire for closure. If a limited disclosure path is chosen, importers should carefully identify whether any additional issues are noted during the review that would warrant expanding the scope of the limited disclosure or perhaps turning it into a full disclosure.
Conducting a Thorough Internal Review. A rigorous internal review forms the foundation of an effective voluntary disclosure. The review should address:
- Nature and Root Cause of the Violation: Was the issue caused by misclassification, undervaluation, incorrect country of origin reporting, or other errors? What internal failures allowed the mistake to persist? Common root causes include inadequate training, miscommunications with suppliers, poor oversight of customs brokers, a poor or incomplete Customs Classification Index, or a missing transfer pricing study for related parties that meets CBP (and not IRS) standards.
- Scope of Affected Entries: The importer must identify all entries impacted by the violation. CBP generally disfavors extrapolations or estimates for full disclosures, preferring line-by-line documentation of affected transactions. The one exception is where statistical sampling is used, which requires following the CBP statistical sampling requirements (covered below).
- Time Period Covered: Full disclosures must generally reach back to the five-year statute of limitations. Companies should trace the issue to the first entry and not stop at the point of liquidation.
- Review of Similar Risks in Other Areas: Importers should examine whether the same or similar violations may have occurred in other business units, product lines, or types of entries. This requires coordination with global affiliates and other internal stakeholders. If necessary, this may lead to a limited disclosure covering a single business unit becoming a full disclosure, perhaps involving different importer of record numbers.
Comprehensive and Transparent Documentation. CBP will evaluate the disclosure based on the clarity, transparency, and completeness of the submission. The disclosure should include:
- A narrative describing the events leading to the violation, its discovery, and the internal response.
- An explanation of the methodology used to identify and analyze affected entries.
- Detailed calculations of duties owed, with supporting analysis and spreadsheets.
- Any prior communications with CBP that are relevant to the issue, including the filing of and responses to post-summary corrections, protests against liquidation, and advisory opinion requests.

In addition, importers should be prepared to provide copies of all relevant documents, including invoices, purchase orders, bills of lading, contracts, commercial invoices, and other supporting information.

Use of Statistical Sampling. In high-volume situations, importers may use statistical sampling to estimate the impact of the violation. This approach must meet CBP standards for reliability, representativeness, and ability to accurately extrapolate from the sample to the full universe of attributed entries. Best practices include:
- Consulting with trade statisticians or professionals familiar with CBP expectations.
- Clearly defining the population of entries.
- Using random sampling with proper stratification if necessary.
- Ensuring that confidence intervals and error margins are defensible.
- Explaining how projected liability was calculated from the sample data.
- Working through the CBP guidance regarding statistical sampling to show how each requirement was met.
Internal and External Coordination. An effective disclosure typically requires contributions from multiple departments:
- Legal Counsel: To oversee the disclosure, prepare the narrative and Customs Manual (if needed), and maintain privilege where appropriate.
- Customs Brokers: To provide entry data and insights into declaration processes.
- Compliance Personnel: To lead root-cause analysis and ensure process improvements.
- IT and Data Teams: To extract, validate, and analyze relevant data.
- External Consultants: To support sampling and data review, or for remedial planning when internal resources are insufficient.
Addressing Multi-Agency Issues. Some customs errors may have implications for filings with other federal agencies, such as the Food & Drug Administration, the Environmental Protection Agency, or the National Highway Traffic Safety Administration. A disclosure that addresses only CBP obligations, without considering related regulatory violations, may be insufficient. A comprehensive, multi-agency disclosure plan should be developed when other regulatory obligations are implicated.
Including a Corrective Action/Customs Compliance Plan. CBP places significant weight on the remedial measures taken by the importer to prevent recurrence. A strong corrective action plan may include:
- Creating or updating a Customs Manual, standard operating procedures, or tariff management tools.
- Creating or updating a Customs Classification Index.
- Creating or updating a system for tracking and attributing assists (production-related aids provided by the importer to the foreign manufacturer).
- New or enhanced training for relevant personnel.
- Corrective entries or protests filed as needed, such as for entries falling within the Post-Summary Corrections period.
Be Careful in Seeking Limited Disclosures. A common pitfall is disclosing only a limited set of issues when a systemic review shows that errors are more widespread. CBP expects disclosures to be complete and candid. Attempting to cherry-pick entries or downplay certain aspects of the violation can result in:
- Rejection of the disclosure or an investigation of entries outside the scope of the limited disclosure.
- Loss of penalty mitigation benefits for any entries outside the scope of the limited disclosure.
- Increased risk of future enforcement actions.

Where multiple types of errors are discovered during the review, it is often best to bundle them into a full disclosure, even if a limited disclosure initially seemed appropriate. Where this occurs, the importer should make a supplemental filing initiating a full disclosure to document the expanded scope of the disclosure.

Follow Up and Confirm Closure. Even after a disclosure is filed, the process is not over. Importers should:
- Monitor the status of the disclosure with CBP.
- Respond promptly to any CBP questions or requests for additional documentation.
- Confirm that CBP is granting offsetting.
- Confirm that CBP has issued a closing letter or decision accepting the disclosure (which it may not issue if the disclosure shows a net overpayment after offsetting, which sometimes occurs).
- Retain all disclosure documentation in case of future audits or enforcement actions.

As the U.S. government intensifies enforcement of import regulations, the voluntary self-disclosure process has become an increasingly vital tool for responsible importers. A well-executed disclosure not only limits financial exposure but also signals institutional integrity and commitment to compliance.

To be effective, however, voluntary disclosures must be more than reactive acknowledgments of past errors. They must be timely, transparent, provide complete coverage of all errors, and be thoroughly documented. By following best practices — from a root-cause analysis and documentation to interdepartmental coordination and corrective action — importers can ensure that their disclosures achieve their intended purpose: resolving past violations while positioning the organization for a better-managed importing environment.

The Foley International Trade & National Security Team is monitoring all tariff-related developments, including any modifications, clarifications/guidance, or new tariff measures introduced by the Trump administration, which we are covering in our Tariff & International Trade Resources blog. As new information becomes available, we will provide updates and analysis to help importers navigate the evolving international trade paradigm, including for new tariffs.

