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 ResourcesĚý±č˛ą˛µ±đ. for our email list to receive future practical international regulatory compliance tips.

In the wake of the IEEPA tariff reversal by the Supreme Court, the new contours of a combination Section 232/Section 301 tariff environment is coming into focus. This renewed tariff environment requires supply chain leaders to revisit assumptions that may have guided sourcing and logistics decisions prior to 2025. Supplier concentration, lean inventory models, long-distance sourcing, and limited redundancy may all become more costly or less sustainable if tariffs potentially can expand or shift rapidly. For many importers, the issue is not merely whether tariffs will increase, but whether the supply chain is designed to adapt if they do.

Supply chain leaders accordingly should consider whether their current sourcing model is resilient enough to withstand renewed tariff pressure. Here are five best practices companies should consider when reassessing their supply chain approach in the new tariff environment:

• Reconsider Single-Country and Single-Supplier Dependence. Companies should assess whether they are overly dependent on one country, supplier, or production site for critical goods or inputs. Concentration may create unacceptable cost and continuity risk where tariffs are imposed quickly or where political measures target a particular market.
• Reevaluate the Assumption That Lowest Unit Cost Means Lowest Total Cost. A sourcing model that appears cost-efficient on paper may become significantly more expensive once tariffs, logistics disruption, compliance burdens, and lead-time risk are taken into account. Supply chain leaders should incorporate total landed cost and strategic resilience into sourcing decisions rather than relying solely on nominal purchase prices.
• Build More Regional and Flexible Supply Options. Companies should consider whether portions of the supply chain can be regionalized, diversified, or structured with backup capacity so that the business is not forced into emergency sourcing if trade conditions change. Building flexibility in advance is often less costly than reacting after tariffs take effect.
• Improve Visibility into Lower-Tier Supply Chains. Tariff risk often extends beyond direct suppliers. Companies should understand where key subcomponents, raw materials, and processing activities occur so that exposure to particular jurisdictions or trade measures can be identified earlier and managed more effectively.
• Integrate Tariff Risk into Routine Supply Chain Governance. Tariff developments and changes should not be treated as occasional outside events. Companies should incorporate tariff risk into regular sourcing reviews, supplier discussions, management reporting, and strategic planning. A supply chain that monitors these issues only after an announcement is often already behind.

Supply chain leaders that rethink concentration risk, hidden cost assumptions, and tariff exposure even from lower-tier suppliers will be better positioned to respond if a more aggressive tariff environment returns. The companies that fare best will be those that prepare before policy changes force rapid decisions.

Would you like more practical compliance tips like these? The Â鶹ֱ˛ĄÂ 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 ResourcesĚý˛ú±ô´Ç˛µ. 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.

Many importers are understandably confused about the current status of International Emergency Economic Powers Act (IEEPA) tariff refunds for “finally liquidated” entries — that is, entries that are more than 80 days beyond liquidation and therefore fall outside Consolidated Administration and Processing of Entries (CAPE) Phase 1. The confusion is not surprising. Although the Court of International Trade (CIT) has ruled that refunds should be available for these entries, the Department of Justice (DOJ) has appealed the question of whether importers that did not file protective actions under 28 U.S.C. § 1581(i) are entitled to those refunds.

To help clarify the current landscape, we summarize below where things stand and offer practical guidance on what companies with significant amounts of tariff refunds tied to finally liquidated entries should be doing now.

Where Things Stand on Refunds for Finally Liquidated Entries

The CIT has now ruled that importers are entitled to refunds of IEEPA tariff payments on finally liquidated entries — generally, entries that are more than 80 days beyond liquidation and therefore cannot be processed through CAPE Phase 1. Those entries sit outside CAPE Phase 1 because, under U.S. Customs and Border Protection’s (CBP) current process, they cannot be handled administratively in that phase.

The refund landscape nevertheless remains unsettled because the DOJ has appealed the question of whether importers that did not file protective actions under 28 U.S.C. § 1581(i) are entitled to those refunds. DOJ’s position is that the CIT cannot under the statute order refunds for importers that never filed their own protective actions and that relief for finally liquidated entries accordingly must be limited to the plaintiffs that preserved their rights through litigation.

That dispute has created a practical split:

• Importers that filed Section 1581(i) protective actions have a clearer path to refunds, but timing remains uncertain because CBP has not yet opened CAPE Phase 3 and has indicated that programming constraints are delaying implementation.
• Importers that did not file protective actions face a much less certain path. They may ultimately prevail if the CIT’s view is upheld, but for now they are effectively waiting on the outcome of the Federal Circuit appeal (and potentially an additional appeal to the Supreme Court) to determine whether they will receive refunds on finally liquidated entries at all.

What Is Happening at the Federal Circuit?

The DOJ has appealed the issue of whether non-party importers — those that did not file protective actions — can receive refunds for finally liquidated entries. The appeal creates a direct conflict between the CIT’s ruling that refunds should be available to all affected importers and DOJ’s position that refunds should be limited to plaintiffs.

In practical terms:

• If the DOJ prevails, non-filed importers may be unable to recover refunds for finally liquidated entries.
• If the CIT’s position is upheld, non-filed importers should remain entitled to refunds, but only after the appeal is resolved, likely after substantial delay, including a potential appeal to the Supreme Court.

That means importers that did not file are now exposed to both timing risk and outcome risk.

Why Does This Matter?

This issue matters because finally liquidated entries represent a substantial set of claims that cannot be resolved through CAPE Phase 1 — and the category may be broader than many importers initially assume.

Although CBP often liquidates entries well after entry, many entries liquidate much earlier, including lower-value informal entries and entries affected by post-summary corrections. As a result, many companies may have a meaningful volume of entries that are already beyond the 80-day window and therefore fall into the finally liquidated bucket.

For those entries, the distinction between having filed a Section 1581(i) action and not having filed one may prove critical.

What About Importers That Already Filed?

Importers that filed Section 1581(i) protective actions are currently in the better position. The CIT’s rulings support refund relief for them, and CBP has indicated that finally liquidated entries will be addressed in CAPE Phase 3.

The current problem is operational, not legal. CAPE Phase 3 has not yet been opened because of CBP programming issues. So filed importers are still waiting, but they are waiting for implementation rather than for the courts to decide whether they qualify at all. Although CBP did not meet its earlier announced target of opening CAPE Phase 3 by August 20, 2026, we expect that CBP may be able to resolve its programming and testing issues relatively soon, potentially allowing CAPE Phase 3 to open for importers that filed Section 1581(i) actions shortly thereafter.

What About Importers That Have Not Filed?

Importers that have not filed are currently left to await the outcome of the appeal. For them, the issue is no longer merely administrative timing. It is whether the DOJ can lawfully deny refunds on finally liquidated entries to importers that did not preserve their claims through protective litigation.

Even if non-filed importers ultimately prevail, the process is likely to take a year or more. And if they lose, they may have no path to recovery for those entries at all. Accordingly, companies with substantial amounts of IEEPA refunds tied to finally liquidated entries should consider whether to file now to avoid the litigation and timing uncertainties created by DOJ’s appeal.

In particular, filing now may help companies:

• reduce the risk that their refund rights will depend entirely on the outcome of the DOJ’s appeal;
• avoid being grouped with non-parties whose rights remain contested;
• improve their position for obtaining relief once CBP is able to open CAPE Phase 3; and
• mitigate the prospect of extended delay while the Federal Circuit (and potentially the Supreme Court) resolve the dispute.

