For multinational companies, sell-side contracts — customer, distributor, reseller, licensing, and service agreements — often define the company’s front-line regulatory exposure. These agreements govern how products are sold, priced, shipped, supported, and represented in the market, and they frequently determine who bears responsibility for regulatory compliance, trade costs, and downstream conduct. Yet sell-side contracts are often negotiated primarily around revenue, margins, and speed to close, with compliance considerations addressed inconsistently or late in the process.

As detailed in Parts I and II of this risk-assessment self-check series, we are publishing a series of self-check assessment guides covering the key regulatory and contractual risk areas for multinational companies. This article provides Part III, which is a self-check assessment for conducting a sell-side contracts review. Part II covered the topic of conducting a buy-side contracts review; Part I provided a self-check for general compliance.

Regulators increasingly look to customer-facing arrangements to assess whether compliance expectations are embedded in commercial reality. Sell-side contracts shape pricing behavior, market access, use of intermediaries, data flows, export and sanctions exposure, tariff pass-through, and post-sale obligations. Weak or inconsistent sell-side contracting practices can undermine broader compliance programs, particularly where distributors or customers act on the company’s behalf in higher-risk markets.

This self-check is designed to help companies assess whether they have a structured, risk-based approach to managing sell-side contracts, rather than a fragmented or purely sales-driven one. It focuses on governance, risk assessment, contracting standards, trade-cost allocation, and lifecycle management — not on specific regulatory regimes or boilerplate clauses. A “no” answer does not automatically indicate a legal violation, but it may signal a systemic gap that warrants attention based on the company’s markets, customers, and distribution model.

I.          Governance & Ownership

• Is there clear ownership for sell-side contracting standards across legal, compliance, sales, and finance functions?
• Are roles and responsibilities defined for: (1) contract drafting and negotiation; (2) compliance review and approval; (3) pricing and discount authority; and (4) ongoing contract oversight?
• Are escalation paths clearly defined when sales teams seek deviations from standard compliance or risk-allocation terms?

II.         Risk Assessment & Contract Scoping

• Does the company apply a risk-based framework to determine which sell-side contracts require enhanced review?
• Does the risk assessment consider: (1) customer type and location; (2) sales channels (direct, distributor, reseller, online); (3) use of intermediaries or agents; (4) government or state-owned customers; and (5) cross-border delivery of goods, services, or data?
• Are contracting requirements scaled to risk, rather than applied uniformly or inconsistently?

III.        Contract Standards & Consistency

• Does the company maintain baseline sell-side contract standards or templates aligned with its business models?
• Are compliance-related provisions: (1) consistent across regions and customer types; (2) commercially workable and understood by sales teams; and (3) updated periodically to reflect evolving risks and enforcement trends?
• Is there a documented process for approving deviations from standard sell-side terms?
• Are relevant sales personnel trained in best practices for compliance and contracting?

IV.        Integration with Compliance Programs

• Do sell-side contracts reinforce the company’s broader compliance framework, including: (1) codes of conduct or ethical standards; (2) restrictions on improper conduct by distributors or resellers; and (3) audit, cooperation, and termination rights?
• Are customers or intermediaries contractually required to comply with applicable laws relevant to the transaction?
• Are expectations clearly communicated to counterparties, not just embedded in legal language?

V.         Pricing, Discounts & Fair Dealing Controls

• Are pricing, discounts, rebates, and incentives subject to defined approval and documentation processes?
• Do contracts align with internal pricing authority and discount controls?
• Are sales practices monitored to ensure consistency with contractual terms and compliance expectations?

VI.        Tariff & Trade Risk Allocation

• Do sell-side contracts clearly address responsibility for customs duties, tariffs, taxes, and import-related charges and how to handle potential refunds?
• Are Incoterms® expressly specified, current, and consistent with the company’s logistics and delivery practices?
• Do contracts clearly allocate responsibility for: (1) importer of record status; (2) customs clearance; and (3) payment of duties and tariffs?
• Do contracts address unexpected or newly imposed tariffs, including: (1) changes in tariff rates or classifications; (2) new trade remedies or retaliatory tariffs; and (3) shifts in country-of-origin treatment or enforcement posture?
• Is there a defined mechanism for price adjustments, renegotiation, or termination in response to significant trade-cost changes?
• Are limitations placed on retroactive or unilateral tariff pass-throughs?
• Are customers required to cooperate in documenting and resolving tariff disputes where trade costs are contested?

VII.       Contract Lifecycle & Change Management

• Is there a process to ensure sell-side contracts are reviewed and updated when business or regulatory risks change?
• Are contracts revisited following: (1) entry into new markets; (2) changes in sales channels or distribution models; and (3) significant regulatory or tariff developments?
• Are any legacy obligations from expired contracts identified and addressed?

VIII.      Monitoring, Enforcement & Remediation

• Are there mechanisms to monitor compliance with sell-side contractual obligations?
• Is there a defined process for addressing: (1) customer or distributor non-compliance (2) repeated breaches or circumvention of controls; (3) misalignment between contract terms and actual practices?
• Are contractual remedies — such as remediation, suspension, or termination — used in practice when warranted?

If you would like to help analyzing the results of your compliance self-check, please reach out to the authors or your Â鶹ֱ˛Ą relationship attorney.

Would you like more practical compliance tips like these? Sign up to receive updates on Â鶹ֱ˛Ąâ€™s Supply Chain page.

Would you like more practical compliance tips like these? The Â鶹ֱ˛Ą International Trade & National Security Team is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our Tariff-ied! and What Every Multinational Should Know articles.

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 Customs.

In June, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a fresh round of new and amended Venezuela-related general licenses (GLs) targeting sectors such as energy, financial services, and aviation. Taken together, these actions signal OFAC’s continued recalibration of the Venezuela sanctions program — tightening restrictions in some areas while carving out narrow pathways for certain commercial and humanitarian activities. Companies with exposure to Venezuela should review these developments carefully to determine whether their operations fall within the scope of the new authorizations or, equally important, within the transactions that remain squarely prohibited.

These GLs continue the shift that began in January 2026 — after years of increasingly restrictive sanctions targeting Venezuela’s government and state-owned enterprises, OFAC has now issued more than a dozen general licenses authorizing significant new categories of oil, gas, mining, and financial-services activity involving Venezuela. These changes have opened new opportunities for business in Venezuela, subject to defined limits and OFAC’s ability to amend and withdraw. Indeed, the distinctions and carveouts present in OFAC’s General Licenses serves as an important reminder of the broader licensing requirements in place when conducting business with Venezuela while the U.S. continues to promote investment in this nation recently subject to comprehensive sanctions.

Permissible Activity Under Key General Licenses

Until early 2026, OFAC’s Venezuela program provided sanctions relief mainly through individual, company-specific licenses.[1] However, after Venezuela’s January 2026 hydrocarbons law reform, OFAC quickly began issuing categorical general licenses, rather than authorizing relief to one company at a time. In June, a flurry of activity resulted in the following General Licenses and/or their amendments:

• General License 46[2] and its current amendments allow “established U.S. entities” (companies organized in the United States on or before January 29, 2025) to purchase, export, and refine Venezuelan-origin crude oil and petroleum products.
• General License 47[3] permits the export of U.S.-origin diluents, which are needed to process Venezuela’s heavy crude, to Venezuela.
• General License 48[4], as currently amended, authorizes U.S. persons to supply goods, technology, and services needed for oil, gas, and petrochemical exploration, development, and production, as well as electricity generation in Venezuela (though it does not authorize forming new joint ventures in Venezuela).
• General License 49[5], as currently amended, allows companies to negotiate and sign contingent investment contracts covering Venezuela’s oil, gas, petrochemical, and electricity sectors, though each contract still requires separate OFAC approval before it can take effect. This license does not authorize performance.
• General License 50B[6], as currently amended, goes further, authorizing actual oil and gas operations in Venezuela by six named companies, including Eni, Repsol, and Shell. Companies not on this list cannot rely on GL 50 to conduct operations.
• General License 5X authorizes, effective August 4, 2026, all transactions related to the PetrĂłleos de Venezuela, S.A. (PdVSA) 2020 8.5 Percent Bond that would otherwise be prohibited under Executive Order 13835. Note that the authorization does not take effect until August 4, so transactions before that date in the bond remain prohibited, and market participants should plan accordingly.

While these General Licenses do not have fixed expiration dates, several of them have already undergone multiple amendments, reflecting how quickly OFAC is willing to adjust the program’s scope. On top of the potential for sudden amendment or recission, each license comes with conditions that will affect how a transaction is structured. For example, contracts with the Venezuelan government or PdVSA generally must be governed by U.S. law and resolved in U.S. courts; payments to blocked parties generally must be routed through U.S.-controlled accounts; payments in cryptocurrency are prohibited; and transactions involving parties connected to Russia, Iran, North Korea, Cuba, or China are excluded. Companies should confirm that each of these conditions is satisfied before assuming a general license covers a proposed transaction.

Availability of Specific Licenses

Beyond the general licenses, OFAC has also shown more willingness to grant specific licenses for transactions that fall outside the general licenses but align with current policy objectives. For example, OFAC has indicated a favorable view toward licenses the resale of Venezuelan-origin oil for use in Cuba, despite the limitation against Cuban transactions under the general licenses.[7] Companies pursuing a transaction that is not squarely covered by a general license should consider whether a specific license application is a viable path forward.

Cautious Compliance Optimism

Internally, multinational compliance departments can move from blanket prohibitions on Venezuela-related activities, toward transactions-specific review. The operative compliance question is no longer: Does this transaction involve Venezuela? Rather, companies should now ask: does this Venezuelan-related transaction fall within the scope of an applicable general or specific license?

However, the same licensing mechanism that allows OFAC to expand commercial opportunities also allows OFAC to restrict or remove them. Unlike statutory sanctions relief, none of which is currently pending before Congress, the licensing framework rests entirely on OFAC’s discretionary licensing authority. General licenses can be amended, narrowed, suspended, or revoked with little or no notice, and businesses should not treat the current framework as a permanent normalization of U.S.-Venezuela economic relations.

OFAC has already exercised this power twice in recent history. OFAC has previously authorized specific companies’ Venezuela operations through individual licenses, only to reverse course and convert those authorizations into wind-down periods when political conditions changed. More recently, in June 2026, OFAC issued a general license authorizing the sale of Iranian oil, only to revoke it entirely just over two weeks later following renewed conflict with Iran.[8] Businesses should assume that the current Venezuela licenses could be reversed on a similarly short timeline if political or security conditions change, but this month’s reaffirmation of the validity of these licenses indicates they may remain durable.

Takeaways for Your Business

For prospective transactions involving Venezuelan parties,

• Assess whether a transaction fits within the scope of an applicable general license, including its conditions on counterparties, payment structures, and reporting obligations;
• Screen all counterparties against OFAC’s sanctions lists;
• Evaluate whether a specific license is needed, or would be advisable, for any activity not squarely covered by a general license; and
• Build flexibility into contracts and compliance programs through sanctions clauses, termination rights, and contingency planning, in case the underlying license is amended or revoked.

Â鶹ֱ˛Ąâ€™s team of experienced trade and national security attorneys advises U.S. and multinational companies on sanctions compliance, export controls, and other regulatory issues affecting cross border operations, including in the energy sector. To discuss how Â鶹ֱ˛Ą & Lardner LLP can assist with navigating Venezuela’s General and Specific Licenses, contact Olivia Singelmann (osingelmann@foley.com), Jack Korba (jkorba@foley.com), Parker White (PWhite@foley.com), or Ahmad Murrar (AMurrar@foley.com).