Our white paper on “Managing Import and Tariff Risks During a Trade War” outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on “Managing Supply Chain Integrity Risks” provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by CBP.

If you have questions about this post, please feel free to reach out to any of the authors or your ��; Lardner relationship attorney. If you would like to see future updates regarding “What Every Multinational Company Needs to Know” about operating in today’s complicated international trade world, please sign up for our Tariff & International Trade blog —

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Illinois Enacts Crypto Law: What Does It Mean for the Industry?

adachel@foley.com — Mon, 15 Sep 2025 16:08:07 +0000

On August 18, 2025, Illinois Governor JB Pritzker signed Senate Bill 1797, enacting, in his words, “first-of-their-kind safeguards in the Midwest for cryptocurrency and other digital assets.”[1] This Illinois law is the Digital Assets and Consumer Protection Act (DACPA or the Act), which establishes an Illinois-state-level regulatory framework for centralized crypto exchanges that have customers and certain other digital asset businesses operating in Illinois. DACPA will be administered and enforced by the Illinois Department of Financial and Professional Regulation (IDFPR).

Highlights of this bill include:

Granting IDPFR authority to regulate and supervise digital asset businesses and centralized digital asset exchanges under the DACPA and the existing Corporate Fiduciary Act (205 ILCS 620).
Establishing consumer protections said to be in line with those that apply to traditional financial services, such as investment disclosures, customer asset safeguards, and customer service standards.
Requiring adequate financial plans and procedures for addressing critical risks, including cybersecurity, fraud, and money laundering, consistent with regulations for traditional financial services.[2]

The fact sheet touts that more states are enacting digital asset regulation, including New York and California.[3] Objectively, the enactment of DACPA appears to be politically motivated, based on statements by Governor Pritzker and other Illinois politicians in the accompanying press release, such as this: “While the Trump Administration is letting crypto bros write federal policy, Illinois is implementing common-sense protections for investors and consumers,” and this: “At a time when fraudsters continue to evolve and consumer protections are being eroded at the federal level, Illinois is sending a clear message that we won’t tolerate taking advantage of our people and their hard-earned assets.”[4]

Does Illinois have the resources to enforce DACPA, or even to process applications to register under the Act? Illinois’s strained resources seem to indicate otherwise.

Regarding the IDFPR, there is no indication that the current staff has the resources, capabilities, or digital asset industry domain expertise to administer or enforce DACPA effectively. In terms of its current limited resources, a review of the enforcement actions for the Banking Division Orders and Enforcement Actions for Banks, Trust Companies and Savings Institutions Enforcement Actions reveals that IDFPR has only brought the following number of actions in this area in the past five years: 2020, four actions; 2021, three; 2022, two; 2023, one; and 2024, four.[5] Thus far in 2025, IDFPR has instituted two enforcement actions. Of the 16 actions instituted since 2020, not one of them appears to involve digital assets.[6]

Turning to the highlights of DACPA, notably in Section 1-10 regarding applicability, Section 1-10(a) provides that the Act governs digital asset business activity of a person or entity doing business in Illinois “to the extent not preempted by federal law.” Section 1-10(b)(1)(A) continues to provide that DACPA does not apply to the extent that the Securities Exchange Act of 1934 governs the activity as a securities transaction and the activity is regulated by the SEC or the Illinois Secretary of State. Also, Section 1-10(b)(1)(B) provides that DACPA does not apply to the extent that the Commodity Exchange Act governs the activity, and the activity is regulated by the Commodity Futures Trading Commission (CFTC). Thus, from the start, the applicability of DACPA is limited by federal preemption, regulation by the SEC, and regulation by the CFTC. Although Governor Pritzker hasn’t mentioned this, what remains of DACPA might well be preempted by the so-called “CLARITY Act” or by other federal digital assets legislation pending in Congress.

For the digital assets entities to which DACPA applies, the scope of the Act is quite broad. Section 1-15 provides “general powers and duties” that include the following: the issuance, revocation, or suspension of registration; to receive, consider, investigate, and act upon complaints made by any person related to any digital asset business activity in Illinois; to subpoena documents and witnesses and compel their production and attendance; to issue orders; to examine the books and records of every covered person, entity, affiliate or service provider; to enforce the provisions of the Act and any state or federal law applicable to digital asset business activity; to levy fees, fines, and civil penalties; to conduct hearings; and more.

How will an Illinois state agency with limited and strained resources attempt to cover the needed resources for implementing and enforcing DACPA? It appears it will do so by obligating industry funding. In Section 1-20, DACPA addresses the expenses of administering this Act. Specifically, it mandates that the expenses of the Act, including those for investigations and examinations, will be borne by and assessed against those regulated by DACPA. Section 1-20 lists the ways that IDFPR may establish fees by rule, which include registration, examination, and investigation fees. It is understood that these fees are being imposed to generate revenue for use in hiring government staff to administer and police DACPA.

DACPA states requirements for customer protection in Article 5. These protections include customer disclosures (Section 5-5); custody and protection of customer assets (Section 5-10); requirements for covered exchanges (Section 5-15); and additional requirements. Article 10 then states compliance requirements. These include policies and procedures (Section 10-10) that cover the following: a cybersecurity program; a business continuity program; a disaster recovery program; an anti-fraud program; an anti-money laundering program; a conflict-of-interest program; and more. Article 15 provides the requirements for registration under DACPA. Article 20, addressing supervision, provides for surety bond and capital and liquidity requirements. Section 20-5 requires a surety bond or trust account in U.S. dollars in a form and amount determined by IDFPR and the maintenance at all times of capital and liquidity in an amount and form that IDPFR determines is sufficient to ensure the financial integrity of the registrant.

In conclusion, the requirements of DACPA are quite broad and demanding. Persons conducting digital asset business activity in Illinois or, wherever located, who engage in or hold themselves out as engaging in that activity for or with an Illinois resident, must register with the IDFPR by July 1, 2027, unless exempt. The IDFPR may, by rule or order, create exemptions to the Act. Applications for exemption can and should be made by competent legal counsel.