In that sense, a protective filing continues to function as an insurance policy. It does not require abandoning CAPE; instead, it expands the types of refunds that can occur through it. It preserves the importer’s own litigation position while the courts and CBP work through the current refund process.

What Should Importers That Filed Protests for Finally Liquidated Entries Be Doing?

Importers that have filed protests for finally liquidated entries should be reassessing that strategy in light of CBP’s and DOJ’s current positions.

CBP has been discouraging the use of protests as the vehicle for obtaining IEEPA tariff refunds. While protests may still serve as a useful mechanism for preserving rights, CBP’s position has been that CAPE — not the protest process — is the operative mechanism for actually issuing refunds.

That distinction matters even more now because the DOJ is simultaneously arguing that refunds for finally liquidated entries should occur through CAPE — but only for importers that filed protective actions in the CIT under 28 U.S.C. § 1581(i). In other words, an importer that relied on protests may find itself in an awkward middle ground: it may have taken steps to preserve its position, but not in the form the DOJ is now arguing is necessary to obtain relief for finally liquidated entries.

For that reason, companies that have been relying on protests should re-evaluate whether to file a Section 1581(i) protective action. A protest may help preserve issues, but it does not appear to place an importer in the same posture as a CIT plaintiff for purposes of the Government’s current theory of who is entitled to refunds through CAPE Phase 3.

A related issue arises for importers that have filed both protests and Section 1581(i) actions. For those companies, the prudent course for now is generally to maintain the protests while monitoring developments on CAPE Phase 3. But once CAPE Phase 3 opens, those importers should consider whether to withdraw their protests in order to allow the entries to proceed through CAPE. Our expectation is that, as with CAPE Phase 1, CBP will not permit importers to maintain open protests and simultaneously obtain refunds through the CAPE process.

Accordingly, importers with both protests and CIT filings should be planning now for how they will manage that transition if and when CAPE Phase 3 becomes operational. In practical terms, that means being prepared to evaluate whether particular protests should remain in place for preservation purposes or instead be withdrawn to facilitate payment through CAPE.

Conclusion

The current landscape for finally liquidated IEEPA refunds is clearer than it was a few months ago in one important respect: the CIT has ruled that those refunds should be paid. But in another respect, the landscape has become more complicated. The DOJ’s appeal has created a meaningful divide between importers that filed Section 1581(i) protective actions and those that did not.

For importers that already have filed, the principal issue is when CBP will be able to implement CAPE Phase 3. For importers that did not file, the issue is more fundamental: whether they will be entitled to refunds for finally liquidated entries at all, and how long they may have to wait for an answer.

Against that backdrop, companies with significant finally liquidated exposure should not assume that the existence of a favorable CIT ruling alone eliminates risk. They should be taking stock now of their entry universe, their filing posture, and whether additional steps — particularly the filing of a Section 1581(i) protective action — may be warranted. The same is true for companies that have relied on protests, or on a combination of protests and CIT filings, as they prepare for the eventual launch of CAPE Phase 3.

In short, the prudent course is to remain engaged, preserve optionality, and position the company to obtain refunds through CAPE as soon as that process becomes available.

If you would like more information about potentially filing a Section 1581(i) protective action or how to evaluate protests in light of CAPE Phase 3, please reach out to the authors or your Â鶹ֱ˛Ą relationship attorney.

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Frequently Asked Questions

FAQ #1: What are the IEEPA tariffs, and how can companies determine how much they paid?

The IEEPA tariffs were imposed by the Trump administration in 2025 under the International Emergency Economic Powers Act (IEEPA). These tariffs included:

• Fentanyl-related tariffs announced in February 2025 on China, Mexico, and Canada;
• Global and reciprocal tariffs announced in April 2025 (Liberation Day) addressing trade imbalances; and
• Country-specific tariffs announced later in 2025 on India and Brazil.

Although the Supreme Court directly reviewed only the first two tariff programs, the logic of the Court’s decision — that IEEPA does not authorize broad-based tariffs — likely has implications for all tariffs imposed under IEEPA.

Importantly, IEEPA tariffs do not include:

• Section 232 sectoral tariffs (e.g., steel, aluminum, copper, lumber, automotive tariffs);
• Section 301 tariffs on China;
• antidumping or countervailing duties; or
• the normal HTS tariffs in Chapters 1–97.

Companies can determine their IEEPA tariff exposure by reviewing data in Customs’ Automated Commercial Environment (ACE). This typically involves running reports beginning February 1, 2025, and filtering for entries containing the relevant Chapter 99 tariff provisions associated with IEEPA measures (such as 9903.01.xx or 9903.02.xx).

If a company does not have ACE access, its customs broker can typically generate the necessary reports.

FAQ #2: What is the deadline to file a §1581(i) action?

Section 1581(i) actions are generally subject to a two-year statute of limitations under 28 U.S.C. § 2636(i). But there is significant uncertainty as to when that period begins to run, including whether it could be tied to:

• the date duties were paid;
• the date of liquidation; or
• the date of the Supreme Court’s decision.

Because the Government may raise timeliness defenses under any of these theories, importers should consider filing sooner rather than later.

There is also a separate timing concern: Section 1581(i) is a residual jurisdictional provision and may become unavailable if another avenue of review is deemed adequate. For that reason, waiting may create additional risk. The safest course for importers that want to preserve judicial options is to evaluate protective filing promptly.

FAQ #3: Will refunded IEEPA tariffs include interest?

Yes.

FAQ #4: What information is required to file a §1581(i) action?

A typical filing includes a summons, complaint, and supporting disclosures. To complete the filing, importers generally must provide:

• the identity of the importer and its principal place of business;
• the importer’s corporate ownership structure, including publicly held parent companies and affiliates;
• identification of any real party in interest, if different from the importer;
• whether the importer has requested extensions of liquidation from CBP; and
• whether the importer has filed post-summary corrections or protests relating to IEEPA entries.

FAQ #5: What happens if an importer does not file a protective action?

An importer that does not file may face substantial uncertainty. At a minimum, it may have to wait while the Federal Circuit and potentially the Supreme Court address the scope of the CIT’s refund authority. More specifically, it may face:

• the risk that refunds will be limited to parties before the court;
• additional complications arising from liquidation finality;
• delays or uncertainty as to reconciliation and AD/CVD-related entries; and
• reliance on administrative refund mechanisms that may be incomplete or delayed.

In the worst case, an importer that does not file may be unable to recover certain refunds at all.

FAQ #6: Can non-importers of record recover IEEPA tariffs?

Generally, only the importer of record has standing to obtain duty refunds directly from CBP. That said, other parties that ultimately bore the economic burden of the tariffs may have contractual or commercial arrangements with the importer regarding the allocation of any refund recovery.

The Â鶹ֱ˛Ą International Trade & National Security Practice

The Â鶹ֱ˛Ą International Trade & National Security Team covers the full gamut of international trade needs, including for tariffs, customs, supply chain/supply chain integrity, trade remedies/antidumping/countervailing duty, export controls, economic sanctions, and CFIUS national security filings. Our Tariff & International Trade blog regularly publishes practical guidance, like this client alert, on all international trade topics and compiles it by topic area on the Â鶹ֱ˛Ą Tariff & International Trade Resources blog. for our email list to receive future emails and practical international regulatory compliance tips, including our What Every Multinational Should Know articles.