This article was prepared with the assistance of 2026 summer associate JJ Gramlich.

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[1] See, e.g.,U.S. Department of the Treasury, Treasury Issues Venezuela General License 41 Upon Resumption of Mexico City Talks, Press Release (Nov. 26, 2022).

[2] Office of Foreign Assets Control, U.S. Department of the Treasury, General License No. 46A: Authorizing Certain Activities Involving Venezuelan-Origin Oil, 31 C.F.R. part 591 (June 2026) (amending General License No. 46 (Jan. 29, 2026)).

[3] Office of Foreign Assets Control, U.S. Department of the Treasury, General License No. 47A: Authorizing the Sale of U.S.-Origin Diluents to Venezuela, 31 C.F.R. part 591 (June 2026) (amending General License No. 47 (Feb. 3, 2026)).

[4] Office of Foreign Assets Control, U.S. Department of the Treasury, General License No. 48A: Authorizing the Supply of Certain Items and Services to Venezuela, 31 C.F.R. part 591 (June 2026) (amending General License No. 48 (Feb. 10, 2026)).

[5] Office of Foreign Assets Control, U.S. Department of the Treasury, General License No. 49A: Authorizing Negotiations of and Entry Into Contingent Contracts for Certain Investment in Venezuela, 31 C.F.R. part 591 (June 2026) (amending General License No. 49 (Feb. 13, 2026)).

[6] Office of Foreign Assets Control, U.S. Department of the Treasury, General License No. 50B: Authorizing Transactions Related to Oil or Gas Sector Operations in Venezuela of Certain Entities, 31 C.F.R. part 591 (June 2026) (amending General License No. 50 (Feb. 13, 2026)).

[7] Office of Foreign Assets Control, U.S. Department of the Treasury, FAQ 1238: Would OFAC approve the resale of Venezuelan origin oil to Cuba?

[8] John F. Korba, Olivia S. Singelmann & Teresa N. Taylor, OFAC Rescinds Iranian Sanctions Relaxation Following Renewed Conflict, Â鶹ֱ˛Ą & Lardner LLP (July 9, 2026).

Session 1: Tariff Developments in Focus: Where Are Tariffs Going and What Should Companies Be Doing Now to Prepare for Trump Tariffs 2.0? | 12:00 p.m. – 1:00 p.m. CT

Now that the IEEPA tariffs have been invalidated, the new focus of the Trump administration is coming into view: new Section 301 tariffs, expanded Section 232 tariffs, and enhanced enforcement. Trump Tariffs 2.0 will bring major changes to tariff rates, product coverage, and the prospect of sharply different tariffs on different countries. In this session, we will provide an update on the IEEPA tariff refunds and our latest insights into where tariff policy appears to be heading, and what practical steps you should be taking now to assess your exposure and prepare for fast-moving trade policy changes.

Session 2: Life After IEEPA: What Companies Should Be Doing Now on Refund Claims, Commercial Disputes, and Supply Chain Strategy | 1:00 p.m. – 2:00 p.m. CT

With the IEEPA tariffs now invalidated, companies face two urgent and overlapping challenges. First, they must prepare for disputes over tariff refunds, including who may claim them, who may retain them, and how to respond to demands from customers, distributors, and other counterparties. Second, despite the invalidation of the IEEPA tariffs, the broader tariff environment remains volatile, meaning that shifting country-specific exposure continuing to reshape sourcing decisions. In this session, we will provide practical guidance on the steps companies should be taking now to protect their positions on refund-related disputes while also building more flexible and resilient supply chains through better sourcing strategies, improved trade data visibility, and stress-testing of key assumptions.

To register for this two-part webinar, please click on the RSVP button.

As detailed in Part I of this risk-assessment self-check series, we are publishing self-check assessment guides covering the key regulatory and contractual risk areas for multinational companies. This article provides Part II, which is a self-check assessment for conducting a buy-side contracts review. Part I, which provides a general compliance self-check, is found here.

For multinational companies, buy-side contracts are one of the most consequential — and least systematically reviewed — sources of compliance risk. Vendor, supplier, manufacturing, and logistics agreements often determine who controls data, who bears regulatory risk, who makes representations to government authorities, and who is responsible when something goes wrong. Yet in many organizations, these contracts are negotiated primarily for price, delivery, and commercial flexibility, with compliance considerations addressed late in the process or inconsistently across regions.

Regulators increasingly assess not only whether companies have compliance programs, but whether those programs are embedded in contractual relationships that shape real-world behavior. Buy-side contracts are a key mechanism for operationalizing compliance expectations, allocating risk, and enforcing standards across complex global supply chains. Weak or inconsistent contracting practices can undermine even well-designed compliance programs — particularly where third parties control manufacturing, sourcing, logistics, data processing, or regulatory interactions.

This self-check is designed to help companies assess whether they have a structured, risk-based approach to managing buy-side contracts, rather than a fragmented or purely commercial one. It focuses on governance, risk assessment, contracting processes, oversight, and remediation — not on specific regulatory clauses or legal doctrines. A “no” answer does not automatically indicate a contractual failure or compliance breach, but it may signal a systemic gap that warrants attention, particularly where suppliers operate in higher-risk jurisdictions or perform compliance-critical functions.

I.          Governance & Ownership

• Is there clear ownership for buy-side contracting standards across legal, compliance, procurement, and business teams?
• Are roles and responsibilities defined for: (1) contract drafting and negotiation; (2) compliance review and approval; and (3) ongoing contract oversight?
• Are escalation paths clearly defined when a supplier resists compliance-related terms?

II.        Risk Assessment & Contract Scoping

• Does the company apply a risk-based approach to determining which buy-side contracts require enhanced compliance review?
• Does the risk assessment consider: (1) supplier location and jurisdictional risk; (2) nature of goods or services provided; (3) access to data, systems, or regulated activities; (4) use of sub-suppliers or subcontractors.
• Are contract requirements scaled to risk, rather than applied uniformly or inconsistently?

III.      Contract Standards & Consistency

• Does the company maintain baseline contracting standards or templates for buy-side agreements?
• Are compliance-related provisions: (1) clearly drafted and commercially workable; (2) consistent across regions and business units; (3) updated periodically to reflect evolving risks?
• Is there a defined process for approving deviations from standard compliance terms?

IV.       Integration with Compliance Programs

• Do buy-side contracts reinforce the company’s broader compliance framework, including: (1) codes of conduct or supplier standards; (2) audit and access rights; (3) information-sharing and cooperation obligations.
• Are suppliers contractually required to flow down relevant obligations to sub-suppliers where appropriate?
• Are compliance expectations clearly communicated to suppliers, not just embedded in legal text?

V.        Contract Lifecycle Management

• Is there a process to ensure contracts are reviewed, updated, or renegotiated when risk profiles change?
• Are contracts revisited following: (1) regulatory changes; (2) changes in supplier operations; (3) Incidents, regulator audits, or enforcement actions?
• Are any ongoing obligations from expired or legacy contracts identified and addressed?

VI.       Tariff & Trade Cost Risk Allocation

• Do buy-side contracts clearly allocate responsibility for tariffs and import-related charges, including how such costs are calculated and invoiced?
• Are Incoterms® expressly specified, current, and used consistently with the parties’ actual logistics and commercial practices?
• Do contracting teams understand how selected Incoterms affect: (1) importer of record designation; (2) responsibility for customs clearance; and (3) exposure to duties, tariffs, and taxes?
• Do contracts address unexpected or newly imposed tariffs, including: (1) changes in tariff rates or classifications; (2) new trade remedies (e.g., safeguard, antidumping, or retaliatory tariffs); and (3) country-of-origin rule changes or enforcement shifts.
• Is there a defined contractual mechanism for price adjustments, cost sharing, or renegotiation in response to significant tariff changes? Are there provisions relating to how to handle any tariff refunds?
• Do contracts prohibit or restrict unilateral pass-through of tariffs without notice or substantiation?
• Are suppliers required to provide accurate and timely information necessary to manage tariff exposure, such as: (1) country of origin; (2) production locations and processes; (3) and tariff classifications and valuation data?
• Are suppliers contractually obligated to notify the company of changes that could affect tariff treatment, including changes in sourcing, manufacturing, or routing?
• Are audit, cooperation, and information-access rights sufficient to verify tariff-related representations?
• Is there a defined process for addressing tariff disputes, including documentation, escalation, and potential recovery of overpaid duties?

VII.     Monitoring, Enforcement & Remediation

• Are there mechanisms to monitor supplier compliance with contractual obligations?
• Do your contracts require that the suppliers submit annual questionnaires?
• Is there a defined process for addressing: (1) suspected breaches; (2) non-cooperation; (3) repeated compliance failures?
• Are contractual remedies — such as remediation plans, suspension, or termination — used in practice when warranted?

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If you would like to help analyzing the results of your compliance self-check, please reach out to the authors or your Â鶹ֱ˛Ą relationship attorney.

Would you like more practical compliance tips like these? Sign up to receive updates on Â鶹ֱ˛Ąâ€™s Supply Chain page.

The Â鶹ֱ˛Ą International Trade & National Security Team also is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our Tariff-ied! and What Every Multinational Should Know articles.

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 Customs.

The Trump administration’s new Section 232 action on polysilicon and its derivatives is poised to materially reshape the cost, compliance, sourcing, and financing environment for U.S. importers across the solar supply chain and for energy companies that depend on solar modules, cells, wafers, and polysilicon inputs. Announced on August 6, 2026, and published in the Federal Register on August 11, the proclamation gives companies a relatively short implementation window before the new measures take effect on December 4, 2026.

At a high level, the action reflects a significant broadening of U.S. trade restrictions in this sector. It moves beyond the prior focus on solar cells and modules and reaches further upstream to cover polysilicon itself, along with ingots and wafers. The administration has framed the action as a national security measure intended to support domestic semiconductor and solar supply chains, including solar-grade polysilicon and derivative solar products used in defense programs and AI-related applications. For energy-sector participants, however, the immediate effect will be commercial and operational: higher landed costs, new price-floor rules, more complicated entry requirements, greater supply-chain diligence, and substantially increased compliance risk.

The Section 232 action combines two principal tools. First, it establishes minimum import prices for polysilicon and certain derivative products, enforced through additional specific duties where import values fall below prescribed thresholds or where required documentation is not provided. Second, it imposes a new ad valorem tariff on downstream derivative products such as ingots, wafers, solar cells, and solar modules. Those duties generally apply in addition to other existing trade measures, meaning that many importers may face layered tariff exposure rather than a single new duty line.

For companies importing polysilicon or polysilicon-based products, the impact goes well beyond a straightforward tariff increase. The new framework introduces entry-time certifications, pricing documentation requirements tied to U.S. sales, anti-stockpiling scrutiny during the pre-effective-date period, and unusually severe penalties for noncompliance, including the possibility that an importer and its affiliates could be permanently barred from importing covered products. Importers using foreign-trade zones, bonded warehouse strategies, related-party sourcing structures, or drawback programs may also need to revisit those arrangements in light of the new rules.

In short, companies that buy polysilicon, wafers, cells, or modules from overseas suppliers should not treat this as a routine tariff announcement. They should be using the four-month runway before December 4 to recalculate landed costs, evaluate supply contracts, test documentation systems, and assess whether current sourcing and customs practices remain workable under the new regime. This article summarizes the two main actions taken by the proclamation and then outlines the practical steps importers should be taking now to prepare.