DACPA regulation already exempts peer-to-peer exchanges or transfers of digital assets, decentralized exchanges (such as Uniswap), software development, the issuance of non-fungible tokens, mining, and validation. Proprietary trading for one’s own account is not considered “exchange” and is therefore outside the scope of the Act. Again, DACPA and other similar state laws might be preempted by the adoption of the CLARITY Act or other federal legislation. Until that happens, we stand ready to interpret the Act, to process registrations under the Act, to seek exemptions from the Act where appropriate, and to defend businesses investigated for, or charged with, violating the Act.

[1] See .

[2] See .

[3] Id.

[4] See .

[5] See .

[6] Id.

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Foreign Terrorist Organization Designations Provide DOJ With New Civil Forfeiture Authorities and Opportunities

adachel@foley.com — Thu, 09 Oct 2025 21:52:03 +0000

Civil forfeiture is becoming an increasingly important tool in the U.S. Justice Department’s (DOJ) campaign against transnational criminal organizations (TCOs), Foreign Terrorist Organizations (FTOs), and other sanctioned parties. This development is part of the Trump Administration’s ongoing campaign against cartels and other TCOs, which most recently has involved the apparent determination that cartels are nonstate actors in a type of armed conflict with the United States, as well as military strikes on Venezuelan vessels in the Caribbean Sea, and the designation of the Barrio 18 a/k/a the 18th Street gang as an FTO.��

Civil Forfeiture Defined

Civil forfeiture actions typically begin with a seizure warrant filed by federal prosecutors that allows law enforcement officers to seize specified property that might not otherwise be reachable through the criminal justice process, such as the property of foreign terrorists or fugitives. In such applications, the government must explain how the property is connected to particular criminal violations. This basis can provide the government with the authority to seize and take control of the property for eventual forfeiture.

Such actions are a particularly useful tool for the DOJ as they do not require a criminal conviction. Instead, the government is able to bring a cause of action in rem (against the property) that was derived from or used to commit an alleged offense. In a civil forfeiture action, there is no defendant to contest the charges, and the government has a lower standard of proof in that it must only prove by a preponderance of the evidence (more likely than not) that the property is linked to criminal activity.

The terrorism forfeiture statute is particularly broad as it extends to all assets, both foreign and domestic, (1) of an individual or entity engaged in planning or perpetrating any federal crime of terrorism; (2) acquired or maintained by any person with the intent and for the purpose of supporting or concealing any federal crime of terrorism; (3) derived from or involved in any federal crime of terrorism; or (4) of an individual or entity engaged in planning or perpetrating any act of international terrorism against any international organization or foreign government.[1] Providing any direct or indirect material support to an FTO — an act for which there is no de minimis acceptable amount — is not only among the enumerated federal crimes related to terrorism but can also separately violate U.S. economic sanctions targeting FTOs. This substantially increases the possibility of civil and criminal liability and creates a separate, independent predicate for a civil forfeiture action.

Civil Forfeiture in Action

The DOJ has previously used civil forfeiture proceedings to target property linked to FTOs such as Hamas and Iran’s Islamic Revolution Guard Corps (IRGC). In July 2020, for example, the DOJ filed a complaint seeking to forfeit cargo seized from four foreign-flagged oil tankers that the IRGC used to ship petroleum products to Venezuela.[2] The property seized included over one million barrels of petroleum that the U.S. Government eventually sold for approximately $45 million.[3] Similarly, in August 2020, the DOJ announced its largest-yet seizure of cryptocurrency in the terrorism context, for funds involved in the financing of FTOs including the al-Qassam Brigades (Hamas’ military wing), al-Qaeda, and the Islamic State of Iraq and the Levant (ISIS).[4]

More proceedings like these are likely as the Administration expands its anti-terrorism focus to include TCOs. With the list of FTOs rapidly expanding to include Latin American drug cartels and other related parties, such as transnational gangs with ties to foreign governments, the DOJ appears poised to leverage its civil forfeiture actions in a variety of sectors with increased exposure risk. Even in instances where there is no direct connection with an FTO, the DOJ will still have strong policy and enforcement incentives to use civil forfeiture proceedings in cases involving other TCOs — particularly those designated under longstanding sanctions programs targeting narcotics syndicates.

These developments can raise the risks for companies that operate internationally, necessitating the re-evaluation of the due diligence and compliance measures for companies that are at a heightened risk of violations. Some of the industries facing enhanced risk include the following:

Manufacturing and Pharmaceutical Industries

The chemical manufacturing and pharmaceutical industry has already seen increased scrutiny this year given the Administration’s focus on fentanyl trafficking and opioid abuse,[5] but this scrutiny has increased even further due to the Administration’s expanded anti-terrorism approach. For example, on September 3, 2025, the DOJ announced the seizure of 300,000 kilograms of methamphetamine precursor chemicals shipped from China and destined to labs controlled by the FTO-designated Sinaloa cartel in Mexico.[6] The seized chemicals, which originated in China, included six shipping containers of benzyl alcohol, a solvent used in the manufacture of pharmaceuticals, and six shipping containers of N-methyl formamide, another liquid organic solvent. This seizure of precursor chemicals, valued at approximately $569 million, was premised on the Sinaloa cartel’s FTO designation, which provided a basis for charges under the material support of terrorism statute. This aggressive pursuit of seizure and forfeiture actions under the government’s anti-terrorism authority may be a warning of similar enforcement actions to come.