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.

Manufacturers are often among the businesses most directly affected by tariff volatility. Changes in tariffs can increase input costs, disrupt production planning, undermine pricing assumptions, and put pressure on supplier relationships. This is especially true where manufacturers rely on globally sourced components, long lead times, or concentrated production in higher-risk jurisdictions.

Manufacturers accordingly should ensure that tariff risk is integrated into sourcing, production, finance, and customer-planning decisions rather than handled only as a customs issue. Here are five best practices companies should consider when preparing for tariff volatility:

• Map Which Inputs and Product Lines Are Most Exposed. Manufacturers should identify the raw materials, components, and finished goods most vulnerable to tariff changes and assess the effect of those changes on margins, pricing, and production continuity. This review should be grounded in real sourcing and bill-of-materials data rather than high-level assumptions.
• Evaluate Alternative Sourcing and Production Options. Companies should determine whether alternative suppliers, substitute materials, secondary production sites, or regional manufacturing options are realistically available if tariff costs rise or sourcing becomes restricted. Even where alternatives are not immediately deployable, understanding what options exist is an important part of tariff preparedness.
• Review Customer and Supplier Contracts for Tariff Risk Allocation. Manufacturing businesses often operate under contracts negotiated before current tariff volatility emerged. Companies should assess whether those agreements address tariff-related cost increases, price adjustment rights, delivery obligations, and termination or renegotiation mechanisms. Contract terms often shape whether tariff pressure becomes manageable or acute, and who bears the risk of changes.
• Coordinate Trade Compliance With Operations and Finance. Tariff exposure is not only a legal issue. Manufacturers should ensure that trade compliance personnel are communicating with operations, procurement, finance, and sales teams so that sourcing and pricing decisions reflect current tariff realities. Cross-functional coordination is especially important when companies are considering changes to origin, further manufacturing locations, or import structures.
• Prepare Contingency Plans Before Costs Escalate Further. Companies should develop practical response plans in advance for different tariff scenarios, including cost increases, country-specific duties, or sudden product-specific measures. The more a manufacturer depends on uninterrupted cross-border flows, the more important it is to decide in advance how the business will respond if trade conditions shift quickly.

Manufacturers that assess their tariff-sensitive inputs, review their contractual exposure, and build operational flexibility in advance will be better positioned to withstand future trade disruption. In the current environment, tariff preparedness is increasingly part of basic business resilience.

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.

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.

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.

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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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.

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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.

The Trump administration’s new tariff initiatives are reshaping the customs compliance landscape. As discussed in the prior articles in this series, higher tariff rates and new customs requirements are increasing customs bond requirements, new executive actions are signaling a more aggressive enforcement posture, and importers face a growing likelihood of audits, investigations, and other enforcement activity. Together, these developments are creating what may be described as the new customs enforcement reality.

Against this backdrop, many importers are understandably searching for opportunities to reduce tariff exposure and manage landed costs. There is nothing inherently problematic about such efforts. Indeed, customs law provides a variety of legitimate planning opportunities that may reduce duty liability when implemented correctly.

The challenge, however, is distinguishing between lawful tariff-planning strategies and positions that create significant compliance and enforcement risks. As tariff exposure increases, so too does the incentive for companies to adopt aggressive customs positions. At the same time, U.S. Customs and Border Protection (CBP) is expected to devote greater attention to classification, valuation, country-of-origin determinations, and other customs issues that directly affect duty liability.

As a result, some strategies that may appear attractive in the current environment can create substantial legal and financial exposure when pursued beyond what the law permits. In some cases, these approaches are based on misunderstandings of customs law. In others, they involve theories that have little support in existing statutes, regulations, or CBP guidance. And in still others, they may create risks that far outweigh any potential duty savings.

This final article in our series examines ten dubious tariff-saving “opportunities” that importers should approach with caution and explains why seemingly creative customs strategies can sometimes become the starting point for significant enforcement problems.

Classification and Tariff Scope Fallacies

Fallacy #1: “Come on, Customs processes millions of entries. They will never connect the dots!”

Many customs compliance strategies are built upon a surprisingly outdated assumption: that CBP reviews transactions one entry at a time and evaluates each filing in isolation.

That assumption is increasingly incorrect.

Modern customs enforcement is heavily data-driven. Through ACE and other enforcement tools, CBP has access to enormous amounts of import data and routinely employs sophisticated analytics to identify anomalies, trends, and potential compliance risks. Rather than beginning with a single problematic entry, CBP frequently begins with a pattern and then works backward to determine whether that pattern reflects a legitimate business change or a potential compliance issue.

This reality has become particularly important in the current tariff environment. CBP understands that importers have strong incentives to reduce exposure to Section 232 duties, Section 301 tariffs, antidumping and countervailing duty liability, and other trade restrictions. As a result, the agency is increasingly focused on identifying data patterns that may suggest aggressive tariff-avoidance strategies.

Classification changes are a good example. A sudden shift from one tariff provision to another shortly after a new tariff measure takes effect may attract attention, particularly where the products appear unchanged. The same is true of significant changes in declared value, abrupt country-of-origin shifts, unusual pricing trends, or sourcing changes that coincide with the implementation of new trade restrictions.

CBP also has the ability to compare importers against their peers. If one importer is declaring dramatically different values, classifications, duty rates, countries of origin, or sourcing patterns than similarly situated competitors importing comparable products, those differences may become visible through data analysis.

Importers should not assume that a questionable position will escape scrutiny simply because it appears reasonable on a single entry. Customs enforcement increasingly focuses on patterns, trends, and anomalies that become apparent only when transactions are viewed across products, suppliers, countries, and time periods.

The most effective compliance programs operate on the assumption that CBP will eventually connect the dots.

Fallacy #2: “Come on, there are at least three HTS codes that could apply. Why not use the cheapest one?”

For many importers, tariff classification is the first place they look when tariff costs increase. That is entirely understandable. A single classification decision may determine whether a product is subject only to ordinary customs duties or also faces substantial additional duties under Section 232, Section 301, antidumping and countervailing duty orders, or other trade restrictions.

In the current tariff environment, companies should be reviewing classifications. Many classifications were established years ago, when the duty consequences of a particular tariff provision were relatively modest. Today, however, the difference between two potentially applicable tariff provisions may result in dramatically different duty outcomes.

The challenge is ensuring that the analysis begins with the product rather than the desired tariff result. The proper question is not, “Which classification produces the lowest duty rate?” Rather, it is, “Which classification is supported by the terms of the Harmonized Tariff Schedule, the Explanatory Notes, CBP rulings, and applicable judicial precedent?”

CBP generally has little concern when importers undertake thoughtful classification reviews supported by sound legal and technical analysis. Problems arise, however, when classifications appear to have been selected primarily to avoid tariffs rather than to accurately describe the imported merchandise.

Importers should also recognize that classification changes are often highly visible to CBP. A sudden change in classification for the same product, or a classification change affecting products that appear substantially similar to merchandise previously entered under a different tariff provision, can be an obvious red flag. Likewise, if a significant number of importers begin shifting products into lower-duty classifications shortly after a new tariff measure takes effect, CBP is likely to notice.