Energy-Sector and Renewable Supply-Chain Context

For energy companies, independent power producers, solar developers, EPC contractors, and module purchasers, the proclamation should be viewed as a supply-chain and project-economics development, not only as an import compliance matter. The covered products sit at the upstream and midstream stages of the crystalline silicon solar value chain, so the measures may affect module procurement, project pricing, PPA negotiations, EPC pass-through clauses, tax equity and debt diligence, and the bankability of supply arrangements that depend on imported polysilicon, wafers, cells, or modules.

For solar panel manufacturers and upstream suppliers, the measure has a dual effect. It may increase near-term input costs where companies rely on imported wafers, cells, or modules, but it also creates a protected pricing environment and a Commerce-administered onshoring incentive pathway for companies willing to build, expand, or refurbish U.S. facilities that produce polysilicon, ingots, wafers, or cells. Those incentives may become relevant to capital planning, offtake structuring, domestic-content strategies, and manufacturing investment decisions.

The Core Section 232 Polysilicon Tariff Actions

The proclamation relies on two principal trade tools to adjust imports of polysilicon and its derivatives: a new minimum import price system and a new ad valorem tariff on downstream products. Together, these measures create both a price floor and an additional duty burden for covered imports entering the United States on or after December 4, 2026.

First, the administration is setting new minimum import prices across the polysilicon chain. The first major action is the creation of a minimum import price, or MIP, regime for polysilicon and selected derivative products. The covered products include polysilicon, polysilicon ingots and wafers, solar photovoltaic cells, and solar photovoltaic modules.

The proclamation sets the following MIP levels:

• $21/kg for polysilicon
• $100/kg for polysilicon ingots and wafers
• $0.22/W for solar cells
• $0.38/W for solar modules

The MIP mechanism functions as a tariff-enforced price floor. Importers will be permitted to submit documentation at entry establishing or certifying either that the first arm’s-length sale in the United States of the imported merchandise, or of downstream products made from that merchandise, will occur at or above the applicable MIP, or that the first arm’s-length sale is pursuant to fixed terms in a time-limited contract entered into before August 6, 2026.

If an importer fails to provide the required documentation, the imported merchandise will be subject to a specific tariff equal to the full applicable MIP. If the importer does provide the required documentation, but the entered value on the entry summary is below the MIP, the imported merchandise will be subject to a specific tariff equal to the difference between the entered value and the MIP.

This is a significant departure from a conventional tariff regime. In practical terms, it creates an import price floor while shifting substantial compliance responsibility onto importers. Companies will need to support not only customs valuation, but also, in many cases, the pricing of the first arm’s-length U.S. sale or of downstream products incorporating the imported merchandise. The proclamation also authorizes Commerce to adjust the MIP levels over time to reflect market conditions or other factors affecting fair market value under what it calls non-distorted, free-market conditions. That means importers will need to monitor not only current thresholds, but also the possibility that those thresholds could change after implementation.

Second, the administration has created a new 15% ad valorem tariff on downstream derivatives. The second major action is the imposition of a new 15% ad valorem tariff on certain downstream polysilicon derivative products. Specifically, the tariff applies to polysilicon ingots, wafers, solar cells, and solar modules. Polysilicon itself is not subject to this separate 15% tariff, although it remains subject to the MIP system described above.

For most countries, the new 15% tariff applies in addition to other duties already in force. The proclamation expressly states that the Section 232 duties imposed under this action are to apply in addition to any other duties, taxes, fees, exactions, and charges unless otherwise specified. As a result, importers should expect these duties to stack with other applicable trade measures, including antidumping and countervailing duties and, where relevant, existing Section 301 duties.

The proclamation provides limited country-specific modifications:

• United Kingdom: 10% tariff.
• Japan, South Korea, Taiwan, Switzerland, Liechtenstein, and the EU: combined Section 232 and ordinary Column 1 duty treatment capped at 15%.

Because many covered products are already duty-free under ordinary Column 1 tariff treatment, that modification will not materially reduce the burden for many importers. In many cases, the commercial result will still be a full additional 15% duty on covered downstream imports.

This new Section 232 action is also broader than the earlier Section 201 solar safeguard, which had focused primarily on solar cells and modules and expired in February 2026. The proclamation replaces that narrower framework with a more expansive one that reaches further upstream to cover polysilicon, ingots, and wafers. For importers, energy developers, and manufacturers, that broader scope means the new action affects more points in the solar manufacturing chain and increases the number of transactions, products, and suppliers that may need to be reassessed before the effective date.

What U.S. importers, energy companies, and manufacturers need to do now

For importers and energy-sector participants, the four-month period before the December 4, 2026 effective date should be treated as a preparation window, not a grace period. The new Section 232 framework does not simply raise duty rates. It introduces a more complex pricing and certification regime that will require companies to align customs, procurement, legal, tax, finance, sales, project development, and supply-chain functions. Businesses that wait until the effective date to address these issues may find that they lack the pricing support, contractual protections, entry documentation, lender diligence materials, or internal controls needed to import covered products or support solar project economics without disruption.

At a minimum, importers and companies with energy-sector exposure should be taking the following steps now:

• Rework landed-cost and project-economics models immediately. Importers should begin recalculating total delivered costs for all affected imports entered for consumption, or withdrawn from warehouse for consumption, on or after December 4. This analysis should account for both: (i) the 15% ad valorem tariff where applicable; and (ii) any potential MIP shortfall duty. For some products, the MIP mechanism may have a greater cost effect than the ad valorem tariff, especially where current import prices are materially below the new thresholds. Energy companies and project sponsors should flow that analysis into module procurement budgets, EPC bids, PPA pricing, tax equity sizing, construction-debt assumptions, and change-in-law risk allocations. Companies also should model the possibility that these duties will stack with existing AD/CVD, Section 301, and other applicable charges.
• Review contracts and pricing provisions. The proclamation permits importers to certify that the first arm’s-length sale is pursuant to fixed terms in a time-limited contract entered into before August 6, 2026. Companies should identify whether any existing contracts may qualify and preserve the supporting records now. Importers also should review supplier agreements, customer contracts, distributor arrangements, purchase orders, EPC contracts, module supply agreements, O&M contracts, and financing documents to determine who bears the risk of new tariffs, MIP shortfalls, customs penalties, delayed module availability, and pricing adjustments. Contract renegotiation may be necessary where existing pricing assumptions no longer hold.
• Prepare for new documentation and certification requirements. The MIP regime will require a more intensive entry process than many importers are used to. Importers should prepare to document: (i) entered value and whether it meets the applicable MIP; (ii) the amount of any shortfall if the entered value falls below the MIP; (iii) the first arm’s-length U.S. sale price, or the downstream sale price where relevant; and (iv) whether a pre-August 6 fixed-term contract applies. This will require coordination across customs, legal, procurement, finance, tax, commercial, and project development teams. Importers relying on fragmented records, inconsistent valuation support, or informal transfer-pricing documentation may face elevated compliance risk.
• Scrutinize related-party pricing and intercompany transactions. This point is especially important for multinational groups. The proclamation expressly authorizes Commerce to issue rules, regulations, and guidance to prevent circumvention and evasion, including through manipulation of related-party transactions or transfers of foreign subsidies. Companies using related-party sourcing, contract manufacturing, transfer-pricing arrangements, or intercompany resale structures should review whether their pricing methodology and supporting documentation can withstand heightened scrutiny under the new MIP system.
• Avoid aggressive frontloading without assessing enforcement risk. Because the proclamation instructs Commerce to monitor imports for possible stockpiling ahead of the December 4 effective date, companies should be cautious about sharply increasing import volumes in the interim without a clear business justification. The proclamation does not define what level of increased imports would constitute stockpiling or what restrictions might be imposed if Commerce makes such a determination. Importers should document the commercial basis for any import surge, align forecasting with ordinary demand patterns where possible, and consider whether pre-effective-date import activity could create later enforcement issues.
• Review FTZ and bonded warehouse strategies. Companies using foreign-trade zones or customs warehousing should reassess how covered products are handled before the effective date. The proclamation provides that covered products admitted into a U.S. foreign-trade zone on or after December 4 generally may be admitted only in privileged foreign status, unless eligible for domestic status. It also applies to goods withdrawn from warehouse for consumption on or after the effective date. These rules may limit the flexibility some importers have used to manage tariff exposure or delay duty payment.
• Reassess drawback assumptions. Importers should not assume that manufacturing drawback will remain broadly available for these duties. The proclamation limits drawback eligibility to qualifying articles that are not of a type subject to AD/CVD orders, that are products of designated trade agreement partners, and whose polysilicon content is entirely sourced from those partner countries. For many solar-related products and supply chains, those conditions may sharply limit or eliminate drawback planning as a means of offsetting duty exposure.
• Reassess sourcing, domestic-content, and manufacturing strategy. The measure is intended to push supply chains toward U.S. production or, at a minimum, toward higher-priced and more transparent imports. Companies should therefore reassess: (i) country sourcing mix; (ii) use of imported wafers, cells, and modules; (iii) exposure to overlapping AD/CVD and Section 301 duties; (iv) whether current suppliers can support the necessary pricing and certification requirements; (v) whether alternative sourcing or domestic production options are commercially viable; and (vi) whether manufacturing investments or offtake arrangements can support domestic-content, onshoring, or other project-finance objectives.
• Monitor onshoring incentives. The proclamation includes an onshoring incentive mechanism under which companies that commit to building, expanding, or refurbishing U.S. facilities producing raw polysilicon, ingots, wafers, or cells may receive Section 232 tariff relief for certain imports of covered products and production equipment. Approved plans must include a commitment to begin construction by January 20, 2029, and benefits will depend on Commerce approval and continued compliance. While implementation details are still pending, companies with medium-term U.S. manufacturing plans, strategic offtake arrangements, or project-finance needs should evaluate whether participation in this program could reduce tariff exposure or improve supply-chain bankability.
• Tighten compliance controls now. One of the most serious features of the action is the penalty risk. The proclamation states that if importer documentation is found to be materially inaccurate, or if an importer materially fails to comply with its certification, the importer and its affiliates may be permanently barred from importing covered products into the United States. That raises the stakes well above routine customs compliance. Importers should consider immediate internal audits of classification, valuation, origin, pricing documentation, related-party entries, and resale support for affected products before the rules take effect.

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For U.S. importers, renewable energy companies, solar manufacturers, project sponsors, and financing parties, the new Section 232 polysilicon action is not simply another tariff increase. It is a broader trade-control framework that combines minimum import prices, additional ad valorem duties, enhanced certification obligations, an onshoring incentive pathway, and severe enforcement consequences for noncompliance. In practical terms, that means higher landed costs for many covered products, more intensive customs scrutiny, and increased pressure on companies to revisit sourcing, pricing, contracting, financing, and manufacturing decisions across the solar supply chain.

The window between now and December 4, 2026, is therefore critical. Companies with exposure to imported polysilicon, ingots, wafers, cells, or modules should be using that time to stress-test landed-cost assumptions, confirm that contracts and pricing arrangements can support the new regime, evaluate customs and FTZ strategies, update project-finance and procurement diligence, and ensure that internal documentation and compliance controls are robust enough to withstand government review. Businesses that move early will be better positioned to manage cost increases and reduce enforcement risk; those that do not may find that this measure affects not only import costs, but access to the U.S. market and the economics of solar projects themselves.

If you have questions about how these measures may affect your company, please contact your Â鶹ֱ˛Ą relationship attorney or one of the authors.

Would you like more practical compliance tips like these? The Â鶹ֱ˛Ą International Trade & National Security Team is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our biweekly What Every Multinational Should Know articles.

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 Customs.