Financial Service Providers

Since FTOs often launder money to obfuscate the true nature, source, and/or destination of their funds, anti-terrorism enforcement actions often target the financing of terrorism by invoking material support of terrorism claims as the “specified unlawful activity” necessary to support a money-laundering charge[7] and regulatory enforcement actions against financial service providers. The money-laundering statute itself is already far-reaching: It can apply extraterritorially, against U.S. citizens or non-U.S. citizens, and to conduct even including correspondent banking transactions,[8] as long as there is conduct that occurs in part in the United States and the transaction or a series of related transactions involves funds in excess of $10,000.[9] DOJ typically uses civil forfeiture actions to seize such funds, and it is now increasingly doing so on the basis of anti-terrorism enforcement. For example, on July 22, 2025, the DOJ announced the unsealing of a civil forfeiture action against approximately $2 million in cryptocurrency connected to a Gaza-based money transfer business that was involved in financially supporting the designated FTO entity Hamas.[10] Recent actions by U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) suggest that Chinese money laundering networks that provide services to Mexican cartels may be the specific focus of U.S. anti-money laundering strategies.[11] Understanding the nature of money-laundering schemes and of related shadow financial networks can assist companies in anticipating how the U.S. government may continue to seize cartel assets and take other steps to dismantle FTO operations.

Oil and Natural Gas Industries

On May 1, 2025, FinCEN highlighted oil smuggling activities in the oil and natural gas industry designed to generate revenue for cartels.[12] According to FinCEN, cartels are using complicit Mexican brokers in the oil and natural gas industry to smuggle and sell crude oil stolen from Mexico’s state-owned energy company, Pemex, to complicit U.S.-based oil and natural gas companies operating near the U.S. southwest border. U.S. importers then sell the crude oil at a steep discount on the U.S. and global energy market before sending a significant amount of the profits back to Mexico. Throughout this scheme, cartels rely on complicit Mexican brokers and their networks of Mexican and U.S. companies, including front companies and shell companies to serve as middlemen. The nature of these schemes suggests that DOJ civil forfeiture proceedings may include actions involving oil and natural gas industries. Indeed, the DOJ has already used criminal forfeiture authority in the oil industry involving the indictment of a U.S.-based father and son who were charged with using their oil and gas company to launder the illicit proceeds of smuggled crude oil on behalf of a Mexican cartel. In that case, law enforcement authorities seized four tank barges containing crude oil, three commercial tanker trucks, and other vehicles.[13]

Meet Anticipated Enforcement with Increased Due Diligence

Corporations operating in key sectors — such as chemical manufacturing, financial services, energy, and pharmaceuticals — should pay attention to recent DOJ actions as warning signs that their assets may be at risk even if there is no direct criminal exposure. Notably, because these laws can be applied to persons that arguably facilitate violations, including in situations where the person “should have known” that they were facilitating a violation, it is appropriate for companies now at heightened risk to re-evaluate their compliance measures in light of the new administration’s priorities. The sectors highlighted above represent just a sampling of the entities that should pay particular attention to their compliance programs, supply chains, and vendor agreements in conducting risk assessments.

To mitigate such risks, companies should engage in thorough counterparty due diligence and screen for red flags identified in FinCEN advisories and implement best practice recommendations by relevant regulators. Adequate training is essential to assist compliance officers and other key company gatekeepers to identify and report issues. Strong internal anti-money laundering policies as well as those internal policies countering the financing of terrorism are essential, and controls should be implemented to block and sever any direct or indirect links to FTOs or other sanctioned individuals and entities. Companies should also establish mechanisms for responding to any U.S. government agencies or other third parties, such as prime contractors and suppliers, and should always consult with counsel when necessary.

If you have questions or concerns about the issues raised in this article, please reach out to any of the authors or your ��; Lardner attorney.

The Foley International Government Enforcement Defense & Investigations Team is monitoring all international trade, government enforcement, and regulatory developments, which we are posting as they occur on our Tariff & International Trade Resources blog. For additional resources surrounding the mitigation of risks posed by the Administration’s crackdown on FTOs and TCOs, our article on “What Every Multinational Company Should Know About…Mitigating Risks Posed by the New Trump Administration Focus on Drug Cartels and TCOs,” provides additional compliance assessment information. In addition, we have been tracking FinCEN’s enforcement actions targeting Mexico-based Financial Institutions as published here, and recommend key measures to prevent similar scrutiny here. If you would like to see future updates regarding “What Every Multinational Company Needs to Know” about operating in today’s complicated international trade world, please sign up for our Tariff & International Trade blog —

[1] See 18 U.S.C. Section 981(a)(1)(G).

[2] See Largest U.S. Seizure of Iranian Fuel from Four Tankers, U.S. Department of Justice (Aug. 14, 2020), https://www.justice.gov/usao-dc/pr/largest-us-seizure-iranian-fuel-four-tankers.

[3] See United States Unseals Civil Forfeiture Complaint for Seizure of Iranian Oil, U.S. Department of Justice (Feb. 2, 2024), https://www.justice.gov/usao-dc/pr/united-states-unseals-civil-forfeiture-complaint-seizure-iranian-oil.

[4] See Global Disruption of Three Terror Finance Cyber-Enabled Campaigns, U.S. Department of Justice (Aug. 13, 2020), https://www.justice.gov/archives/opa/pr/global-disruption-three-terror-finance-cyber-enabled-campaigns.

[5] See Executive Order 14193 (Feb. 1, 2025), https://www.federalregister.gov/documents/2025/02/07/2025-02406/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-northern-border.

[6] See U.S. Seizes 300,000 Kilos of Meth Precursor Chemicals Sent from China Destined for Mexico’s Sinaloa Drug Cartel, U.S. Department of Justice (Sept. 3, 2025), https://www.justice.gov/usao-dc/pr/us-seizes-300000-kilos-meth-precursor-chemicals-sent-china-destined-mexicos-sinaloa-drug.

[7] See 18 U.S.C. § 1956(c)(7).

[8] Corresponding banking refers to a banking relationship between two banks, where one bank (the “correspondent bank”) provides banking services to another bank (the “respondent bank”). This type of relationship facilitates cross-border transactions such as international wire transfers.

[9] See 18 U.S.C. § 1956(f).

[10] See U.S. Files Forfeiture Action Against $2 Million in Digital Currency Involved in Hamas Fundraising, U.S. Department of Justice (July 22, 2025), https://www.justice.gov/usao-dc/pr/us-files-forfeiture-action-against-2-million-digital-currency-involved-hamas-fundraising.