A classification change that can be explained and defended is a legitimate compliance decision. A classification change that exists only because the tariff rate is lower is far more likely to attract scrutiny.

Fallacy #3: “These Section 232 tariffs are so unfair! Just pick a reasonably close alternative that is not covered and call it a day.”

Few customs issues have attracted more attention in recent years than Section 232 tariffs. As tariff rates on steel, aluminum, copper, and derivative products have increased, importers have devoted significant resources to evaluating whether particular products actually fall within the scope of the applicable measures.

There is nothing improper about undertaking that analysis. Indeed, importers should periodically revisit whether their products remain properly subject to Section 232 duties.

The challenge is that Section 232 reviews often begin with a legitimate question but can quickly become outcome driven. Once a company realizes that a particular classification or scope determination carries a significant tariff consequence, the temptation naturally arises to search for an alternative interpretation that places the product outside the scope of the applicable measures.

For numerous products, Section 232 applicability turns directly on tariff classification. A change in classification may therefore have the effect of moving a product from a tariff-bearing provision to one that falls outside the scope of the applicable Section 232 measures.

CBP is acutely aware of these incentives. Classification changes, revised product descriptions, and newly adopted scope interpretations that coincide with the imposition or expansion of Section 232 duties are likely to receive heightened scrutiny.

Importers should therefore approach Section 232 reviews with the same discipline that they would apply to any other customs analysis. The relevant question is whether the product’s physical characteristics, technical specifications, and legal classification support the conclusion being advanced.

Valuation Fallacies

Fallacy #4: “If we don’t put it on the invoice, how would Customs even know about it?”

As tariff rates have increased, customs valuation has become an increasingly important area of focus for importers seeking to manage landed costs.

Not surprisingly, many companies have begun scrutinizing whether royalties, license fees, engineering payments, software fees, tooling charges, product development costs, molds, dies, technical assistance, prototypes, and other contributions must be included in customs value.

A common misconception is that a cost somehow falls outside the customs valuation analysis simply because it does not appear on the commercial invoice. Customs valuation, however, focuses on the economic reality of a transaction rather than the accounting treatment chosen by the parties.

This issue has become particularly important as companies pursue China+1 sourcing strategies and establish relationships with new manufacturers. In many cases, importers provide substantial support to overseas producers in the form of engineering assistance, tooling, product specifications, testing protocols, software, prototypes, manufacturing know-how, and other valuable inputs. While these contributions are often necessary to establish production capability, they may also create “assist” obligations that must be reflected in customs value.

One reason royalties and assists remain recurring compliance issues is that the relevant information frequently resides outside the customs department. Engineering teams, procurement personnel, product development groups, legal departments, tax departments, and sourcing teams may each possess pieces of relevant information.

Whether a royalty must be included in customs value, or whether a particular contribution constitutes a dutiable assist, depends on a highly fact-specific analysis. As tariff exposure has increased, CBP has devoted greater attention to arrangements that appear designed to remove otherwise dutiable amounts from customs value or that fail to account for significant contributions provided to foreign manufacturers.

An assist that is overlooked does not cease to be an assist simply because no one informed the customs department that it existed.

Fallacy #5: “What’s the harm in unbundling a few costs? The supplier gets paid the same amount.”

Closely related to the assists and royalties issue is another common misconception: that a cost becomes non-dutiable simply because it appears somewhere other than the commercial invoice.

As tariff rates have increased, so has the incentive to reduce the value declared to CBP. Not surprisingly, some companies begin exploring whether costs associated with imported merchandise can be moved into separate contracts, invoices, entities, or payment streams.

Engineering services may be invoiced separately. Tooling charges may be placed in a side agreement. Royalties may be reflected in a licensing arrangement rather than a purchase order. Software fees, commissions, development costs, technical assistance charges, and other payments may be carved out from the primary purchase transaction.

The compliance risk arises when the structure is driven primarily by the desire to remove otherwise dutiable amounts from customs value.

CBP generally looks beyond invoice labels, accounting treatment, and contractual terminology to evaluate the substance of the transaction. The key question is not whether a payment appears on a separate invoice. The key question is whether the payment is sufficiently connected to the imported merchandise that it must be included in customs value under the applicable valuation rules.

Separating a payment from the commercial invoice may change the paperwork. It does not necessarily change the customs treatment.

Fallacy #6: “If our transfer pricing study is good enough for the IRS, it’s good enough for Customs!”

As tariff rates have increased, customs valuation has become an increasingly important component of overall trade compliance.

Many multinational enterprises already maintain extensive transfer pricing documentation for income tax purposes. Faced with the cost and complexity of customs valuation compliance, some companies naturally wonder whether those existing transfer pricing studies can simply be repurposed to support customs value.

Unfortunately, the answer is not always that simple.

Although tax and customs authorities both examine related-party transactions, they often do so from different perspectives and for different purposes. Transfer pricing analyses prepared for the IRS typically focus on whether profits are allocated appropriately among related parties and whether the pricing is consistent with the arm’s-length standard. CBP, by contrast, focuses on whether the declared customs value satisfies the requirements of the customs valuation statute and whether the relationship between the parties influenced the price paid for the imported merchandise.

The overlap between tax and customs is significant. The rules, however, are not identical.

Fallacy #7: “If there are three invoices, why aren’t we using the cheapest one?”

As tariff rates have increased, many importers have begun exploring First Sale programs as a means of reducing customs value and lowering duty liability.

Unlike many of the strategies discussed in this alert, First Sale is not a loophole or an aggressive compliance position. When properly implemented, it is a well-established customs valuation methodology recognized by CBP and the courts.

One of the most common misconceptions, however, is that First Sale simply permits the importer to use the lowest invoice in a multi-tier supply chain as the basis for customs value.

To qualify for First Sale treatment, importers generally must establish that there was a bona fide sale for export to the United States, that the relevant parties dealt with one another at arm’s length, and that the transaction satisfies the requirements established through CBP rulings and judicial precedent. Equally important, the importer must possess sufficient documentation to demonstrate that those requirements have been satisfied.

Simply selecting the lowest invoice in the transaction chain is not a First Sale program. It is merely a lower number.

Origin Fallacies

Fallacy #8: “If we assemble the product in Vietnam, doesn’t it become a product of Vietnam?”

Few customs concepts have become more important in recent years than country of origin.

Not surprisingly, many importers have pursued China+1 sourcing strategies, relocating production or portions of their supply chains to countries such as Vietnam, Thailand, Malaysia, India, and Mexico.

The challenge is that not every supply-chain change results in a new origin.

One of the most persistent misconceptions in international trade is the belief that country of origin changes simply because merchandise is subject to some processing in another country. It does not. Minor assembly operations, repackaging, relabeling, testing, inspection, sorting, or other limited processing activities generally do not change origin if they do not result in a substantial transformation of the product.

Because China+1 strategies have become so widespread, country-of-origin claims associated with third-country manufacturing have become a major enforcement focus. CBP is well aware that importers have strong incentives to reduce exposure to Section 301 duties and other trade restrictions.

Country-of-origin determinations should be driven by the facts of the production process and the substantial transformation analysis, not by the tariff result the importer hopes to achieve.

Compliance Fallacies

Fallacy #9: “Just let the customs broker handle everything; it’s what we pay them for.”

