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This week consisted of many developments surrounding President Trump’s tariff policy. On March 4, his sweeping new tariffs took effect, significantly altering the trade landscape for businesses engaged in international commerce. Those new tariffs consist of:

A 25% tariff on Mexican and Canadian imports into the U.S. that took effect on midnight after a one-month extension imposed by President Trump.
A 10% tariff exception on imports of Canadian energy products.
An additional 10% tariff on certain Chinese goods, on top of the existing 10% tariff, effectively doubling duties on Chinese imports into the U.S.

The implementation of President Trump’s tariff agenda and the foreign policy responses to it have been dynamic and constantly evolving. On March 5, President Trump announced he would pause the 25% tariff for automobile imports from Mexico and Canada that are compliant under the U.S.-Mexico-Canada Agreement (USMCA) for 30 days. This development resulted from continued lobbying efforts from the automobile industry. On March 6, President Trump announced a 30-day pause on the 25% tariff imposed on Canada and Mexico imports, but only for those compliant with the USCMA. President Trump also reduced the tariff on Canadian potash not included in the USMCA to 10% from 25%. These modifications are effective with respect to goods entered for consumption or withdrawn from warehouse for consumption on or after March 7, 2025. The pause will remain in effect until April 2, the date the Trump administration has consistently stated it will impose reciprocal tariffs on all trading partners. It is reported that this pause will affect 50% of Mexican imports and 38% Canadian imports that are USMCA compliant. However, about 40% of imports from Canada and Mexico that were not USMCA compliant were not subject to a tariff.

Executive Order 14194 (“Imposing Duties to Address the Situation At Our Southern Border”), as amended by Executive Order 14198 (“Progress on the Situation at Our Southern Border”) and subsequently amended by the March 2, 2025 Executive Order “Amendment to Duties to Address the Situation At Our Southern Border”, which implement these tariffs, do not include any mechanism for exceptions or exclusions, meaning all covered imports will be subject to the new tariffs without relief options. Previous tariff policies have been implemented through statutes like section 301 of the Trade Act of 1974, which imposed tariffs on China for purposes of its unfair trade practices. The current tariff provisions invoke the International Emergency Economic Powers Act (IEEPA), which has been broadly interpreted to authorize the president to regulate international commerce to address an unusual or extraordinary threat if the president declares an emergency to address such a threat. This distinction is important because it allows the president to declare the emergency at any point, for the duration that the threat continues, without any congressional approval. The administration has justified the implementation of these tariffs by asserting that these countries have not done enough to curb fentanyl and other drug smuggling, as well as illegal immigration at the northern and southern borders, which poses a threat to the U.S.

These measures have triggered immediate responses from Canada, Mexico and China, escalating trade tensions and creating significant challenges for companies reliant on cross-border supply chains.

China’s Response

In response to the new U.S. tariffs against China, China’s Ministry of Finance has imposed 15% tariffs on imports of American chicken, wheat, corn, and cotton, along with 10% tariffs on soybeans, pork, fruit, beef, dairy products and other food items. Reporting has suggested China’s Ministry of Commerce would sanction 15 U.S. companies, prohibiting them from importing/exporting Chinese products or making new investments in China or Chinese entities, unless granted special government permission. However, these actions remain unclear. China has also filed a complaint with the World Trade Organization, arguing that the U.S. tariffs violate global free trade rules.

Canada’s Response

Canada had implemented a 25% tariff on $107 billion in U.S. goods, rolling out in two phases. Phase one, with immediate impact, included $20.6 billion in U.S. imports, targeting 1,256 products such as alcohol, meat, milk, certain fruits, coffee, beauty products, household goods, paper, and construction materials. Phase two includes an addition $86.4 billion in goods facing tariffs that will be announced over the next 21 days. Earlier this week, Ontario Premier Doug Ford reiterated that he would cut off electricity flows to New York, Michigan, and Minnesota. As a response to the recent pause by President Trump, Canada agreed to suspend only the implementation of phase two of its tariffs until April 2.