[11] See FinCEN Issues Advisory and Financial Trend Analysis on Chinese Money Laundering Networks, Financial Crimes Enforcement Network (Aug. 28, 2025), https://www.fincen.gov/news/news-releases/fincen-issues-advisory-and-financial-trend-analysis-chinese-money-laundering.

[12] FinCEN Issues Alert on Oil Smuggling Schemes on the U.S. Southwest Border Associated with Mexico-Based Cartels, Financial Crimes Enforcement Network (May 1, 2025), https://www.fincen.gov/news/news-releases/fincen-issues-alert-oil-smuggling-schemes-us-southwest-border-associated-mexico.

[13] See Father and son indicted for providing material support to Mexican cartel engaged in terrorism, U.S. Department of Justice (May 30, 2025), https://www.justice.gov/usao-sdtx/pr/father-and-son-indicted-providing-material-support-mexican-cartel-engaged-terrorism.

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Foley Automotive Update

bklemm@foley.com — Thu, 15 May 2025 19:18:38 +0000

Analysis by Julie Dautermann, Competitive Intelligence Analyst

Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more.

Trump Administration and Tariff Policies

��; Lardner provided an overview for multinational companies regarding the potential antitrust scrutiny over tariff-related pricing changes. Visit ��; Lardner’s Trump Administration Resource Hub: Legal and Business Insights for more updates on key policy and regulatory developments.
The U.S. lowered the base level of duties on most Chinese goods to 30% from 145%, and China cut its levies on many U.S. products to 10% from 125% as part of a scheduled between the nations that is to take effect this week.
A U.S.-UK trade deal May 8 would allow imports of 100,000 vehicles annually by UK car manufacturers under a 10% “reciprocal tariff,” with additional vehicles subject to 25% levies. The American Automotive Policy Council that in certain instances, “it will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA compliant vehicle from Mexico or Canada that is half American parts.”
A U.S. Customs and Border Protection guidance for the auto parts tariffs that took effect May 3 indicated that US-Mexico-Canada Agreement (USMCA)-compliant parts have a “0 percent additional ad valorem rate of duty.” The duration of this exemption is unknown.
A pair of executive orders announced on April 29 will ease some of the impact of certain automotive import tariffs. One will establish a complex system of temporary and partial reimbursements for certain tariffed auto parts, and another indicates tariffed vehicles and auto parts will not “stack” on other levies, such as the 25% duty on steel and aluminum. One large supplier quoted in indicated the orders were a positive step, while an unnamed major supplier stated the tariff revisions were “not cause for celebration” as the industry will still encounter significantly higher operational costs. An analyst from Wedbush the revised tariffs as a “gut punch” for the auto industry.
May 16, 2025 is the for submitting public comments regarding the Trump administration’s Section 232 investigation into imports of processed critical minerals and their derivative products.��

Automotive Key Developments

Automotive News provided updates on suppliers’ concerns regarding the potential for this year as a result of automotive import tariffs, as well as the of assessing USMCA-compliant content in vehicles.
GM the Trump administration’s tariffs could increase its costs by up to $5 billion this year, and potentially reduce 2025 net profit by up to 25% year-over-year. The automaker its projected tariff exposure by roughly 30% through spending reductions and shifting more supplies and manufacturing to the U.S. In 2024, GM more vehicles into the U.S. than any other automaker.��
Japanese automakers could collectively experience a $19 billion impact from U.S. import tariffs, according to analysis from .
and projected annual net profit declines of 35% and 70%, respectively, for fiscal year ending March 2026, if U.S. automotive import tariffs are maintained. Toyota its tariff impact reached $1.3 billion within just two months, while Honda expects an annual tariff impact of up to $3 billion.
Ford a $2.5 billion impact from tariffs in 2025, but noted it plans to offset up to $1 billion of the costs.��
Revised analysis from the Anderson Economic Group the Trump administration’s current automotive tariff policies will raise vehicle costs from $2,000 to $15,000.
U.S. new light-vehicle inventory is down by an 24% year-over-year, representing a 61 days’ supply, following robust sales in April.
Kelley Blue Book the U.S. new light-vehicle average transaction price (ATP) rose 2.5% in April 2025 from March. New-vehicle sales incentives fell to 6.7% of ATP last month, down from 7% in March and compared to a pre-pandemic norm of roughly 10%.
The U.S. House Ways and Means Committee included a measure to eliminate consumer tax credits of up to $7,500 for a new EV and $4,000 for a used EV at the end of 2025 in the “” tax package introduced on May 12. The initial proposal would extend new EV tax credits until the end of 2026 for automakers that sold less than 200,000 EVs in the U.S. between 2010 and 2025.��
California and 16 other states over the Trump administration’s of the $5 billion National Electric Vehicle Infrastructure (NEVI) program created by the 2021 Bipartisan Infrastructure Law.
The U.S. House on May 1 of three Congressional Review Act resolutions to repeal Clean Air Act waivers issued by the Environmental Protection Agency for California’s vehicle emissions programs. A related to the proposals has not yet been scheduled.
Federal Reserve Chair Jerome Powell the U.S. “may be entering a period of more frequent, and potentially more persistent, supply shocks” due to economic and trade policy uncertainty.

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First-quarter 2025 profitability dropped by 2.3% for , 6.6% for , nearly 40% for , and over 60% for .
Automakers that include , , recently suspended 2025 financial guidance due to tariff-related uncertainty.
Magna its annual direct tariff costs will reach $250 million for 2025.
Nissan a net loss equivalent to $4.55 billion for its fiscal year ended March 31, 2025 due in part to restructuring charges. The automaker to cut 15% of its global workforce, and consolidate its global production base to 10 assembly plants from 17.
Ford to raise prices by as much as $2,000 on certain Mexico-produced models in response to U.S. import tariffs.
GM to eliminate a shift at its Oshawa Assembly plant in Ontario in response to “forecasted demand and the evolving trade environment.”
Aptiv to establish two new plants in China in the second half of this year that will produce high-voltage connectors and active safety products.
Stellantis to launch a lower-priced version of its U.S.-made Ram pickup truck later this year to boost sales and mitigate tariff exposure. The automaker previously shifted pickup truck production for from Michigan to Mexico.