As customs compliance becomes increasingly complex, many importers rely heavily on their customs brokers to help navigate classification, entry filing, admissibility requirements, tariff programs, and a growing array of trade restrictions.

The challenge is that importers sometimes assume that the broker’s involvement means that someone else is responsible for evaluating all customs compliance issues.

More importantly, many of the customs issues discussed in this alert involve facts that the broker may never see.

A broker can review the commercial invoice and entry documentation that it receives. What the broker often cannot see are royalty agreements negotiated by the legal department, transfer pricing policies developed by the tax department, engineering services provided by product development teams, tooling supplied by procurement personnel, or sourcing decisions made months earlier as part of a China+1 initiative.

Many customs disputes arise not because anyone intentionally ignored a compliance issue but because the importer assumed that someone else was evaluating it. The logistics department assumed the broker was handling it. The broker assumed the importer had already analyzed it. Meanwhile, the underlying issue was never reviewed by anyone.

A customs broker is an important part of a compliance program. It is not a substitute for one.

Fallacy #10: “if everyone else in the industry is doing it, why should we be the only saps who are paying the highest tariff rate?”

As tariff rates have increased and customs compliance has become more consequential, importers have devoted significant attention to understanding how competitors classify products, determine country of origin, value merchandise, and address other customs issues.

The challenge arises when industry practice becomes a substitute for legal analysis.

One of the more common justifications for an aggressive customs position is the belief that the position must be acceptable because it is widely used throughout the industry. Whether that belief is accurate or not, it generally misses the point. CBP does not determine compliance based on the number of companies taking a particular position. Rather, the agency evaluates whether a specific importer’s customs treatment is consistent with the applicable legal requirements.

Moreover, widespread adoption of a particular practice does not necessarily reduce enforcement risk. In some circumstances, it may increase it. When CBP identifies a potential issue affecting a particular product category or industry sector, it is not uncommon for multiple importers of similar merchandise to receive CF-28 Requests for Information or become part of a broader enforcement initiative.

In those situations, the fact that everyone is doing it may simply mean that everyone receives the same questionnaire.

If a company genuinely believes that a competitor is obtaining an unfair advantage through customs violations, CBP maintains mechanisms, including its e-Allegations program, through which suspected customs violations may be reported. The appropriate response to suspected noncompliance is to evaluate available legal remedies, not to assume that another company’s conduct creates a safe harbor for everyone else.

Ultimately, customs compliance is determined by the correctness of an importer’s own entries, not by whether its competitors are making the same decisions.

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The common theme running through all ten of these fallacies is that they begin with the desired tariff result and work backward. Customs compliance works best when the process runs in the opposite direction.

There is nothing improper about reducing tariff exposure. In fact, importers should continuously evaluate legitimate opportunities to improve classifications, optimize supply chains, implement First Sale programs, review valuation methodologies, and qualify for preferential tariff treatment where appropriate. Many of the most effective tariff-saving strategies are entirely lawful and have been recognized by CBP and the courts for decades.

The challenge is ensuring that the facts and the law support the result.

As tariff rates increase, so too do the incentives for aggressive customs positions. CBP understands those incentives and has increasingly focused its enforcement efforts on classification changes, valuation adjustments, country-of-origin claims, and other positions that materially affect duty liability. In today’s data-driven enforcement environment, assumptions, industry practices, and undocumented conclusions are becoming increasingly difficult to defend.

Ultimately, the best tariff-planning strategy is not the most creative one. It is the one that remains supportable when CBP asks a simple question:

“Please provide the documentation supporting your position.”

The landscape of tariff enforcement is intensifying, creating significant compliance, financial, and operational challenges for importers. The first installation in this series examined how rising bonds and liquidity could impact importer’s risk management profiles, while the second analyzed the impact of the new executive order on Strengthening Customs Enforcement. We now proceed to analyze the impact of the new focus of the Department of Justice on tariff underpayments, which further increases the risk of importing.

In a development that may mark a meaningful escalation in the Trump administration’s trade enforcement agenda, the Department of Justice (DOJ) recently announced a major False Claims Act (FCA) settlement involving importers accused of evading antidumping and countervailing duties (AD/CVD). The settlement is an important reminder that customs enforcement risk no longer resides only with U.S. Customs and Border Protection (CBP). The DOJ is increasingly positioning itself as an active player in trade enforcement, with a focus on import fraud, duty evasion, and false statements made in connection with import entries.

For importers, the message is straightforward. Companies should reassess their own customs compliance programs now, particularly in higher-risk areas such as tariff classification, valuation, country of origin, AD/CVD exposure, and supply chain representations. They should also be aware that the DOJ’s renewed focus may create opportunities for companies; those harmed by unfair competition will see opportunity to raise concerns about trade evasion by their competitors.

DOJ Has Been Building Toward This Moment

The recent settlement did not emerge in isolation. Over the past year, the DOJ has been assembling the internal structure necessary to pursue trade fraud more aggressively.

In August 2025, the DOJ created its Market, Government, and Consumer Fraud Unit within the Criminal Division. That move was widely viewed as an effort to build enforcement capacity around customs and trade-related fraud, including misclassification, undervaluation, transshipment, and relabeling schemes used to evade duties. At the time, the initiative appeared closely aligned with the Administration’s broader reliance on tariffs and other trade restrictions, including duties imposed under the International Emergency Economic Powers Act (IEEPA).

The DOJ later reinforced that direction by launching a cross-agency Trade Task Force focused specifically on customs violations and trade evasion. The task force was described as using a range of enforcement tools, including civil False Claims Act cases, collections actions, and criminal prosecutions, and drew personnel from the DOJ’s civil and criminal components as well as the Department of Homeland Security. By early 2026, the DOJ had identified leadership for the task force and was coordinating with U.S. Attorneys’ Offices to support enforcement efforts.

Then, in April 2026, the DOJ announced the creation of a new National Fraud Enforcement Division, following broader concerns about fraud against the government. Although that move raised questions about whether trade enforcement would be absorbed into a more general anti-fraud framework, the better reading now appears to be that the DOJ intends to pursue trade fraud through multiple channels rather than narrow its focus.

The Aluminum Settlement Suggests DOJ Is Following Through

That enforcement architecture now appears to be producing visible results. On May 12, DOJ announced a $549.5 million settlement with aluminum importers to resolve civil False Claims Act allegations tied to the evasion of antidumping and countervailing duties on aluminum extrusions from China.

According to the DOJ, the importers falsely described the imported merchandise on Customs entry documentation in order to avoid AD/CVD liability. The government alleged that the products were declared as finished aluminum pallets, when in reality they were aluminum extrusions that had been superficially modified to appear to fall outside the applicable trade remedy orders and were intended to be broken apart and resold for other downstream uses.

The size of the settlement is notable on its own, but the case is significant for broader reasons as well. It shows that the DOJ is prepared to use the False Claims Act in the customs context where alleged duty evasion is supported by false statements made to the government, including on Customs Form 7501 entry summaries and related import documentation. It also confirms that the government is willing to pursue large-scale recovery in trade cases that historically might have been viewed primarily as administrative customs matters.

Why This Matters for Importers

The settlement underscores a larger shift: import-related compliance failures may increasingly be framed not just as customs violations but as fraud against the United States. That framing brings with it much more serious consequences, including treble damages, statutory penalties, broader investigatory tools, and greater reputational exposure.