Recent Chinese government measures suggest that China is entering a new phase in the development of its counter-sanctions and anti-extraterritoriality framework. For several years, multinational companies have tracked China’s Anti-Foreign Sanctions Law, Blocking Rules, Unreliable Entity List regime, data laws, export control rules, and related measures as part of a growing — though only intermittently enforced — legal architecture. What now appears to be changing is not only the breadth of that framework but the extent to which Chinese authorities may be prepared to formalize and operationalize it in concrete commercial and regulatory settings.

Two new State Council decrees are central to that shift. State Council Decree No. 834 addresses industrial and supply-chain security and creates a broader framework for identifying, monitoring, and responding to risks affecting China’s industrial and supply chains. State Council Decree No. 835 establishes a more formal mechanism for identifying and countering what China characterizes as improper or unjustifiable foreign extraterritorial measures. As State Council regulations, these measures appear to elevate and further institutionalize China’s response toolkit beyond earlier Ministry of Commerce of the People’s Republic of China-level (MOFCOM) rules.

Taken together, the decrees may materially affect how multinationals conduct supplier diligence, sanctions compliance, export-control screening, internal investigations, regulatory responses, data handling, and relationship-management decisions involving Chinese entities. They also reinforce a broader People’s Republic of China (PRC) policy approach in which industrial security, supply-chain resilience, and opposition to foreign extraterritorial measures are treated as interconnected elements of national security and economic governance.

For companies operating in or selling to China, the practical significance is not that China-facing diligence, trade compliance, or regulatory-response work should cease. Rather, these developments strengthen the case for more deliberate conflict-of-laws analysis, tighter governance over China-related information collection and data handling, and more carefully designed escalation protocols when global compliance processes intersect with PRC law.

The Emerging Structure: From Framework-Building to Application

Until recently, many companies treated China’s counter-sanctions, blocking, and anti-extraterritoriality regime as important but not yet fully operationalized. That view is becoming harder to maintain.

China already had several relevant legal tools on the books, including the 2021 Blocking Rules, the Anti-Foreign Sanctions Law, the Unreliable Entity List regime, the Data Security Law, the Personal Information Protection Law, and restrictions on providing documents or data to foreign authorities without approval in certain sectors or circumstances. The new decrees appear to push this architecture further in at least two ways.

First, they appear to formalize institutional mechanisms for identifying and responding to conduct that China views as harmful to its national security, development interests, or legitimate commercial interests. Decree No. 835 reportedly establishes a State Council “working mechanism” involving multiple departments, with the Ministry of Justice playing a central role in identifying foreign measures that China considers unlawful or unjustifiable extraterritorial assertions of jurisdiction. Decree No. 834 likewise appears to establish a coordinated, whole-of-government framework for monitoring, assessing, and responding to risks affecting key industrial and supply chains.

Second, the decrees appear aimed at the mechanics of how foreign legal and compliance demands are implemented in China — particularly where those demands require local information gathering, local cooperation, local remediation, suspension of transactions, or adverse action against Chinese counterparties. In that sense, the measures are not merely symbolic objections to foreign sanctions or investigations. They create more explicit legal hooks for Chinese authorities to characterize foreign trade, sanctions, subsidy, export-control, or investigative measures as objectionable and to restrict implementation or assistance within China.

That matters because many multinational compliance processes are built on assumptions of global consistency. If a counterparty is sanctioned, flagged for export-control or anti-corruption concerns, implicated in forced-labor risk, or subject to an external regulatory investigation, legal or compliance teams of multinationals may assume they can require subsidiaries, affiliates, suppliers, or employees worldwide to collect data, stop transactions, remediate relationships, or respond to regulators in a standardized way. The new PRC measures raise the possibility that those assumptions may no longer hold where China is involved.

The result is not simply a new layer of “China compliance,” but a more direct conflict-of-laws problem. A foreign parent’s global compliance decision may be lawful — or even required — in one jurisdiction, while the local implementation of that decision by a PRC affiliate, employee, or supplier may create separate risk under PRC law. That distinction — between global policy and China-based execution — may become increasingly important in practice.

Decree No. 834: Supply-Chain Security and Limits on Investigative or Information-Gathering Activity

Decree No. 834 reportedly focuses on industrial and supply-chain security and appears intended to create a broader framework for identifying, monitoring, and responding to risks affecting important Chinese industrial and supply chains. In that sense, it appears to do more than regulate discrete corporate conduct. It also establishes a basis for a coordinated governmental approach to supply-chain resilience, including risk monitoring, early warning, and potential intervention where foreign measures or commercial conduct are viewed as disruptive, discriminatory, or harmful to China’s supply-chain interests.

A key implication, however, is that the measure may affect a wide range of supply-chain-related investigations or requests for information conducted in China or directed at China-based actors, especially where those activities are linked to foreign legal mandates or where the collection and transfer of information could implicate PRC restrictions. Commentary on the decree suggests that it reinforces existing PRC limits on unlawful “information collection activities” in the supply-chain context and may increase scrutiny of certain audit or diligence exercises carried out for foreign compliance purposes.

For multinational companies, the activities potentially affected may include:

• supplier audits and supplier questionnaires;
• supply-chain mapping and traceability exercises;
• origin verification;
• sanctions and restricted-party diligence;
• export-control screening and end-use/end-user checks;
• forced-labor, modern slavery, and human-rights diligence;
• Environmental, Social, and Governance (ESG) and sustainability reviews;
• anti-diversion and anti-circumvention inquiries;
• internal investigations involving China-based transactions or personnel; and
• foreign regulator-driven document collection or fact development.

The concern is not necessarily that each of these activities is prohibited as such. Rather, the concern is that the decree appears to add another source of legal risk where the activity is perceived to undermine PRC supply-chain security interests, violate domestic legal requirements, or facilitate foreign measures that China considers objectionable. That risk may be especially acute where the request seeks detailed information about sub-tier suppliers, sourcing relationships, production locations, labor conditions, customer networks, logistics channels, shipment histories, or politically sensitive geographies.

This is particularly relevant for companies that rely on detailed supplier certifications, origin declarations, customer and shipment tracing, raw material disclosures, transaction histories, or factory-level information to satisfy foreign forced-labor laws, sanctions obligations, customs rules, procurement restrictions, or ESG commitments. If obtaining or transferring that information in China is considered inconsistent with PRC requirements, legal exposure could arise not only from the outbound transfer of data but also from the request itself and from the local collection process.

At the same time, Decree No. 834 appears to extend beyond information gathering alone. It may also provide a basis for investigation or countermeasures where foreign persons or entities are seen as interrupting normal market transactions with Chinese parties, discriminating against Chinese parties in supply chains, or otherwise taking actions that materially harm China’s industrial or supply-chain interests. That could have implications not only for diligence programs, but also for certain de-risking, supplier-remediation, refusal-to-deal, or export-control-driven decisions involving Chinese counterparties.

For that reason, companies should be cautious about treating Decree No. 834 as only a data-collection issue. It may also affect how businesses structure supply-chain diversification, communicate sourcing changes, and implement compliance-driven restrictions involving Chinese suppliers or customers.

Decree No. 835: Countering “Unjustifiable” Extraterritorial Measures

Decree No. 835 appears to be the more explicit anti-extraterritoriality instrument of the two. As a State Council regulation, it appears to elevate and formalize China’s anti-extraterritoriality framework beyond the earlier MOFCOM-level Blocking Rules and Unreliable Entity List regime. The decree reportedly establishes a formal State Council working mechanism involving multiple departments, with the Ministry of Justice playing a central role in identifying foreign laws, regulations, or other measures that China considers to constitute unjustifiable or improper extraterritorial jurisdiction.

Once such a determination is made, Chinese authorities may publicly identify the foreign measure and prohibit organizations or individuals from implementing, complying with, or assisting in its implementation. Commentary on the decree also suggests that authorities may issue prohibition or enforcement orders — potentially on an entity-specific or activity-specific basis — directing particular parties to refrain from implementing identified foreign measures.

The decree also reportedly includes a mechanism under which Chinese citizens and organizations may apply for approval or a waiver in special circumstances to implement otherwise prohibited measures, although it remains unclear how workable or frequently used that process will be in practice. For multinational groups, that may be relevant where PRC subsidiaries are asked to carry out sanctions, export-control, or investigation-related actions required by global policy.

Another notable feature is the creation of a new Malicious Entity List, distinct from China’s existing Unreliable Entity List regime. The Malicious Entity List reportedly targets foreign organizations and individuals that implement, assist in implementing, participate in, or promote the implementation of unjustifiable extraterritorial measures. Depending on how this authority is used, the concept of “promoting” such measures could extend beyond direct compliance activity and potentially capture advocacy or support for the underlying foreign action.

This is a meaningful development because it appears to move beyond abstract policy objections toward a more operational system for identifying specific foreign actions and constraining local compliance with them. It therefore increases the legal and practical tension for companies whose global compliance programs require uniform adherence to:

• U.S. sanctions;
• EU or UK sanctions;
• export-control restrictions;
• anti-boycott requirements;
• restricted-party screening results;
• procurement exclusions;
• foreign forced-labor and supply-chain due diligence mandates; and
• foreign competition, subsidy, customs, antitrust, anti-bribery, anti-corruption, data-protection, or enforcement investigations.

The legal friction becomes especially sharp where a foreign parent or headquarters function instructs a China subsidiary, branch, affiliate, employee, or supplier to take concrete action because of a foreign law or regulatory demand. That action might include collecting information, producing documents, blocking a customer, declining a shipment, suspending payment, terminating a distributor, delisting a supplier, or answering a regulator’s questionnaire. Under Decree No. 835, the implementation of that step may itself become the relevant issue under PRC law.

The decree may also increase litigation risk. Commentary indicates that Chinese individuals or entities harmed by implementation of an identified foreign extraterritorial measure may have a private right of action against the implementing party. For multinationals, that raises the possibility that a decision taken to comply with foreign legal requirements could create not only regulatory exposure in China but also civil claims from affected Chinese counterparties.

In that sense, the decree raises not just sanctions risk, but governance risk. Many multinational systems are not built to isolate China-facing implementation steps from globally triggered compliance decisions. If a foreign measure is identified as unjustifiable under PRC law, routine internal operating processes may inadvertently place China entities or personnel in the position of executing a prohibited instruction.

How These Decrees Interact with the Existing PRC Framework

The importance of Decrees 834 and 835 is magnified when viewed together with China’s broader legal architecture.

Several existing PRC regimes are already relevant to cross-border compliance activity:

• the 2021 Blocking Rules;
• the Anti-Foreign Sanctions Law;
• the Data Security Law;
• the Personal Information Protection Law;
• export-control restrictions;
• state secrets and commercial secrets rules;
• sector-specific rules on data, archives, mapping, finance, and statistics; and
• restrictions on providing evidence or information to foreign authorities without approval in certain contexts.

The new decrees appear to sit on top of that architecture and provide additional grounds to challenge foreign-facing information collection and compliance implementation. In practical terms, this means that a single corporate action may trigger multiple PRC issues at once. For example:

• a supplier questionnaire may raise supply-chain security concerns;
• transmitting the response abroad may raise data transfer issues;
• using the information to terminate the supplier based on foreign sanctions may raise anti-extraterritoriality issues; and
• cooperation with a foreign regulator using China-located documents may raise evidence-transfer or regulatory cooperation restrictions.

This layering effect is important for clients because legal risk may no longer be manageable through a single workstream. Trade compliance, internal investigations, data privacy, employment, procurement, and local regulatory teams may all need to be involved.