Market Trends and Regulatory

AlixPartners Chinese brands will account for 30% of the global auto market by 2030, compared with 21% in 2024.
BYD has a to achieve 50% of its sales outside of China by 2030.
Congress an Environmental Protection Agency rule on National Emission Standards for Hazardous Air Pollutants related to rubber tire manufacturing.��
According to a of 126 supply chain executives, 47% of respondents were renegotiating contracts with suppliers to mitigate the impact of tariffs.

Autonomous Technologies and Vehicle Software

Automotive News provided an of recent developments in autonomous driving.
Ford plans to cut 350 connected-vehicle software jobs in the U.S. and Canada, and the reductions account for roughly 5% of the total team, according to a report in .
Waymo with Toyota to develop robotaxi technology for personally-owned vehicles. Waymo’s self-driving partnerships include Hyundai and China’s Geely.

Electric Vehicles and Low-Emissions Technology

U.S. EV sales by roughly 5% in April, amid a 10% YOY increase in overall new-vehicle sales. Global EV sales in April were up by an 29% YOY, led by a 35% increase in China.
Honda a planned $11 billion investment in new EV factories in Ontario, Canada due to slowing demand in North America.
�Ҳ�’s Orion Assembly Plant in Michigan may not operate as a fully electric vehicle factory as originally planned, according to unnamed sources in .
The American and Chinese car markets are likely to diverge further due to in supply chain costs and consumer preferences, as well as the nations’ ongoing trade conflicts.
GM a project with Piston Automotive to establish a $55 million hydrogen fuel cell plant in Detroit.
Stellantis production of its first battery-electric Ram pickup truck until 2027.
Hyundai to launch a hydrogen production and dispensing facility for heavy-duty trucks in Georgia.
Toronto-based battery recycler Li-cycle is a sale of its business or assets.
Canadian electric truck and bus maker Lion Electric faces a “very high” after the Quebec government decided not to support a public bailout.��

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SEC Creates New Cross-Border Task Force to Combat Fraud, Prioritizing Investigations of Foreign Issuers and Gatekeepers

Ali Fitzgerald — Tue, 30 Sep 2025 18:51:11 +0000

On September 5, 2025, the U.S. Securities and Exchange Commission (SEC) announced the creation of the (“Task Force”) to identify and combat cross‑border fraud harming U.S. investors. The Task Force will primarily focus on investigating potential U.S. securities law violations related to foreign-based companies, such as market manipulation, and those gatekeepers, such as auditors and underwriters, which enable these companies to access U.S. capital markets. The SEC specifically called out “companies from foreign jurisdictions, such as China, where governmental control and other factors pose unique investor risks.”

The new Division of Enforcement Director Margaret A. Ryan, warned: “The Cross-Border Task Force will leverage the Division of Enforcement’s resources and expertise to combat international market manipulation and fraud.” Chairman Paul Atkins further made clear: “[W]e will not tolerate bad actors – whether companies, intermediaries, gatekeepers, or exploitative traders – that attempt to use international borders to frustrate and avoid U.S. investor protections.” According to Commissioner Atkins, this new Task Force will consolidate SEC investigative and enforcement resources while “allow[ing] the SEC to use every available tool to combat transnational fraud.” Chairman Atkins also has “directed the staff in other SEC divisions and offices…to consider and recommend other actions that would better protect U.S. investors, including new disclosure guidance and any necessary rule changes.”

The Task Force reflects the Trump administration’s stated focus of enforcing US federal law against foreign companies and other international actors which put U.S. companies at economic disadvantage abroad and harm U.S. investors. This “America First” approach is consistent with the U.S. Department of Justice’s “” memo and (summarized here and here, respectively).

The focus on transnational fraud and gatekeepers, however, is not new. The SEC has a longstanding practice of investigating U.S.-listed foreign companies – also known as foreign private issuers (“FPIs”) – and their auditors. Indeed, in a December 7, 2018 statement, former SEC Chairman Jay Clayton, SEC Chief Accountant Wes Bricker, and PCAOB Chairman William Duhnke III stated, in part:

As the primary regulator of the world’s largest securities markets, administering and enforcing the requirements for reliable financial reporting requires the SEC to be engaged in many topics that extend beyond the U.S. borders. Indeed, the flow of international capital investment presents challenges, not just for U.S.-listed companies and economic interests, but also for the SEC’s efforts to protect transparency and accountability in financial reporting globally. Protecting transparency and accountability in financial reporting is vital.[1]

The SEC has targeted gatekeepers and in particular foreign auditors in the past, because they, in the words of former Director of the Division of Enforcement Gurbir Grewal, “are often the first lines of defense against misconduct.” [2] Indeed, former SEC Chairman Gary Gensler cautioned, “When lawyers—or other gatekeepers, like auditors and underwriters—breach their positions of trust and violate the securities laws, we will not hesitate to take action.” [3] Likewise, the same December 7, 2018 statement quoted above discusses the vital role auditors perform in U.S. markets and specifically noted “the work of a [multinational company’s] external auditor” is “critical” to ensuring the company’s financial statements are accurate and reliable.[4]

Accordingly, we expect to see increased scrutiny by the SEC of FPIs and their auditors like in . There, the SEC alleged a music streaming company based in Greece defrauded investors in connection with its 2019 merger with a special purpose acquisition company (“SPAC”) by claiming it had millions of subscribers when, in fact, it did not have any subscribers. In connection with the merger, the SPAC filed its registration with the SEC on Form F-4 and included an audit report from the company’s audit firm. In bringing a separate enforcement action against the company’s foreign auditors, the SEC made clear that even where professionals are unaware of a company’s alleged fraud: “[It] will continue holding gatekeepers accountable, especially those whose professional failings allow financial frauds to enter our public markets.”