The DOJ appears particularly focused on conduct involving:

• misclassification of imported merchandise;
• undervaluation;
• false country-of-origin claims;
• transshipment and relabeling schemes;
• evasion of AD/CVD orders;
• false certifications or declarations submitted to CBP; and
• supply chain representations that cannot be substantiated.

For importers, this means that customs compliance and government-facing trade representations should be viewed through a litigation and enforcement lens, not merely an operational one.

Expect More Overlap Between Trade Enforcement and Supply Chain Enforcement

Looking ahead, the DOJ is likely to use a broader set of legal tools to address trade misconduct, especially where the underlying conduct touches China, Southeast Asia, or other supply chains already associated with heightened enforcement risk. In addition to more traditional duty evasion cases, companies should expect increasing attention to statutes such as the Uyghur Forced Labor Prevention Act (UFLPA) and potentially other laws aimed at forced labor, trafficking, and prohibited imports.

This matters because modern trade enforcement often turns on statements made to the government. For example, importers responding to UFLPA scrutiny may be required to provide detailed certifications and supply chain tracing information to CBP. Where those submissions are inaccurate, inconsistent, or unsupported, they may create the kind of evidentiary record that can support broader fraud allegations. In that sense, forced labor enforcement and trade fraud enforcement are becoming more closely linked.

Competitor Complaints and Whistleblower Risk Are Also Rising

Another important consequence of the DOJ’s posture is that companies harmed by trade evasion may have more incentive to act. If a competitor appears to be gaining an unfair advantage by avoiding duties or making false import declarations, there may now be a more receptive audience within the government for well-supported allegations.

In addition, the False Claims Act creates the possibility of private whistleblower suits, which can allow a private party to bring allegations on behalf of the government and share in any recovery. That creates an additional risk layer for importers, particularly where customs compliance issues are known internally by employees, former employees, suppliers, or competitors with access to relevant facts.

Practical Takeaways

Importers should consider taking several concrete steps now in light of the DOJ’s growing trade fraud focus and the increasing overlap between customs enforcement, supply chain enforcement, and False Claims Act risk.

Review classification, valuation, origin, and AD/CVD compliance controls. Companies should revisit the core customs determinations that drive duty liability, including tariff classification, customs valuation, country of origin, and exposure to antidumping and countervailing duties. This review should focus not only on whether the company has a formal process but also on whether the process is sufficiently documented, consistently applied, and updated when sourcing patterns, product design, or tariff treatment changes. Areas that involve engineering distinctions, mixed-origin inputs, first sale valuation, assists, transfer pricing, or possible AD/CVD scope questions should receive particular attention.

• Assess whether import declarations and supporting records accurately reflect the merchandise and supply chain. The DOJ’s recent actions underscore that entry summaries, commercial invoices, packing lists, certifications, and other government-facing trade documents can become the basis for fraud allegations if they are materially inaccurate. Importers should confirm that their entry data matches the actual product, use, composition, origin, and transaction structure, and that internal records support the representations being made to CBP. Companies should also review whether product descriptions used in import documentation are overly generalized, outdated, or inconsistent with technical specifications and commercial reality.
• Evaluate UFLPA and other forced labor-related representations for consistency and evidentiary support. Companies importing from higher-risk jurisdictions or sectors should assess whether their supply chain tracing, supplier certifications, affidavits, origin records, and due diligence files would withstand government scrutiny. This is particularly important where importers have made, or may need to make, affirmative statements to CBP regarding forced labor, source materials, factory relationships, or production tracing. Any gap between what the company knows internally and what is being represented externally creates potential enforcement risk.
• Investigate internal complaints or red flags involving customs reporting before they become external issues. Internal audit findings, broker questions, employee complaints, sourcing irregularities, and inconsistencies in invoices or origin documentation should not be treated as routine operational noise. In the current environment, those issues can become the basis for a whistleblower complaint, a government inquiry, or a False Claims Act theory if left unresolved. Companies should ensure that customs and trade concerns are escalated appropriately, investigated promptly, and remediated where necessary, with attention to whether prior disclosures or corrective filings should be considered.
• Consider whether competitors may be engaging in actionable trade evasion. Companies that compete against importers benefiting from suspiciously low pricing, implausible origin claims, unusual transshipment routes, or apparent duty avoidance should evaluate whether those practices warrant further investigation. In an environment where the DOJ and other agencies are actively looking for trade enforcement leads, well-supported allegations of evasion may receive attention. Businesses harmed by unfairly traded imports should consider the range of available options, including administrative and litigation-related avenues, depending on the facts.
• Prepare for a more coordinated enforcement environment involving CBP, DOJ, DHS, and potentially private whistleblowers. Customs issues that once might have been handled as routine administrative matters may now be viewed through a broader fraud-enforcement lens. Importers should assume that entry practices, certifications, supply chain representations, and duty determinations may be examined not only by CBP but also by the DOJ, Homeland Security Investigations, and private relators under the False Claims Act. Trade compliance programs should therefore be evaluated with cross-agency enforcement risk in mind, including document retention, internal reporting channels, management oversight, and legal review of sensitive customs positions.

The DOJ’s recent aluminum settlement is a significant signal that trade fraud enforcement is becoming more active, more coordinated, and more consequential. The government appears prepared to use the False Claims Act and other tools to pursue importers that evade duties through false statements, misleading declarations, or unlawful supply chain practices. For companies engaged in cross-border trade, this is a good time to reassess customs compliance, supply chain representations, and exposure to competitor-driven or whistleblower-driven enforcement.

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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, 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.

For nearly eight years, most importers were forced to react to an ever-changing landscape of tariffs on imports from China. For perhaps the first time since the Section 301 tariffs were imposed, companies now have a meaningful chance to influence what that tariff landscape looks like going forward.

Following the May 2026 meeting between President Trump and President Xi Jinping, the Office of the U.S. Trade Representative (USTR) announced intended to help shape the next phase of U.S.-China trade negotiations. USTR is accepting comments through July 10 regarding which Chinese-origin products should be prioritized in negotiations. The comments are expected to help identify approximately $30 billion in bilateral trade that may become eligible for lower tariff treatment through a newly established U.S.-China Board of Trade, while also identifying U.S. exports that should receive reciprocal tariff reductions by China.

Unlike previous Section 301 exclusion proceedings, this is not simply another opportunity to seek temporary relief from existing tariffs. Instead, USTR is identifying candidates for longer-term tariff liberalization in the broader bilateral trade framework. U.S. Trade Representative Jamieson Greer has explained that the comments will help inform negotiations with China regarding where the two countries have the strongest opportunities for mutually beneficial trade. That makes this proceeding relevant not only for companies that currently benefit from existing Section 301 exclusions but also for businesses whose prior exclusion requests were denied, companies that continue to rely on Chinese sourcing because commercially reasonable alternatives remain unavailable, and U.S. exporters seeking improved access to the Chinese market.

There is no assurance that USTR will ultimately reduce tariffs on any particular product. However, companies that choose not to participate may forfeit an important opportunity to inform the factual record underlying the United States’ negotiating position. Companies that do participate — and that support their positions with well-developed factual and economic evidence — will likely be best positioned to influence USTR’s negotiating priorities and the next phase of the U.S.-China tariff framework.

Why Is This Proceeding Different From the Prior Section 301 Exclusion Process?