Concrete Signs of Enforcement

The clearest reason these developments matter is that Chinese authorities appear to have begun applying them in identifiable cases.

MOFCOM’s May 2, 2026, Blocking Order

On May 2, 2026, MOFCOM reportedly issued a blocking order prohibiting recognition, enforcement, or compliance with certain U.S. sanctions imposed on five Chinese companies allegedly involved in Iranian petroleum transactions.

If widely understood correctly as the first formal invocation of China’s 2021 Blocking Rules, the order is a major development. For years, many companies understood the Blocking Rules to be part of a latent legal toolkit that may or may not be used. A formal blocking order changes the analysis. It gives companies a live example of a situation in which PRC law may expressly prohibit compliance with foreign sanctions.

That creates immediate practical problems for any party dealing with the named entities, including:

• financial institutions deciding whether to process payments;
• insurers and reinsurers assessing coverage;
• commodity traders evaluating cargo exposure;
• shipping and logistics companies deciding whether to carry or service goods;
• suppliers and customers assessing contract performance; and
• multinational groups deciding how sanctions controls should be applied across affiliates.

The dilemma is straightforward but serious: continuing to deal with a named Chinese company may raise foreign sanctions concerns, while refusing to deal or taking restrictive action because of those sanctions may raise PRC blocking or anti-extraterritoriality concerns.

Ministry of Justice Announcement on the EU FSR Investigation of Nuctech

On May 15, 2026, the Ministry of Justice reportedly issued an announcement regarding the EU Foreign Subsidies Regulation (FSR) investigation of Nuctech. The announcement concluded that certain EU investigative practices constituted improper extraterritorial jurisdiction measures under Decree No. 835 and stated that organizations and individuals may not execute or assist in executing those measures.

This development is significant beyond the Nuctech matter itself. It signals that China may use Decree No. 835 not only against sanctions-related measures but also against foreign regulatory investigations that seek information or cooperation from within China.

That has potentially wide implications for regulatory response work. Foreign agencies increasingly seek information that is operationally or physically located in China, including accounting data, procurement files, subsidy-related information, internal communications, source data, emails, pricing materials, supply-chain records, and witness access. If complying with those requests is characterized by PRC authorities as assisting improper extraterritorial measures, companies may face a direct legal conflict between foreign cooperation expectations and Chinese prohibitions.

Operational Risk Areas for Multinational Companies

These developments are likely to affect several recurring business processes.

• Supplier diligence and traceability. Programs aimed at identifying forced labor, sanctions exposure, diversion risks, ESG failures, or prohibited sourcing often rely on deep supply-chain visibility. Where China suppliers are asked to disclose sub-tier suppliers, production locations, labor arrangements, customer lists, shipment paths, raw material origins, or ownership information, PRC legal issues may arise, particularly if the request is framed as necessary to satisfy foreign legal restrictions.
• Global sanctions-screening and restricted-party controls. Many companies run centralized screening tools that automatically block, pause, or escalate transactions once a sanctions-related hit is identified. If a Chinese counterparty is affected and the basis for the action is a foreign measure that China has opposed or blocked, there may be risk in implementing that result automatically within China or through China personnel.
• Export-control and end-use diligence. End-user and end-use checks involving Chinese customers, distributors, and downstream users may require information collection that becomes legally sensitive if tied to foreign control regimes. This may be especially true where the inquiry seeks granular operational, customer, technical, or shipment information.
• Internal investigations. Cross-border investigations often require local employees or affiliates to collect emails, transaction records, shipping data, and communications, then provide them to outside counsel or headquarters. If the underlying investigation is connected to sanctions, forced labor, trade diversion, foreign subsidy inquiries, or other foreign legal demands, companies should not assume that standard investigation protocols can simply be extended into China without modification.
• Regulatory inquiries and dawn-raid response support. Where a foreign regulator asks a multinational to produce China-located information, interview China-based personnel, or explain China-based commercial arrangements, the company may need to analyze not only data transfer restrictions but also whether local cooperation could be viewed as implementing an improper extraterritorial measure.
• Contract suspension and termination decisions. Suspending or terminating a Chinese supplier, customer, distributor, or service provider based expressly on foreign sanctions, foreign subsidy concerns, or foreign political-risk criteria may create local-law exposure, especially if local affiliates are involved in executing the decision or communicating the rationale.

What Companies With International Supply Chains in China Should Do Now

The answer is not to stop diligence, trade compliance, or regulatory-response work involving China. It is to make those processes more deliberate and more legally segmented.

Companies with China exposure should consider reviewing the following:

• China-facing diligence protocols. Audit questionnaires, mapping requests, on-site review procedures, and certification demands should be reviewed to assess whether they seek information that may be sensitive under PRC law and whether the request can be narrowed, localized, sequenced, or otherwise redesigned.
• Conflict-of-laws screening. Companies should consider introducing an explicit conflict-of-laws check before implementing foreign sanctions, export-control, due-diligence, or regulatory-response measures that require action by China entities or personnel.
• Data and information-transfer procedures. Requests for China-origin data should be assessed not only under privacy and data-export rules but also in light of supply-chain security, anti-extraterritoriality, secrecy, archives, and industry-specific rules.
• Decision architecture for sanctions and terminations. Rather than relying on automatic global controls, companies may need a more nuanced process for China-related counterparties, including legal review before blocking, suspending, or terminating business and careful consideration of how the rationale is documented.
• Regulatory-response playbooks. Companies should ensure that they have China-specific protocols for responding to foreign government requests, subpoenas, questionnaires, and investigative demands that may touch China-based documents, employees, or operational information.
• Internal communications and documentation. The way decisions are described matters. Internal instructions that explicitly direct a China team or supplier to act “because of U.S. sanctions,” “to comply with EU investigative demands,” or “to satisfy forced-labor restrictions” may create avoidable PRC-law sensitivity. Communications should be carefully reviewed.
• Escalation and governance. Trade compliance, disputes, investigations, privacy, procurement, HR, public policy, and local China counsel should have a clear path for rapid escalation when a China-related issue involves foreign sanctions, export controls, supply-chain diligence, or regulator requests. Some items to consider here include:
  • a trigger list for high-risk China-related requests;
  • mandatory legal review of China-facing diligence tied to sanctions, forced labor, export controls, or ESG obligations;
  • local review before collecting or transmitting certain categories of supply-chain information;
  • controls on who may instruct China personnel or suppliers to respond to foreign legal demands;
  • protocols for handling blocked or sensitive counterparties in screening systems;
  • a review requirement for China-related suspensions and terminations;
  • pre-approved messaging templates for counterparties and affiliates; and
  • training for legal, compliance, procurement, and investigation teams on PRC anti-extraterritoriality and supply-chain security risks.

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China’s new decrees, together with the reported MOFCOM blocking order and the Ministry of Justice’s Nuctech-related announcement, suggest that PRC authorities are increasingly prepared to use counter-sanctions and anti-extraterritoriality tools in concrete settings. For multinational companies, the result is a more immediate and operational conflict-of-laws problem.

The main lesson is not that China-related diligence or compliance must stop. It is that many routine global practices – supplier audits, sanctions implementation, export-control checks, internal investigations, foreign regulator responses, and termination decisions — now require a more tailored China-specific legal analysis than many organizations have historically applied.

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

For multinational companies, today’s compliance challenge is not merely the number of applicable regulations but the pace of regulatory change, geographic fragmentation, and rising expectations from regulators, investors, financial institutions, and business partners. Enforcement authorities are increasingly aligned in looking beyond the existence of written policies to examine how companies identify and prioritize risk, allocate resources, train personnel, oversee third parties, and respond when issues arise. As a result, an effective compliance program must be dynamic, defensible, and embedded in day-to-day business operations — rather than a static set of documents maintained in isolation.

To help companies navigate this environment, this checklist is offered as a practical self-assessment tool for evaluating corporate governance and overall compliance infrastructure. It is designed to help organizations assess whether they have a functioning, risk-based compliance program, regardless of industry, business model, or jurisdiction. Rather than cataloging obligations under specific laws or regulatory regimes, the checklist focuses on the core building blocks of effective compliance — governance, risk assessment, training, oversight, escalation, and continuous improvement. In short, it asks not simply, “Do we have policies?” but “Does our compliance program work in practice?”

The checklist is intended for internal use by legal, compliance, audit, and business leadership to identify strengths, surface blind spots, and prioritize remediation efforts. A “no” response does not, by itself, indicate noncompliance or a legal violation. Instead, it should be viewed as a potential program gap — an area that may warrant further analysis, enhancement, or documentation based on the company’s specific risk profile.

I.          Tone-at-the-Top, Ownership, and Governance

• Do senior management and the board of directors demonstrate a strong commitment to compliance by promoting ethical conduct, supporting compliance personnel, and ensuring adherence to applicable laws, regulations, and policies?
• Is there clear executive-level ownership of compliance (e.g., a designated compliance leader with defined authority and responsibility)?
• Does the compliance function have direct access to the Board or an appropriate Board committee, with regular, substantive reporting?
• Does the compliance leader have sufficient independence from commercial pressures to escalate issues and raise concerns without interference?
• Does the compliance function have the authority to pause or halt activities when material compliance risks are identified?
• Are compliance responsibilities formally assigned across business units, regions, and functions, including clearly defined lines of accountability?
• Is the compliance function adequately resourced (i.e., personnel, budget, tools) in light of the company’s size, geographic footprint, and risk profile?
• Are compliance expectations reflected in job descriptions, performance evaluations, and management incentives, rather than treated as an informal obligation?
• Are compliance failures addressed through consistent disciplinary processes, regardless of seniority or revenue impact?
• Is compliance viewed internally as a business enabler and risk manager, not solely as a legal or audit backstop?
• Does the organization maintain written governance documents describing compliance roles, escalation paths, reporting lines, and decision-making authority?
• Do Board or committee discussions address not only metrics but also emerging risks, significant incidents, and program effectiveness?
• Is compliance meaningfully integrated with legal, audit, finance, HR, and enterprise risk functions, with defined coordination mechanisms?
• Are compliance considerations embedded in strategic business decisions, such as market entry, restructuring, acquisitions, or changes in business model?

II.         Risk Assessment and Program Design

• Has the company conducted a documented, enterprise-wide compliance risk assessment?
• Is there a defined and repeatable methodology for how compliance risks are identified, evaluated, and prioritized?
• Does the risk assessment involve meaningful input from relevant business units, regions, and functions, rather than being limited to legal or compliance?
• Is the risk assessment updated periodically, and refreshed after major events such as acquisitions, new market entry, changes in business model, or significant regulatory developments?
• Does the risk assessment consider key structural risk drivers, including: (1) geographic footprint; (2) business model and sales channels; (3) reliance on third parties; (4) government touchpoints; and (5) supply-chain complexity?
• Are risks prioritized using consistent criteria (e.g., likelihood and potential impact), rather than treated as equal?
• Are compliance resources, controls, and monitoring activities aligned to the prioritized risks identified in the assessment?
• Can the company clearly explain and defend its risk prioritization and program design choices to senior management, the Board, auditors, or regulators?

III.        Policies, Procedures, and Practical Guidance

• Are core compliance policies written, current, and accessible to relevant employees?
• Are policies supported by practical procedures, playbooks, examples, or FAQs that explain how compliance works in real scenarios?
• Are policies: (1) tailored to the company’s business (not generic templates); (2) reviewed on a regular cadence; and (3) regularly updated to reflect regulatory and operational changes?
• Is there a documented process for policy exceptions, approvals, and interpretations?