Similarly, the PCAOB has initiated enforcement actions against auditors of FPIs. For example, Chinese audit firm Shandong Haoxin Certified Public Accountants Co., Ltd. and four of its employees were for, among other things, issuing a false audit report for a Beijing based company client and providing false information and testimony to the PCAOB. The PCAOB specifically alleged that even though the auditors knew its client had terminated a previous auditor for raising concerns about the veracity of the company’s financial statements and was hired to replace an auditor who withdrew after the company refused to provide information necessary to complete its audit procedures, it relied on the predecessor auditor’s incomplete work papers and issued an audit report one day after it was engaged.

While the broader implications of this new Task Force remain to be seen, there is no doubt the SEC and DOJ will direct its enforcement resources to investigate foreign companies and gatekeepers involved in alleged transnational frauds that harm U.S. investors. FPIs should review and strengthen their disclosure and accounting controls and monitor any new disclosure guidance and rule changes by the SEC.[5] Similarly, auditors, underwriters, and other professionals who help FPI’s and foreign actors access U.S. markets should review, and where appropriate, enhance their due diligence, client acceptance, and other compliance procedures for existing and new clients which operate in high-risk jurisdictions and ensure adequate documentation is maintained. Such actions are essential given the U.S. government’s stated and evolving cross-border enforcement priorities.

��; Lardner LLP’s (“Foley”) Securities Enforcement & Litigation (“SEL”) and Government Enforcement Defense and Investigations (“GEDI”) practice groups work together to offer industry-leading experience and world-class capabilities when handling matters faced by public and private companies and their officers and directors as well as by their outside auditors, underwriters, and other professionals, with urgent, multidimensional, and multijurisdictional needs. Our SEL and GEDI teams feature a diverse group of skilled legal professionals, including former SEC and PCAOB enforcement attorneys, federal prosecutors, and senior inhouse lawyers, who manage government enforcement actions, internal investigations, and related civil litigations effectively and efficiently. Foley also has decades of experience defending accounting firms in their most critical matters. Our auditor defense practice covers all federal and state regulatory regimes governing auditors and extends internationally to almost every continent. Additionally, these practice groups are comprised of lawyers proficient in multiple foreign languages, including Spanish. If you have questions or concerns about any of the topics discussed in this article, reach out to the authors or your Foley attorney.

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The Effects of Government Change and Political Instability on Supply Chain Management: How Political Instability and Government Change Disrupt Global Supply Chains (Part I)

adachel@foley.com — Tue, 02 Sep 2025 14:26:27 +0000

In 2022, Russia’s invasion of Ukraine triggered a cascade of supply chain disruptions – energy shortages, restricted grain exports, and sweeping sanctions. But the lesson wasn’t just about Russia or war. It was about how quickly political decisions can send shockwaves through global commerce and how they can upend supply chains.

Today, government change and political instability are among the most disruptive forces in supply chain management. Further, the United States itself has become one of the most unpredictable actors. Once seen as a stabilizing force in global trade, the U.S. government increasingly has used tariffs, export controls, economic sanctions, and aggressive regulatory enforcement as tools of foreign policy. Under recent administrations, especially during the first months of the second Trump administration, supply chains have faced rapid shifts in legal regimes, abrupt trade restrictions, rapidly changing tariffs, and aggressive enforcement initiatives, all with little warning and wide-reaching impact.

Thus, traditional assumptions that volatility arises in hotspots or emerging markets are no longer true. From Brexit to tariffs to new supply chain integrity measures such as the Uyghur Forced Labor Prevention Act (UFLPA), supply chains must now adapt to political and legal disruptions coming from every direction, including Washington.

In this environment, businesses that operate or source abroad have to plan for unanticipated changes in regulatory environments and trade policies. To navigate this new normal, companies must adopt proactive legal, contractual, and operational strategies that account for rapid regulatory change and geopolitical risk. This two-part series article explores how political transitions impact supply chains, examines contractual and compliance strategies to manage exposure, and outlines steps companies can take to build resilience in an increasingly unpredictable world. Part I covers the many ways in which political uncertainty has to be taken as a constant in the new international trade environment. And Part II provides coping strategies for companies coping with this new international trade normal.

I. Understanding How Political Instability Impacts Supply Chain

Political instability is no longer an edge case – it’s a persistent and evolving risk to global operations. For companies operating across borders or reliant on imported goods or parts and components, political instability introduces uncertainty at every level of the supply chain, from sourcing and production to shipping and compliance. These disruptions can emerge suddenly, like a military coup or a trade war, or creep in more subtly through regulatory shifts or public unrest.

Political instability affects supply chains in several key ways:

Sudden Regime Changes and Policy Reversals. Changes in government, whether through elections, coups, or internal crises, can result in abrupt reversals of existing policies. These shifts can have the following impacts:

Tariff and customs changes can create immediate cost increases and compliance hurdles, threatening the viability of long-standing supply arrangements.
Investment and ownership rules, including nationalization threats or new requirements for local ownership, have long been an issue in certain areas of the world and can impose issues relating to reliability of supply.
Export and import controls, especially for sectors deemed critical to national security, are increasingly an issue that can disrupt supply chains (and sales opportunities), as shown by the tit-for-tat export control restrictions imposed by the U.S. and Chinese governments.
New supply chain transparency requirements, particularly relating to forced labor, human trafficking, and other issues relating to ethical sourcing, are an increasing fixture in numerous countries, bringing new compliance requirements into play.

Regulatory Volatility and Enforcement Surges. Political transitions often bring regulatory whiplash. Governments may:

Strengthen or relax environmental or safety compliance requirements, forcing companies to alter sourcing or manufacturing processes.
Increase labor protections, raise minimum wage thresholds, or alter worker classification laws, affecting cost structures and vendor relationships.
Expand customs enforcement, scrutinizing transshipment, valuation, and origin claims, or the purported application of safety or other regulatory requirements, as a means of throttling imports.
Impose measures relating to requirements to include local ownership, thereby potentially disrupting supply arrangements.

Human Rights Scrutiny and Forced Labor Enforcement. Increasing international requirements that companies take ownership of their supply chains create heightened risks of detained goods. International norms increasingly require due diligence around modern slavery, child labor, and workplace safety, with enforcement by regulators and increasing levels of consumer concern. Failure to proactively identify and mitigate these risks can result in shipment seizures, reputational harm, and civil or criminal penalties.