Many importers may initially view this proceeding as simply another opportunity to request a Section 301 exclusion. While there are similarities, the objectives of the new process are fundamentally different.

The prior Section 301 exclusion process generally focused on whether specific products should receive temporary relief from tariffs that otherwise remained in place. This proceeding instead is intended to help shape a broader bilateral framework governing trade in products that both governments determine are “non-sensitive.” Rather than asking whether a particular importer should receive an exclusion, USTR is identifying categories of products for potential tariff reductions in U.S.-China trade negotiations.

To that end, USTR is seeking comments regarding which Chinese-origin products present few, if any, concerns relating to economic security, national security, or supply chain resilience, and therefore may warrant reductions in additional tariffs imposed under authorities such as Section 301 and, potentially, Section 232. At the same time, USTR is also seeking recommendations regarding U.S. exports that should receive reciprocal tariff reductions from China.

This broader policy focus means that companies should not assume prior Section 301 exclusion decisions determine the outcome here. Importers whose exclusion requests were previously denied may have a meaningful opportunity to present new arguments based on current market conditions, sourcing challenges, and the broader policy objectives underlying these negotiations. Likewise, companies currently benefiting from existing Section 301 exclusions should not assume those exclusions will simply continue without further action.

Another significant distinction is that this proceeding involves the creation of an ongoing institutional framework rather than a one-time tariff decision. USTR is seeking comments regarding the proposed U.S.-China Board of Trade (the Board), a government-to-government body that would oversee trade in designated non-sensitive products and provide a mechanism for future tariff adjustments. Among other things, USTR requests input regarding how frequently the Board should meet, how products should be added to or removed from the list of non-sensitive goods, and what information should be exchanged to support future decisions.

If established, the Board could become an important mechanism for periodically revisiting tariff treatment as supply chains, economic conditions, and national security priorities evolve, rather than requiring entirely new tariff proceedings each time circumstances change.

Who Should Consider Filing Comments?

The universe of companies that should consider participating in this proceeding is considerably broader than those that previously sought Section 301 exclusions. Indeed, many businesses that concluded years ago that the Section 301 exclusion process offered little prospect of success may find that this proceeding presents a substantially different opportunity.

The most obvious candidates are companies currently benefiting from one of the relatively few remaining Section 301 product exclusions. Those businesses should strongly consider advocating that the products currently covered by those exclusions should continue to receive favorable tariff treatment under whatever framework ultimately emerges from the negotiations.

Likewise, companies whose prior exclusion requests were denied should not assume that those earlier decisions dictate the outcome here. This proceeding involves different legal standards and policy objectives; USTR is expressly seeking updated information regarding current supply chains, sourcing realities, and economic consequences of maintaining elevated tariffs. Companies that continue to source from China because commercially reasonable alternatives remain unavailable should carefully consider whether changed market conditions support a renewed request.

Manufacturers that rely on imported Chinese components or raw materials should also evaluate whether existing tariffs have increased the cost of U.S. production, discouraged domestic investment, reduced exports of U.S.-manufactured products, or otherwise made American manufacturing less competitive. This may be particularly true where tariffs have created “tariff inversions,” resulting in manufacturing inputs being subject to higher duties than the downstream finished products produced from those inputs. In those situations, reducing tariffs on imported inputs may strengthen rather than undermine domestic manufacturing.

Similarly, companies that have invested substantial resources attempting to diversify their supply chains may continue to rely on China for specialized manufacturing, unique production capabilities, tooling, customer-specific specifications, regulatory requirements, or quality considerations. Those companies should consider explaining to USTR why additional diversification is not commercially realistic, and why the products at issue do not present meaningful national security or supply chain concerns.

Companies that have largely absorbed the cost of tariffs rather than passing those costs through to customers should likewise evaluate whether tariff relief would materially improve their competitiveness, profitability, pricing flexibility, or ability to invest in U.S. operations. Businesses considering reshoring or expanding domestic manufacturing also may wish to explain how lower tariffs on imported manufacturing inputs could facilitate additional U.S. investment and employment.

Finally, U.S. exporters should consider submitting their input as well. USTR is seeking comments not only regarding which Chinese-origin products should receive lower U.S. tariffs, but also which U.S.-origin products should receive reciprocal tariff reductions by China. Companies exporting agricultural products, industrial goods, machinery, technology, or other products currently subject to elevated Chinese tariffs may find that improved access to the Chines markets will provide significant commercial benefits

In short, this proceeding is relevant to far more than traditional importers. Any company whose business is materially affected by tariffs on U.S.-China trade—whether as an importer, domestic manufacturer, exporter, or participant in an integrated global supply chain—should consider whether submitting comments could define a more favorable tariff framework going forward.

What Information Is USTR Seeking?

Unlike many prior tariff proceedings, USTR is not simply asking whether tariffs should be increased or decreased. Rather, it is attempting to determine which products are appropriate candidates for tariff liberalization as part of broader negotiations with China. To do so, USTR is seeking factual information that will help it evaluate both the strategic importance of particular products and the economic consequences of modifying existing tariffs.

The threshold question is whether a product should be considered “non-sensitive.” USTR defines non-sensitive products as those that present few, if any, concerns relating to national security, economic security, or supply chain resilience. Accordingly, companies should be prepared to explain why their products do not implicate those concerns and why reducing tariffs would be consistent with general U.S. trade and national security objectives.

Beyond that threshold determination, USTR is seeking to understand the practical effects of existing tariffs. For example, the agency is requesting information regarding products that remain subject to Section 301, Section 232, or other non-MFN tariffs and whether those tariffs have produced unintended economic consequences. One example is tariff inversions, where manufacturing inputs face higher duties than the downstream finished products produced from those inputs. USTR is also interested in understanding the extent to which the United States continues to rely on Chinese imports for particular products and whether commercially realistic alternative sources exist.

The Notice also places considerable emphasis on the extensive economic consequences of tariff modifications. USTR specifically requests information regarding how lower tariffs would affect U.S. manufacturers, workers, consumers, and supply chains. Consequently, companies should focus not only on how tariffs affect their own operations, but also on how tariff relief would influence domestic manufacturing, investment, employment, competitiveness, consumer spending, and downstream industries. The more clearly a company can demonstrate that reducing tariffs would strengthen the U.S. economy without creating meaningful national security concerns, the more persuasive its submission is likely to be.

Finally, USTR is evaluating the bilateral trading relationship as a whole, not merely U.S. imports. The agency is also seeking recommendations regarding U.S.-origin products that should receive reciprocal tariff reductions by China. Therefore, Companies with significant export operations should consider whether this proceeding presents an opportunity to advocate for improved access to the Chinese market as well as lower tariffs on imported products.

Throughout the Notice, one theme is clear: USTR is looking for evidence, not conclusions. Companies that support their comments with objective trade data, sourcing information, economic analysis, and concrete examples are likely to present considerably more persuasive submissions than those relying primarily on generalized policy arguments or assertions that tariffs simply increase costs.

What Types of Arguments Are Most Likely to Persuade USTR?

Although USTR retains broad discretion, both the Notice and prior tariff proceedings provide useful guidance regarding the types of arguments that are most likely to influence the agency’s analysis. Companies should remember that they are not simply requesting lower tariffs—they are helping USTR determine which products should become part of the United States’ negotiating position with China. Accordingly, the strongest submissions are likely to demonstrate not only why tariff relief benefits the commenting company, but also why it advances broader U.S. economic and trade policy objectives.