IV.        Training and Awareness

• Does the company provide regular compliance training, not just onboarding training?
• Is training risk-based, with enhanced focus for higher-risk roles, regions, or functions?
• Is training: (1) tracked and documented; (2) updated periodically; and (3) delivered in formats employees can realistically absorb?
• Are employees periodically reminded of: (1) where to get compliance guidance; (2) how to raise concerns; and (3) that retaliation is prohibited?

V.         Reporting, Escalation, and Response

• Are there clear, confidential channels for employees and third parties to raise concerns?
• Do employees understand when and how to escalate issues?
• Is there a documented investigation and response protocol for compliance concerns?
• Are issues tracked to resolution, with corrective actions identified and implemented?
• Does the company analyze issues for root causes and systemic weaknesses, not just individual errors?

VI.        Monitoring, Testing, and Continuous Improvement

• Does the company conduct periodic testing or monitoring of compliance controls?
• Are audits or reviews used to assess whether controls actually work in practice?
• Are compliance failures, near-misses, or enforcement actions used as inputs for program improvement?

VII.       Third-Party and Business Partner Oversight

• Does the company maintain a risk-based process for identifying, onboarding, and managing third parties and business partners?
• Has the company clearly defined the scope of third parties subject to oversight (e.g., agents, distributors, suppliers, contractors, consultants, intermediaries)?
• Are third parties risk-ranked using consistent criteria, with due diligence scaled to the level of risk?
• Are third parties subject to: (1) due diligence proportional to risk; (2) contractual compliance commitments; and (3) ongoing monitoring or periodic refresh where appropriate?
• Are red flags, adverse findings, or changes in risk escalated through a defined review and approval process?
• Is responsibility for third-party oversight clearly assigned, including ownership for onboarding, monitoring, and issue resolution?
• Are relevant third parties provided with appropriate compliance training, guidance, or certifications, where risk warrants?
• Are compliance failures by third parties addressed through documented remediation steps or enforcement actions, including suspension or termination when necessary?

VIII.      M&A, Growth, and Change Management

• Are compliance risks identified and assessed early when entering new markets, launching new products or services, or changing business models?
• Is there a defined process to involve legal and compliance in strategic initiatives at the planning stage, rather than after commercial decisions are finalized?
• Is compliance meaningfully integrated into: (1) M&A due diligence; (2) post-acquisition integration planning and execution; (3) joint ventures, strategic partnerships, and minority investments; and (4) major restructuring, outsourcing, or supply-chain redesign decisions?
• Are compliance risks evaluated as part of deal structuring, including allocation of risk, representations and warranties, and post-closing remediation planning?
• Is there a post-transaction roadmap to address identified compliance gaps, including timelines, ownership, and resource allocation?
• Are acquired or newly integrated entities brought into the company’s compliance framework within a defined period, including policies, training, reporting mechanisms, and controls?
• Are changes in geographic footprint, customer base, third-party relationships, or government touchpoints fed back into the enterprise risk assessment?
• Is there a process to track, test, and validate that compliance controls remain effective as the organization grows or changes?
• Are lessons learned from prior integrations, expansions, or restructurings captured and used to improve future change-management processes?

IX.        Documentation and Defensibility

• Can the company demonstrate its compliance efforts with contemporaneous documentation?
• Is there a clear record of: (1) risk assessments; (2) training offerings and completion; (3) policy approvals; and (4) Board or management reporting?

If you would like to help analyzing the results of your compliance self-check, please reach out to the authors or your Â鶹ֱ˛Ą relationship attorney.

Would you like more practical compliance tips like these? The Â鶹ֱ˛Ą International Trade & National Security Team is monitoring all international trade, enforcement, and compliance developments, which we post as they occur on our Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our Tariff-ied! and What Every Multinational Should Know articles.

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 Customs.

Three recent developments point to a marked escalation in U.S. customs and trade enforcement. The Department of Justice (DOJ) and Department of Homeland Security’s (DHS) Trade Fraud Task Force has in less than a year, demonstrating that the government is already deploying existing enforcement tools with greater intensity. Building on that momentum, the July 14, 2026, DOJ press release also announced the creation of a Global Trade & Commerce Enforcement Section within its National Fraud Enforcement Division, adding permanent prosecutorial capacity in this area. DOJ and DHS have also issued a (the Trade Enforcement Guide), which sets out the government’s trade fraud framework, identifies the principal investigative and prosecutorial tools now being used, and signals the compliance expectations likely to define the next phase of enforcement.

Taken together, these developments reflect a clear progression: first, the more aggressive use of existing enforcement mechanisms; second, the expansion of specialized enforcement capacity; and third, a more explicit statement of the government’s trade priorities and expectations. The message for importers and other supply-chain participants is direct. Customs non-compliance — at least for the most serious cases involving significant revenue loss to the Treasury — is no longer being treated mostly as an administrative matter to be managed through administrative penalty procedures. Instead, the U.S. government is increasingly treating tariff evasion, origin fraud, forced labor-related violations, and unsafe or non-compliant imports as matters to be dealt with using civil fraud and criminal exposure tools.

Importers should take that message seriously. This is a moment to test whether existing customs controls are genuinely fit for a more prosecutorial era. To help importers do that, this article examines these developments, explains why they matter, and highlights practical compliance steps businesses should take now to strengthen their trade controls given the new enforcement realities.

First Came Increased Enforcement…

The Trade Fraud Task Force’s first-year results are notable not just for their size but for what they show: tariff evasion has become a major enforcement priority. DOJ and DHS reported more than $1 billion in recoveries and enforcement-related outcomes in less than a year, signaling a shift away from treating customs violations as routine administrative issues and toward more aggressive use of fraud-based enforcement tools.

That shift matters because the government is increasingly using the False Claims Act (FCA), criminal fraud statutes, forfeiture, and other authorities to pursue trade-related misconduct. As a result, conduct once viewed as a technical customs error may now be treated as a false statement, duty evasion scheme, or unlawful importation.

The broader takeaway is that the government has already been building cases, coordinating across agencies, and applying these tools more systematically. For importers, the July 2026 announcements did not start this trend — they confirmed and accelerated it.

Now the DOJ Is Institutionalizing a Harder-Edged Approach…

The creation of the Global Trade & Commerce Enforcement Section is best understood against that backdrop, as it represents the institutionalization of a more prosecutorial model of customs and trade enforcement that was already emerging.

According to the DOJ, the section will investigate and prosecute criminal import, trade, and related fraud offences that:

• undermine American industries;
• evade external revenue collection;
• threaten consumer health and safety;
• finance foreign adversaries;
• promote forced labor through illegal trade practices; or
• violate US laws governing domestic and foreign commerce.

That formulation confirms that the government is not limiting its focus to duty underpayments in the narrow sense and instead is linking it to national security, forced labor enforcement, consumer protection, and supply-chain integrity. It also suggests the government’s attention will not stop with the importer of record. The DOJ’s framing points toward scrutiny of the wider commercial chain, including suppliers, customs brokers, distributors, resellers, and other parties that may have known of, facilitated, or deliberately ignored unlawful import practices.

A new enforcement section can develop concentrated expertise, coordinate more efficiently with DHS and other agencies, and generate a more consistent pipeline of cases. For importers and companies that rely on imports, that means trade fraud risk is less likely to depend on isolated investigations or changing enforcement priorities and more likely to become a regular and sustained feature of the enforcement landscape.

And Now the Trade Enforcement Guide Signals Where Enforcement Is Headed Next

If the Task Force’s results show that customs and tariff enforcement is already intensifying, and the new DOJ section shows that the government is expanding its capacity to pursue such cases, the new (the Guide) provides the clearest indication of where enforcement is likely to focus next.

Although presented as a general resource for enterprises of different sizes, the Trade Enforcement Guide is also usefully read as an enforcement roadmap. It explains the government’s approach to trade fraud, describes the principal investigative and prosecutorial tools available to it, and highlights the conduct areas most likely to attract scrutiny. In that sense, it not only informs companies of the rules; it also reveals the factual patterns and compliance failures the government increasingly associates with fraud, evasion, and knowing misconduct.

The Trade Enforcement Guide’s discussion of risk areas, particularly in chapters 4 and 5, points to several priority categories:

• Misclassification. Tariff classification remains a core customs risk because errors can reduce duties, avoid Section 232 or 301 tariffs, evade anti-dumping and countervailing duty (AD/CVD) orders, or affect admissibility and partner agency requirements. The Guide suggests Customs and Border Protection (CBP) may increasingly treat weak or unsupported classifications as potential evidence of evasion or false statements, not just technical disputes.
• Undervaluation, assists, and valuation omissions. Customs valuation remains a major focus, including not only straightforward undervaluation but also omissions from transaction value, such as assists, royalties, license fees, proceeds, and side payments. These issues often arise when customs lacks visibility into arrangements handled by procurement, finance, engineering, tax, or product teams, making valuation errors a sign of broader control failures or intentional duty minimization.
• False origin declarations and transshipment. The Guide emphasizes origin risk alongside transshipment, relabeling, false manufacturer information, and other efforts to hide the true source of goods. Because these tactics can evade tariffs, AD/CVD orders, forced labor restrictions, and other controls, importers are expected to go beyond supplier certifications and apply origin rules carefully.
• Section 301 and AD/CVD evasion. Evasion of Section 301 duties and antidumping/countervailing duties remains a high priority. Because these measures create strong incentives for misclassification, undervaluation, origin manipulation, and routing schemes, entries involving trade remedies are likely to face heightened scrutiny.
• Forced labor and prohibited goods. The Guide links customs enforcement to broader supply-chain integrity issues, including forced labor. False statements about sourcing, manufacturers, origin, or production conditions may support broader trade fraud theories, creating not only detention or exclusion risk but also civil and criminal exposure.
• Unsafe imports, consumer protection, and partner agency requirements. The Guide also ties trade fraud enforcement more closely to imports that threaten health and safety or violate partner government agency rules. Inaccurate customs declarations may matter not just because they reduce revenue, but because they conceal defects, bypass testing or certification, or facilitate entry of goods that should have been detained or refused.
• Downstream knowledge and supply-chain participation. Enforcement risk is not limited to the importer of record. The Guide suggests scrutiny may extend to brokers, distributors, resellers, consignees, end-users, and related entities that knew, suspected, or ignored that goods were imported unlawfully.

Taken together, these topics identify the government’s main trade fraud priorities: classification, valuation, assists, origin, tariff evasion, AD/CVD exposure, forced labor, unsafe imports, and knowing participation across the supply chain. Businesses should ensure these areas have the strongest compliance controls, documentation, and escalation processes.

Why These Developments Signal Increasing DOJ False Claims Act and Criminal Prosecution, Not Only Enhanced Customs Oversight

Before turning to the DOJ’s new role, it is worth emphasizing what has not changed. U.S. Customs and Border Protection’s administrative enforcement regime remains a core feature of U.S. customs enforcement and continues to generate substantial recoveries (in the billions of dollars) each year through audits, post-entry reviews, civil penalty actions and investigations, prior disclosures, and ordinary duty collection mechanisms. That regime is also designed to encourage importers to come forward when problems are identified. A valid prior disclosure can reduce penalty exposure and provide a compelling argument for resolution of an administrative-only matter because the DOJ’s role would be piling onto CBP’s enforcement, contrary to DOJ policy reflected in the . In that sense, CBP’s administrative system remains both a revenue collection tool and a compliance incentive. It is not being displaced, and it remains one of the government’s most important enforcement mechanisms.