Infrastructure Risks and Local Disruption. In regions experiencing political turmoil, the physical movement of goods may be compromised. This includes:

Port closures, customs slowdowns, or strikes at key logistics hubs.
Cyberattacks, which are increasingly used in geopolitical conflicts to target supply chain systems.
Civil unrest, which may block roads, damage facilities, or disrupt telecommunications and power supplies.

These events may not originate from government action, but political instability often impairs the ability of authorities to respond effectively.

Geopolitical Tensions Creating Supply Chain Fragmentation. Beyond specific countries, larger geopolitical shifts, such as growing tension between Western countries and China, are creating long-term structural fragmentation in global supply chains. Companies are increasingly being forced to choose between compliance with U.S. export controls and access to the Chinese market, for example. Political alliances are now shaping sourcing decisions and manufacturing footprints in ways that previously were driven purely by cost and efficiency.

In short, political instability doesn’t just create headline risk – it can unravel entire sourcing strategies, invalidate long-term contracts, and expose companies to significant legal and operational exposure. Understanding where and how these risks arise is the first step in building a resilient, adaptable, and compliant supply chain.

II. The New-Found Instability Source: The U.S. Government as a Political Risk Factor

Political risk is no longer confined to unstable regimes or emerging markets. In recent years, the United States has emerged as a significant and often unpredictable source of trade disruption and supply chain upheaval. This shift has injected a level of regulatory volatility and uncertainty into global commerce that rivals traditional political risk hotspots. Companies that once viewed U.S. regulatory systems as a foundation of global stability are now recalibrating their risk models to account for abrupt policy swings, aggressive enforcement, and the erosion of long-term trade norms.

Examples of U.S. contributions to supply chain uncertainty include:

Sweeping and Sudden Tariff Regimes. Perhaps the most visible example of U.S.-driven instability has been the imposition of massive, often unilateral tariffs:

Section 232 Tariffs (national security rationale) placed duties on imported steel and aluminum, disrupting supply chains in construction, manufacturing, and automotive industries.
Section 301 Tariffs (targeting China’s trade practices) affected thousands of products across electronics, consumer goods, industrial components, and agricultural commodities.
Global and reciprocal tariffs have increased the cost of importing into the United States, while introducing sharply varying tariff rates for different countries, which changes the calculus of where it is most cost-efficient to source from international supply chains.

The use of newly imposed tariffs by the U.S. government to create negotiating leverage has increased unpredictability in sourcing decisions.

These measures were often enacted with little notice, further increasing importing uncertainty. They forced importers to restructure sourcing strategies, renegotiate contracts, absorb steep cost increases, or pass along suddenly increased sourcing costs, virtually overnight. In many cases, suppliers that did not build in pricing or sourcing flexibility into their supply chains found themselves locked into pricing or delivery terms that no longer reflect legal or economic realities.

Customs Enforcement as Foreign Policy. Customs acts as the gatekeeper to the U.S. market, which means that Customs enforcement has impacts beyond tariffs. Under the first Trump administration and continuing into the Biden era, Customs has dramatically expanded its enforcement toolkit, especially on supply chain integrity and human rights grounds:

The UFLPA creates a rebuttable presumption that goods linked to China’s Xinjiang region are made with forced labor. This presumption shifts the burden to importers, who must provide detailed proof of supply chain cleanliness down to the raw material level.
CBP has also issued an increasing number of Withhold Release Orders (WROs), which allow border agents to detain or seize goods suspected of violating labor or origin requirements.

This form of enforcement turns compliance from a documentation function into an operational imperative, requiring companies to map their supply chains far beyond Tier 1 suppliers and implement traceability systems capable of withstanding government scrutiny.

Export Controls and Geopolitical Targeting. U.S. export control policy has also become more aggressive, particularly in strategic sectors like semiconductors, artificial intelligence, aerospace, and telecommunications. New rules now:

Restrict the export of sensitive technologies to China and other adversarial states.
Expand the definition of “U.S. person” involvement, capturing foreign subsidiaries and third-party entities that handle U.S.-origin goods or software.
Target entities (particularly in China) involved in dual military and civil activities, even if they are purchasing for commercial purposes.

The Bureau of Industry and Security (BIS) has increased its focus on dual-use items and foreign reexports, broadening the scope of required licensing and end-use certifications. This creates uncertainty for global supply chains that involve any U.S.-origin components or software, even in minimal quantities.

Strategic Decoupling and “Onshoring” Pressure. Beyond specific rules and enforcement, U.S. industrial policy now encourages companies to move operations away from perceived adversaries (particularly China) toward “friendly” nations or domestic facilities. Incentives under laws like the CHIPS Act and the Inflation Reduction Act reward domestic sourcing, but also introduce:

Regulatory pressure to decouple from suppliers linked to strategic competitors.
Uncertainty about future eligibility for government funding if supply chains remain too globalized.

This politicization of sourcing adds a layer of strategic uncertainty to long-term supplier relationships and capital investment planning.

In sum, international sourcing has become markedly less predictable. From tariffs and forced labor enforcement to export controls, companies that depend on international supply chains need to plan for unexpected and potentially major changes. Supply chain resilience today means planning not just for foreign upheaval but for the next policy shift or tariff announcement from Washington. In Part II of this series, we provide advice on how companies with international supply chains can cope with these new risks.

We will be posting a weekly article exploring different facets of Navigating Legal Challenges in Global Supply Chain Management.

If you would like further information, please reach out to the authors or your Foley relationship partner.

The Foley International Government Enforcement Defense & Investigations Team and Supply Chain Teams are monitoring all international trade developments, including any modifications, clarifications/guidance, or additional measures introduced by the Trump administration, which we are posting as they occur on our Tariff & International Trade Resources blog. Our white paper on “Managing Supply Chain Integrity Risks” provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs. In addition, our “Managing Import and Tariff Risks During a Trade War” outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment.

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