Mexico’s Response

Initially, Mexican President Claudia Sheinbaum denounced the tariffs by confirming that Mexico would impose retaliatory tariffs, with details expected to be announced on March 9. This may change based on recent developments. However, if Mexico proceeds with any retaliatory tariffs, based on past patterns, such as Mexico’s 2018 retaliatory tariffs on U.S. goods, new tariffs could range from 5% to 20% on various agricultural products and manufactured goods. President Sheinbaum has emphasized that the goal is not to escalate into a full economic confrontation, but to defend Mexico’s interest, suggesting a strategic selection of goods that could pressure the U.S. without severely disrupting bilateral trade.

President Trump’s State of the Union Response

Immediately before the State of the Union speech, Commerce Secretary Howard Lutnick commented that the U.S. could compromise with Canada and Mexico just one day after imposing the new tariffs. The compromise resulted in the 25% tariff pause for automobile imports referenced above. The most recent pause on Mexico imports is a result of a conversation scheduled Thursday between Presidents Sheinbaum and Trump. Even with these new developments, the administration’s tone seems to indicate that it may not budge from its use of tariffs to press on its “America First” policy stance.

Tariffs will continue to be President Trump’s first line of trade defense, as in his speech he said they are “a little disturbance” and doubled down on beginning a reciprocal tariffs program on April 2, 2025. President Trump nodded to other trade issues, including technology investments in artificial intelligence and the creation of semiconductor chip plants in the U.S., as well as the incentives to encourage the production of automobiles in the U.S. An overall takeaway from President Trump’s speech is that products should be made in America, if not, “you will pay a tariff, and in some cases a rather large one.”

Continuous Whiplash

President Trump intends to utilize the power of the tariff as a negotiation tactic to promote his “America First” policy agenda. This tactic will lead to continued whiplash for importers and exporters. For those reasons, there will be continuous developments in the trade and tariff space as this administration utilizes these economic powers.

A 25% tariff on steel and aluminum imports effective on March 12.
A potential 25% tariff on automobiles, semiconductors, and pharmaceutical products slated for April 2.
Reciprocal tariffs to be implemented by April 2 to eliminate the U.S. trade deficit with countries having non-reciprocal trading agreements. India is currently working to avoid reciprocal tariffs, but President Trump’s speech nodded to an application of these tariffs across the board.
A possible tariff on external agriculture products to go into effect on April 2. No further details have been disclosed.
Current ongoing investigation to impose tariffs on copper imports with a recommendation due by late November.

The actions by President Trump may seem to signal that his threats to the European Union could come to fruition and the region may be next on the tariff crusade. Those actions may be different from what is occurring with Canada and Mexico. However, President Trump’s goal is to eliminate America’s trade imbalance. He campaigned on a promise of implementing a universal baseline tariff, which he will likely push forward through the implementation of reciprocal tariffs.

This alert is intended as a guide only and is not a substitute for specific legal or tax advice. Things are rapidly changing by the day and hour, and our Tariff Task Force will do its best to provide timely and relevant updates as things progress. Please don’t hesitate to reach out to us with questions.

International comity has long sat at the center of U.S. foreign relations law, governing how U.S. courts approach conflicting foreign laws, foreign judgments, and abstention. However, evaluation of international comity principles is often based in federal or international law. But what happens when international comity needs to be applied to a state law claim? Last year, the U.S. Court of Appeals for the Eight Circuit sought to clarify this question, finding international comity principles do not require dismissal of a state action based in Missouri common law tort claims. While many hoped to see this issue reviewed by the U.S. Supreme Court, the writ for certiorari was denied on February 28. Now, the implications of the Eight Circuit’s decision may remain the standard moving forward.

On August 1, 2024, the Eighth Circuit denied summary judgment and dismissal of Missouri state law tort claims brought on behalf of Peruvian citizens.[1] The action began in 2007, when Sister Kate Reid and Megan Heeney, acting as next of friends, filed numerous tort lawsuits in state court, alleging that Peruvian citizens, who were children at the time of the harm, were exposed to hazardous toxic emissions from a smelting and refining complex in Peru.[2] The complex was owned by the Peruvian affiliate of Doe Run Resources Corp. (Doe Run), a subsidiary of The Renco Group, Inc. (Renco) — both named defendants in the case.[3]

After the consolidation of 40 cases and an additional 1,420 individual plaintiffs, the case was removed to federal court where the Peruvian nationals claimed “decision making by Doe Run executives in the United States exposed plaintiffs to lead poisoning and caused them to suffer persistent and irreversible cognitive impairments.”[4] The corporate defendants moved for summary judgment, arguing Peruvian law should apply due to the U.S.-Peru Free Trade Agreement (PTPA or TPA), and calling for a dismissal based on international comity.[5] The district court denied the motion to apply Peruvian law and the dismissal.