What has evolved is that the DOJ is now building a more formal fraud and prosecution layer on top of administrative structure. Increasingly, errors or unpaid penalties assessed by CBP may also be assessed through an additional lens: whether it reflects a knowingly false declaration, a fraudulent scheme to evade duties or restrictions, or conduct serious enough to support civil fraud claims or criminal charges. That shift matters because it expands consequences facing importers and others in the supply chain.

The new enforcement direction indicates the government is increasingly prepared to ask tough questions about the seriousness of any underpayments: whether the company knew the declaration was unsupported; whether red flags were ignored; whether commercially significant inaccuracies were repeated over time; and whether multiple actors across the supply chain participated in or benefited from the scheme.

That is where False Claims Act and criminal exposure become more significant. In the customs context, the government may seek to characterize the underpayment of duties as a false claim or false statement to the government, particularly where inaccuracies are alleged to have been deliberate or even reckless. Criminal theories may become relevant where the facts suggest intentional concealment, falsified documents, sham routing, false manufacturer information, or coordinated conduct designed to evade duties or import restrictions. The distinction between negligence and fraud therefore becomes operationally important: weak controls, poor escalation, and untested supplier claims may no longer be viewed as compliance shortcomings if they are seen as evidence that a company disregarded obvious risks. This risk is especially heightened under the False Claims Act because it permits not only government enforcement actions but also qui tam actions filed by private individuals who can recover a share of the penalties.

The Trade Enforcement Guide’s discussion of investigative tools, cooperation, voluntary disclosure, and qui tam relator mechanisms reinforces that point. The government appears to be encouraging earlier internal escalation and remediation by making clear that companies may face a more serious set of consequences if concerns are ignored until they get on the DOJ’s enforcement radar.

Practical Compliance Implications

Against that background, the key question is what a defensible compliance program should look like. While the appropriate design will depend on a company’s products, sourcing model, entry profile, and duty exposure, several baseline elements are increasingly important.

• Stronger governance and written procedures. Customs compliance should be treated as an active risk-management function. Senior management should ensure responsibilities are clearly allocated among trade compliance, legal, procurement, finance, logistics, sourcing, and internal audit. This is particularly important where customs decisions depend on information held outside the customs function, such as transfer pricing, engineering support, tooling arrangements, royalties, product development inputs, and origin substantiation.
• Documented classification and valuation controls. Importers should maintain defensible and documented processes for tariff classification and customs valuation. A central customs classification index should identify the applicable HTSUS code, product description, technical rationale, sourcing details, supporting rulings or legal notes, date of review, and responsible approver for each SKU or product family. Valuation controls should likewise address assists, royalties, license fees, proceeds, side payments, and other adjustments to value. Purchases from affiliated parties should be supported by a regularly updated transfer pricing study.
• A structured process for identifying assists. Assists remain a common area of under-controlled exposure because customs teams often do not have sufficient visibility into tooling, design work, engineering support, prototypes, molds, dies, or components provided free of charge or at reduced cost to overseas manufacturers. Importers should implement a formal process to identify such inputs across procurement, engineering, finance, and product teams; link them to the relevant imported goods; allocate value across affected entries; and document the methodology used.
• Risk-based post-entry reviews. With enforcement becoming more forensic after importation, companies should strengthen their own post-entry review processes. Reviews should be conducted periodically and on a risk-based basis to test whether entry data remains accurate, consistent, and adequately supported. They should cover classification, valuation, assists, origin declarations, Section 301 applicability, AD/CVD exposure, broker filing accuracy, and consistency across invoices, shipping documents, supplier certifications, and internal records.
• Enhanced supplier and origin, oversight. Origin-related enforcement risk remains particularly acute where country of origin affects duty liability or trade restrictions. Importers should not rely uncritically on supplier certifications where commercial incentives to misstate origin are obvious. Enhanced diligence may include confirming the actual manufacturer and production site, reviewing production records and bills of materials, assessing whether claimed substantial transformation is supportable, and testing consistency across invoices, labels, certificates, and entry data.
• Customs broker oversight and importer of record accountability. Importers should be careful not to treat customs brokers as a substitute for an internal compliance function. Although brokers play an important operational role in preparing and filing entries, the importer of record remains primarily responsible for the accuracy and completeness of the information declared to CBP. That means a company cannot simply hand off classification, valuation, origin, or admissibility decisions to its broker and assume that any resulting errors will be the broker’s problem. A defensible compliance program should therefore include clear written instructions to brokers, controls over the data and assumptions provided to them, periodic review of broker filings, escalation procedures for unusual transactions, and testing to confirm that broker practices align with company policy. Where multiple brokers are used, companies should also monitor consistency across filings and identify unexplained differences in classification, valuation treatment, origin declarations, or use of special trade programs.
• Protocols for investigation, disclosure, and remediation. Businesses should revisit their internal investigation and disclosure protocols in light of the DOJ’s emphasis on voluntary disclosure, cooperation, remediation, and qui tam channels. A current response plan should address issue escalation, document preservation, internal fact-finding, involvement of outside counsel where appropriate, quantification of affected entries and duty exposure, suspension of problematic practices, and decision-making around prior disclosure or other remedial engagement with the government. In a more prosecutorial environment, the speed and quality of a company’s internal response may materially affect enforcement outcomes.

Preparing for a More Prosecutorial Era

The significance of July 2026 developments lies not in any one announcement viewed in isolation, but in what they show collectively. The government first intensified use of existing enforcement tools and produced substantial early results. It has now reinforced that effort by creating permanent DOJ capacity dedicated to trade and customs-related fraud. At the same time, it has made its enforcement theory and practical priorities more explicit through the new DOJ-DHS Trade Enforcement Guide.

For importers and other supply-chain participants, the message is that customs compliance can no longer be approached as a narrow operational function concerned mainly with filing accuracy and duty calculation. It must instead be treated as part of a broader fraud, sanctions-adjacent, and supply-chain integrity risk framework in which tariff evasion, origin misstatements, forced labor-related representations, and unsafe or non-compliant imports may trigger civil fraud exposure, criminal scrutiny, and liability beyond the importer of record.

Businesses that invest now in governance, documentation, origin verification, valuation controls, post-entry testing, and credible escalation mechanisms will not eliminate enforcement risk. They will, however, be materially better positioned to identify problems early, remediate them before they escalate, and demonstrate that they take import compliance seriously in an environment where the US government plainly does as well.

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If you have questions or concerns about this article, please feel free to reach out to any of the authors or your Â鶹ֱ˛Ą & Lardner attorney. If you would like to see future updates, including our weekly Tariff-ied! updates on This Week in International Trade and our “What Every Multinational Company Needs to Know” compliance and trade series, please sign up for our email list.

The Â鶹ֱ˛Ą International Trade & National Security Team advises companies across the full spectrum of international trade issues, including tariffs and Customs compliance, supply chain integrity, trade remedies (antidumping and countervailing duties), export controls, economic sanctions, and CFIUS national security reviews. Our Tariff & International Trade Resources blog regularly publishes practical guidance on all international trade topics and compiles it by topic area.

On June 12, 2026, U.S. Customs and Border Protection (CBP) published a new guide intended to help the importing community understand the three principal authorities used to enforce U.S. forced labor import restrictions: 19 U.S.C. § 1307, the Uyghur Forced Labor Prevention Act (UFLPA), and the Countering America’s Adversaries Through Sanctions Act (CAATSA). The . It also explains the steps importers should take before importing merchandise into the United States, the types of documentation that may be needed to establish admissibility, and the procedures for seeking release of detained shipments.

This publication reflects a significant shift in CBP’s expectations for importers. Supply chain review for forced labor exposure is no longer merely a best practice for risk mitigation; CBP now makes clear that failure to conduct adequate diligence may constitute a failure to exercise the “reasonable care” required under U.S. customs law, with potentially significant consequences.

At the same time, the updated guidance gives importers greater visibility into CBP’s enforcement framework by consolidating process maps for UFLPA, Withhold Release Order (WRO), Finding, and CAATSA actions into a single resource, providing step-by-step instructions for responding to detentions and exclusions, as well as including expanded appendices with recommended supply chain documentation, practical due diligence examples, and sample enforcement notices. In that respect, noncompliance with this “guidance” may be cited as evidence that an importer failed to meet reasonable standards for preventing forced labor, human trafficking, or the exploitation of Uyghur labor within its supply chain. CBP’s guide therefore serves as both a warning and a roadmap — and a strong signal of where forced labor enforcement is headed.

The updated guidance has been followed by the Department of Justice’s (DOJ) announcement on July 14, 2026, of the creation of a new global trade enforcement section within its National Fraud Division, which is tasked with investigating and prosecuting criminal import, trade and customs fraud offenses.  The trade enforcement section will focus specifically on criminal schemes to import goods illegally that violate anti-forced labor laws or misreport values and other information to evade tariffs.

To help importers navigate these heightened compliance expectations and enforcement priorities, we provide below a summary of CBP’s new guidance, along with practical best practices for strengthening forced labor compliance programs. For companies sourcing globally, the message is unmistakable: CBP expects importers to know their supply chains, document them thoroughly, and be prepared to demonstrate that their goods were not made, wholly or in part, with forced labor.

Why This Matters

CBP’s new guidance is significant because it expands both the scope and the reach of the agency’s prior forced labor compliance materials. It replaces the June 13, 2022, UFLPA Operational Guidance for Importers and extends beyond a UFLPA-only focus to address the full range of forced labor authorities enforced by CBP. As a result, importers must now understand not only the UFLPA but also how CBP administers WROs, Findings, and CAATSA-related exclusions.

For multinational importers, this has important implications:

• First, the legal standard is expansive. U.S. law prohibits the importation of goods mined, produced, or manufactured, wholly or in part, with forced labor, convict labor, or indentured labor. The phrase “wholly or in part” is critical: even a minor input, raw material, or upstream component linked to forced labor can render an entire shipment inadmissible.
• Second, CBP now presents all three of its principal forced labor enforcement authorities in a single framework, but each authority operates differently. Under 19 U.S.C. § 1307, CBP may issue a WRO when it has reasonable suspicion that goods were made with forced labor, resulting in detention of the merchandise. If CBP develops probable cause and the Secretary of Homeland Security approves, it may issue a Finding, which can lead to seizure and forfeiture. Under the UFLPA, goods produced wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) or by entities on the UFLPA Entity List are subject to a rebuttable presumption that they are prohibited from entry. Under CAATSA, goods produced wholly or in part by North Korean nationals or citizens, anywhere in the world, are likewise presumed to be made with forced labor and may be excluded from entry. Importers therefore must understand not only the substantive prohibitions but also the distinct evidentiary thresholds, procedures, and consequences associated with each authority.
• Third, rebutting these presumptions or overcoming CBP action can be demanding. In the UFLPA context, importers seeking release must satisfy a clear and convincing evidence standard and demonstrate compliance with the UFLPA Strategy. In WRO and Finding matters, importers may need to provide documentation sufficient to establish that the goods were not made with forced labor or are otherwise admissible. The practical result is that forced labor compliance requires robust supply chain mapping, traceability, and documentation well before goods reach a U.S. port.
• Fourth, the response timelines are short. For UFLPA detentions, importers generally have 30 days to respond, although limited extensions may be available. For WRO detentions, importers generally have three months to establish admissibility. For exclusions, importers generally have 180 days to file a protest. If a company begins assembling supply chain evidence only after receiving a detention or exclusion notice, it may already be at a significant disadvantage.

To help with understanding the overall process, one of the most practical additions in CBP’s updated guidance is a set of process maps that walk importers through the agency’s principal forced labor enforcement pathways step by step. Rather than describing the authorities only at a high level, the guidance lays out what type of information may trigger CBP action; whether the likely result is detention, exclusion, or seizure; what deadlines govern an importer’s response; and what procedural options may remain available.