Some items to consider when drafting comments include the following:

• Begin by Explaining Why the Product Is Truly “Non-Sensitive.” The threshold issue in this proceeding is whether a product presents meaningful concerns relating to national security, economic security, or supply chain resilience. Companies should therefore directly address that question rather than assuming the answer is self-evident. Relevant considerations may include whether the product has little or no military or dual-use application, is widely available from multiple global sources, consists primarily of commodity materials or industrial inputs, or otherwise presents minimal strategic significance. The more directly a submission addresses USTR’s definition of a “non-sensitive” product, the more persuasive it is likely to be.
• Consider Arguments Regarding Why Continued Chinese Sourcing Reflects Commercial Reality. Many companies have spent years attempting to diversify their supply chains. In industries where Chinese sourcing nevertheless remains necessary, companies should explain why. Relevant considerations include capacity limitations outside China, customer specifications, regulatory approvals, tooling investments, quality requirements, intellectual property protections, and other commercial realities. These factors often provide persuasive explanations for why production cannot reasonably be relocated in the near term. Objective evidence supporting those circumstances will generally carry substantially greater weight than generalized assertions that alternative sourcing would simply be expensive or difficult.
• Demonstrate How Tariff Relief Would Strengthen U.S. Manufacturing. Perhaps the most compelling submissions will show that reducing tariffs would strengthen—not weaken—American manufacturing. For many products, tariffs increase the cost of manufacturing in the United States by raising the price of imported components, raw materials, or production equipment. Companies should explain whether tariff relief would reduce production costs, support additional domestic investment, improve export competitiveness, preserve or create U.S. jobs, or otherwise enhance the competitiveness of U.S.-based manufacturing operations. Framing tariff relief as a means of supporting American industry is likely to resonate more strongly than arguments focused solely on reducing import costs.
• Highlight Tariff Inversions and Other Unintended Consequences. USTR specifically requests information regarding tariff inversions, where manufacturing inputs are subject to higher duties than the downstream products manufactured from those inputs. Companies encountering these situations should carefully explain how the existing tariff structure discourages domestic manufacturing, distorts sourcing decisions, or otherwise produces outcomes that are inconsistent with the underlying objectives of the tariff program. Concrete examples of these unintended consequences may be particularly persuasive because they demonstrate how existing tariffs can sometimes undermine the very industries they were intended to protect.
• Support Every Assertion With Objective Evidence. Throughout the Notice, USTR repeatedly requests factual information rather than general policy views. Accordingly, companies should support their submissions with objective data whenever possible, including import volumes, duty payments, China’s share of the U.S. market, employment impacts, capital investments, downstream manufacturing supported by the imported products, export impacts, and other measurable economic effects. Whenever possible, companies should quantify the consequences of maintaining—or reducing—the current tariffs. Numbers almost always carry more weight than adjectives.
• Anticipate the Questions USTR Will Ask. The strongest submissions do not ignore the reasons the tariffs were imposed in the first place. Rather than simply asserting that tariffs are harmful, companies should explain why the specific products at issue do not present meaningful national security or supply chain concerns and why targeted tariff relief would remain fully consistent with broader U.S. trade policy objectives. Likewise, because this proceeding is intended to support bilateral negotiations, companies should explain why their proposed tariff modifications represent appropriate candidates for reciprocal concessions by China and would contribute to a more balanced and durable trading relationship.
• Do Not Assume Someone Else Will Make Your Case. Many industries are represented by trade associations that are likely to submit comments in this proceeding, which can provide valuable input when they provide industry-wide economic data, explain broader market dynamics, or advocate for tariff relief affecting an entire sector. But companies should not assume that an association’s comments eliminate the need for an individual submission, because your company may have unique points to make. Company-specific facts often cannot be presented effectively by an industry association, yet they may be among the most persuasive evidence in the record. Companies should therefore view association comments and company-specific submissions as complementary rather than mutually exclusive. An effective strategy may involve supporting an industry’s broader policy objectives through the association while simultaneously submitting company-specific comments explaining how those issues affect the business’ own operations, investments, employees, customers, and competitiveness.

Ultimately, USTR is likely to be influenced by both the breadth and the depth of the record before it. Trade associations often demonstrate the breadth of an issue across an industry, while individual companies frequently provide the detailed factual evidence that gives those broader arguments practical force.

Practical Steps Before the July 10 Deadline

Preparing a persuasive submission will often require considerably more than simply drafting a comment letter. Companies should view this proceeding as an opportunity to develop a comprehensive factual record establishing why tariff relief would advance broader U.S. economic interests. Accordingly, companies should consider taking the following steps before the July 10 deadline:

• Identify the products that matter most. Review products currently subject to Section 301, Section 232, or other non-MFN tariffs to determine which have the greatest commercial significance and would provide the greatest benefit if tariffs were reduced.
• Confirm the applicable tariff classifications. Because any eventual tariff modifications are likely to be tied to specific HTSUS provisions, companies should verify the tariff classifications for the products they intend to address and consider whether more detailed product descriptions are appropriate to distinguish their merchandise from other products classified under the same tariff provision.
• Evaluate whether the products qualify as “non-sensitive.” Carefully assess how each product fits within USTR’s definition of a non-sensitive product and identify the facts demonstrating that it presents minimal national security, economic security, or supply chain resilience concerns.
• Look for unintended consequences in the current tariff structure. Determine whether existing tariffs create tariff inversions, increase the cost of U.S. manufacturing, discourage domestic investment, reduce exports of U.S.-manufactured goods, or otherwise produce outcomes inconsistent with the objectives of the tariff program.
• Build an evidence-based record. Assemble objective information regarding import volumes, duty payments, sourcing alternatives, manufacturing operations, employment, capital investment, export activity, and other measurable economic impacts. The stronger the factual record, the more persuasive the submission is likely to be.
• Coordinate across the organization. Preparing an effective submission may require input from trade compliance, procurement, engineering, manufacturing, finance, government affairs, sales, and senior management. Companies should begin that coordination early enough to gather the information requested by USTR.
• Continue monitoring the proceeding after July 10. Initial comments are only the first stage of the process. Companies should consider reviewing comments submitted by others, particularly competitors, customers, suppliers, and domestic manufacturers, to determine whether rebuttal comments should be submitted before the July 27 deadline.

Key Takeaways

For nearly eight years, most companies have had little choice but to adapt to an evolving landscape of tariffs on imports from China. This proceeding represents a rare opportunity to move from simply reacting to tariff policy to helping shape it.

Although there is no assurance that USTR will ultimately reduce tariffs on any particular product, companies that fail to participate may miss an important opportunity to influence the factual record that will help define the United States’ negotiating priorities. Those priorities, in turn, may define the next generation of tariff treatment for billions of dollars in U.S.-China trade.

Accordingly, companies should not view this proceeding as merely another public comment exercise. Rather, it is an opportunity to explain why particular products should be treated differently, why tariff relief would advance broader U.S. economic interests, and why those products are appropriate candidates for inclusion in a future bilateral tariff agreement. Companies that present thoughtful, well-supported, and data-driven submissions will likely be best positioned to influence the next phase of the U.S.-China tariff framework.