Refusing to reach the merits of a summary judgment motion, the district court certified its choice-of-law ruling for interlocutory appeal. The Eighth Circuit accepted and on appeal evaluated three major questions: (1) Whether the TPA required dismissal; (2) Whether traditional comity factors required dismissal; and (3) Whether extraterritoriality principles warranted abstention.[6]

First, the Eighth Circuit found a plain reading of Chapter 18.4 of the TPA, which dictates the enforcement of foreign environmental laws, did not require dismissal as “[t]he plaintiffs’ specific claims and methods for relief [those based in negligence under Missouri state law] are not explicitly addressed by the TPA, which contemplates more traditional mechanisms for environmental enforcement.”[7] Second, the Court reasoned prospective comity did not apply in this circumstance as neither the U.S. State Department nor the Peruvian government submitted positions in the case.[8] As a result, the traditional comity factors, requiring a showing of foreign or domestic interest in resolving the suit, could not be met.[9] Finally, the Eighth Circuit distinguished the case from SCOTUS’ decision in Nestlé USA, Incorporated v. Doe. Nestlé itself established a two-step framework for analyzing extraterritoriality issues, and applied this framework to determine whether foreign national plaintiffs could hold a domestic corporation liable under the Alien Tort Statute (ATS), 28 U.S.C. § 1350.[10] But the Eighth Circuit distinguished Nestlé by noting state law, not a federal statute, governed the Peruvian nationals’ dispute. Additionally, the actions complained of in Nestlé occurred overseas.[11] These actions were in stark contrast to the argument that Doe Run and Renco should be liable for their executive decisions made in the U.S.[12] As such, the Eight Circuit affirmed the judgment of the district court.

The corporate defendants put in the bid to the U.S. Supreme Court in motion, arguing in their petition for writ of certiorari that the Eighth Circuit’s decision “provides an easy end run around Nestlé” allowing plaintiffs to “recast any extraterritorial claim … as a state-law tort claim to sue in the United States.”[13] In response, the Peruvian nationals argued the Eighth Circuit’s reasoning is sound as applied, and because defendants forfeited defenses such as forum non conveniens early on, the unique interlocutory posture of the case makes it so that “few (if any) other litigants will take the same approach….”[14] In support of the corporate defendants’ certiorari petition, Troutman Pepper Locke’s Elizabeth Holt Andrews filed an amicus brief on behalf of Professor Samuel Estreicher, a law professor at NYU and one of the nation’s foremost experts on the law of international comity. The amicus brief set forth a proposed theoretical framework drawn from Professor Estreicher’s research and published work in this field.

Now that the Supreme Court has decided against taking the case, Reid v. Doe Run Resources Corporation and the Eight Circuit’s decision provides an interesting application of international comity, extraterritoriality principles, and the TPA to state common law tort claims.

[1] Reid v. Doe Run Res. Corp., 110 F.4th 1049 (8th Cir. 2024).

[2] Id. at 1052.

[3] Id.

[4] Id.

[5] Id. at 1053.

[6] Id. at 1053–55.

[7] Id. at 1054.

[8] Id. at 1054–55.

[9] Id.

[10] Nestlé USA, Inc. v. Doe, 593 U.S. 628 (2021).

[11] Reid, 110 F.4th at 1055.

[12] Id.

[13] Petition for a Writ of Certiorari at 25, Reid v. Doe Run Res. Corp., No. 23-1625 (Nov. 27, 2024).

[14] Brief in Opposition for Respondents at 2, Reid v. Doe Run Res. Corp., No. 23-1625 (Jan. 29, 2025).

This article was republished in Compensation Standards on April 25, 2025.