In total, the document maps five distinct processes: UFLPA potential input, UFLPA direct input, CAATSA, WRO, and Finding actions. These process maps are important because they highlight that not all forced labor cases follow the same procedural path. In some cases, CBP may detain goods and allow a short period for the importer to submit evidence supporting admissibility. In others, CBP may exclude goods outright or seize them, leaving the importer with more limited and more time-sensitive options. The guidance also clarifies that different CBP offices play different roles in these cases, including the Forced Labor Division, Ports of Entry, Centers of Excellence and Expertise, and the Forced Labor Portal, through which certain requests must be submitted.

Updating Supply Chain Best Practices in Light of the New CBP Guidance

CBP’s updated guidance demonstrates that forced labor compliance cannot rest on a policy statement alone. It requires a functioning, documented, and auditable compliance system capable of identifying risk, tracing supply chains, preserving evidence, and responding quickly when questions arise. For multinational importers, best practices should include the following:

1. Establish Clear Internal Governance and Escalation Procedures

Forced labor compliance should have defined internal ownership. Companies should assign responsibility across legal, customs compliance, procurement, logistics, supply chain, and social compliance functions, and ensure that those teams understand when and how to escalate concerns.

A workable governance structure should address:

• who is responsible for supplier onboarding and risk review;
• who evaluates documentation supporting country of origin and supply chain traceability;
• who has authority to approve higher-risk sourcing decisions;
• when outside counsel, customs brokers, or other advisors are engaged; and
• how potential forced labor concerns are elevated before goods are shipped or entered.

This is especially important because CBP now frames forced labor diligence as part of the importer’s obligation to exercise reasonable care.

2. Map the Supply Chain to the Raw Material Level

CBP expects importers to understand the full supply chain for imported goods, including components, subcomponents, and raw materials. This means identifying:

• all suppliers and sub-suppliers;
• manufacturers, processors, miners, farms, mills, smelters, refiners, and assembly facilities;
• the role each entity plays;
• the location of each production stage;
• the movement of materials through the supply chain; and
• any corporate or operational relationship among entities in the chain.

For companies sourcing globally, this is critical because risk often enters through indirect suppliers. A low-risk final assembly location does not eliminate exposure if an upstream input was sourced from a prohibited region, listed entity, or high-risk labor program.

3. Screen Suppliers, Facilities, and Inputs for Forced Labor, Human Trafficking, and UFLPA Risk

Importers should implement a screening process that goes beyond the immediate vendor. Suppliers, sub-suppliers, production sites, labor brokers, and key inputs should be reviewed against the UFLPA Entity List, CBP’s WROs and Findings, and other relevant government restrictions, advisories, or forced labor indicators.

Screening should also account for:

• aliases and affiliated entities;
• changes in ownership or sourcing patterns;
• known high-risk geographies or labor transfer programs; and
• inconsistencies between claimed origin and available commercial records.

Because supply chains evolve, screening should be repeated periodically and updated when suppliers, manufacturing locations, or source materials change.

4. Maintain Complete Transaction, Production, and Transportation Records

CBP repeatedly emphasizes that importers should be able to support their claims with ordinary-course business records. The specific documents required will vary by product and industry, but common and useful records may include:

• purchase orders and invoices;
• bills of materials and bills of lading;
• shipping, production, and inventory records;
• proofs of payment;
• certificates of origin;
• supplier affidavits and declarations;
• manufacturing flowcharts showing each production step and the responsible entity;
• factory capacity and production records; and
• import and export records.

These records should connect logically from raw material to finished good. Gaps, inconsistencies, or unexplained breaks in the paper trail can undermine an admissibility submission, even where much of the supply chain is otherwise documented.

5. Apply Enhanced Diligence to High-Risk Â鶹ֱ˛Ą and Products

CBP applies a risk-based approach, and the guidance includes sector-specific documentation expectations for UFLPA high-priority sectors such as apparel, cotton, tomatoes, polysilicon, aluminum, steel, copper, lithium, PVC, caustic soda, red dates, and seafood.

If a company imports goods in these sectors (or products containing these materials) it should expect a higher level of scrutiny and deeper traceability requirements. For example:

• cotton products may require tracing to the bale level;
• apparel may require records from fiber sourcing through garment assembly;
• solar or silica-based products may require tracing back to quartzite or polysilicon inputs;
• metals may require documentation of mining, smelting, refining, casting, and finishing; and
• seafood may require records showing where it was caught, processed, packed, and exported.

The practical lesson is that generic supplier certifications are unlikely to be enough. CBP expects product-specific, transaction-linked, and traceable evidence.

6. Strengthen Supplier Controls and Contractual Protections

The guidance encourages importers to maintain a meaningful social compliance and due diligence system. At a minimum, that system should include:

• supplier codes of conduct prohibiting forced labor;
• contractual representations regarding compliance with U.S. forced labor laws;
• contractual rights to obtain supply chain records and supporting documentation;
• audit rights, including rights to review sub-tier sourcing where appropriate;
• employee and supplier training on forced labor risks and documentation expectations;
• remediation procedures for identified concerns; and
• termination rights where remediation is not possible or suppliers fail to cooperate.

CBP also makes clear that audits must be meaningful. Financial audits, environmental audits, or social audits that do not specifically assess forced labor indicators will generally carry limited value in demonstrating effective risk mitigation.

7. Identify Red Flags and Monitor the Supply Chain on an Ongoing Basis

Forced labor compliance is not a one-time exercise completed at onboarding. Companies should continuously monitor their supply chains for warning signs, including:

• incomplete or inconsistent origin information;
• supplier reluctance to identify sub-suppliers or production sites;
• sudden changes in sourcing routes or manufacturing locations;
• production volumes that appear inconsistent with facility capacity;
• documentation gaps or conflicting records; and
• indications of labor transfer programs, third-party recruitment risks, or unusual workforce arrangements.

When red flags arise, companies should have a documented process for investigation, follow-up, remediation, and, where necessary, suspension or termination of sourcing relationships.

8. Prepare a Detention Response Before a Detention Happens

A multinational importer should have a response plan in place before cargo is stopped. That plan should identify:

• who internally owns the response and communicates with CBP;
• which outside counsel, customs broker, or consultant will assist;
• where supply chain records are stored and how they can be retrieved quickly;
• which suppliers must provide supporting records on short notice;
• whether the company may seek applicability review, exception review, export, or destruction;
• how business confidential information will be identified and protected; and
• how translations will be obtained and validated.

CBP specifically recommends organized submissions, searchable PDFs, English translations, numbered exhibits, and clear labeling. These details may seem administrative, but they can materially affect the speed and effectiveness of CBP’s review.

9. Plan for Post-Entry Risk, Including Redelivery and Prior Disclosure

The guidance also addresses what may happen when forced labor concerns arise after goods have already entered the United States. CBP may issue a Notice of Redelivery requiring the goods to be returned to the port. Failure to comply can lead to liquidated damages and other enforcement consequences, and in more serious cases may expose the goods to seizure-related action.

The guidance also discusses prior disclosure, which may mitigate penalties if an importer voluntarily discloses a violation before the government discovers it. For multinational companies, this underscores the importance of internal reporting channels, prompt investigation of potential issues, and coordination among legal, compliance, and trade functions when supply chain concerns are identified.

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For multinational importers, CBP’s new guidance is more than a procedural reference — it is a statement of enforcement priorities and a clear articulation of what the agency now expects as a matter of reasonable care. Companies that import into the United States should view it as a practical compliance framework for identifying forced labor risk, strengthening supply chain due diligence, and preparing to respond quickly and effectively if CBP detains, excludes, or seizes merchandise.

The central takeaway is that forced labor compliance can no longer be treated as a reactive customs issue addressed only when a shipment is stopped at the border. It must be integrated into sourcing, contracting, supplier onboarding, audit practices, recordkeeping, logistics, and entry procedures. Knowing only the immediate seller or manufacturer is no longer enough; CBP expects importers to understand the upstream supply chain, document it in the ordinary course of business, and be able to substantiate admissibility with credible, transaction-specific evidence.

Importers best positioned under this framework will be those that act before enforcement begins, including by mapping supply chains to the raw material level, implementing meaningful supplier controls, maintaining organized documentation, and establishing clear internal escalation and response procedures. In short, CBP has made plain that importers must be prepared not only to manage forced labor risk but to prove that they have done so.

Please find our latest “Five Compliance Best Practices” article, which provides quick-hit compliance best practices multinational companies can implement to enhance their compliance programs and internal controls. Additional “Five Things” articles, as well as our What Every Multinational Should Know and Tariff-ied! articles, can be found in the drop-down menu on our Tariff & International Trade Resources page. for our email list to receive future practical international regulatory compliance tips.

Tariff volatility continues to create operational and financial pressure for U.S. importers. Rapid changes in tariff rates, product coverage, country-specific measures, and enforcement priorities can significantly affect landed costs, customer pricing, sourcing decisions, and broader supply chain planning. For many importers, the challenge is not just reacting to a new tariff announcement but identifying practical steps that can reduce tariff volatility exposure before the next trade action takes effect.

Importers accordingly should take a structured and proactive approach to tariff mitigation. Here are five best practices companies should consider when seeking to reduce and manage their tariff risk exposure:

• Review Classification, Valuation, and Origin Determinations Carefully. Importers should confirm that their tariff classifications, customs valuation methods, and country-of-origin determinations are accurate and well supported. (These items are chosen because they are the key ones most likely to impact the tariff rate imposed.) Errors in these core customs determinations can result in overpayment of duties, heightened audit risk, or both. Particularly in a volatile tariff environment, companies should not assume that historical classifications or sourcing assumptions remain correct.
• Identify Products and Suppliers With the Greatest Tariff Sensitivity. Importers should determine which products, inputs, and supplier relationships are most exposed to current or potential tariff increases. This review should consider duty rates, import volumes, customer commitments, and the availability of alternative sourcing or mitigation strategies. A company cannot reduce tariff exposure effectively unless it knows where that exposure sits.
• Assess Whether Duty-Saving Programs Are Available. Companies should consider whether they may benefit from customs programs and strategies such as first sale valuation, duty drawback, foreign-trade zones, bonded warehouses, tariff engineering, or temporary importation options where applicable. These tools are not available or appropriate in every case, but they can offer meaningful savings if analyzed carefully and implemented correctly.
• Review Commercial Terms and Pricing Flexibility. Tariff exposure is often shaped not only by customs law, but by commercial arrangements. Companies should assess whether contracts, purchase orders, and customer agreements address tariff-related cost increases, pricing adjustments, delivery terms, and importer-of-record responsibilities. Existing agreements may determine whether additional tariff costs can be passed on, shared, or absorbed.
• Build an Internal Escalation Process for New Tariff Developments. Companies should have a clear process for identifying major tariff announcements, assessing business impact, and escalating decisions quickly to the right personnel. This process should include trade compliance, legal, finance, procurement, and supply chain functions so that tariff changes can be evaluated and acted on before unnecessary cost is incurred.

Taken together, these steps can help importers move from reactive tariff management to more deliberate tariff risk reduction. Companies that understand their customs data, evaluate available mitigation tools, and align trade compliance with commercial decision-making will be better positioned to respond effectively as tariff measures continue to evolve.

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Would you like more practical compliance tips like these? The Â鶹ֱ˛Ą International Trade & National Security Team is monitoring all international trade developments, including new tariff pronouncements, which we post as they occur on our Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips.

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 Customs.