Under current law, New York employers are statutorily required to provide a 21-day review and seven-day revocation periods in employment separation agreements in two scenarios: (1) if the employee is 40 or older and the waiver and release includes federal age discrimination claims; and/or (2) if the separation agreement with an employee or independent contractor resolves claims of discrimination, harassment, or retaliation and the employer wishes to include a nondisclosure provision regarding the factual foundation of the claim. The New York Senate recently passed the No Severance Ultimatums Act (the Act), S.372, which expands the 21-day review and seven-day revocation period requirements to all employment separation agreements. The bill, which is likely to be passed by the New York Assembly and signed by the governor, requires employers to provide employees with at least 21 business days to review a separation agreement, and seven calendar days to revoke the separation agreement (meaning an agreement cannot become effective or enforceable until the revocation period has expired). While employees can voluntarily sign a separation agreement before the required consideration period expires, the revocation period is not waivable. The Act also requires employers to notify employees that they have the right to consult an attorney regarding the separation agreement.

If enacted into law, the Act will go into effect immediately. A severance agreement that does not comply with the Act shall be deemed void and unenforceable, so it is essential that New York employers keep current on the status of the bill, and immediately comply if it goes into effect.

Employers should be cognizant of the fact that the Act’s review period requirement is 21 business days, which is longer than both the federal age discrimination review period and the state review period for agreements resolving claims of discrimination, harassment, or retaliation, both of which are 21 calendar days. This inconsistency may have been a drafting error and may be corrected before enactment. Otherwise, if the Act goes into effect, New York employers will need to provide for a separate, longer review period for their New York employees than those only covered by the federal age discrimination law.

We will continue to monitor developments.

Our team published new content and podcasts to the Consumer Financial Services Law Monitor throughout the month of February. To catch up on posts and podcasts you may have missed, click on the links below:

Regulatory Oversight Blog

Make sure to visit Troutman Pepper Locke’s Regulatory Oversight blog to receive the most up-to-date information on regulatory actions and subscribe to our mailing list to receive a monthly digest.

Regulatory Oversight will provide in-depth analysis into regulatory actions by various state and federal authorities, including state attorneys general and other state administrative agencies, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). Contributors to the blog will include attorneys with multiple specialties, including regulatory enforcement, litigation, and compliance.

Troutman Pepper Locke Spotlight

Troutman Pepper Locke Partner Ashley Taylor Named a ‘Go To Lawyer’ by Virginia Lawyers Weekly for Business Litigation

RICHMOND – Ashley L. Taylor, Jr., co-leader of Troutman Pepper Locke’s nationally ranked State Attorneys General Practice, was named to Virginia Lawyers Weekly’s “Go To Lawyers” for business litigation. The program recognizes the top lawyers across the commonwealth in a given practice area based on nominations and an independent selection process.

Bipartisan Leadership and Reform at NAAG: Insights From Brian Kane

By Stephen C. Piepgrass and Clayton Friedman

In this episode of Regulatory Oversight, Clay Friedman, co-leader of the firm’s State Attorneys General (AGs) practice, welcomes back Brian Kane, executive director of the National Association of Attorneys General (NAAG). They discuss the significant transitions and reforms at NAAG over the past two years, including the implementation of a bipartisan leadership structure and a comprehensive management review.

State Regulators Step Up: Responding to the CFPB’s New Leadership

By James Kim, Stephen C. Piepgrass, Chris Willis, Jesse Silverman, and Lane R. Page

In this special joint edition of the Consumer Finance Podcast and the Regulatory Oversight Podcast, host Chris Willis is joined by colleagues Stephen Piepgrass, James Kim, Jesse Silverman, and Lane Page to discuss the ongoing changes at the Consumer Financial Protection Bureau (CFPB) and predict how state regulators and legislatures will react to fill the void. This episode explores the anticipated responses from state attorneys general, financial service regulators, and legislatures, and offers strategic insights for industry players to navigate this complex regulatory environment. Tune in to understand the proactive measures your organization can take to stay compliant and ahead of potential state enforcement actions.

Balancing Law and Public Service: Insights From AG Formella

By Stephen C. Piepgrass and Chuck Slemp

In this episode of Regulatory Oversight, Chuck Slemp is joined by New Hampshire Attorney General (AG) John Formella to discuss his journey to becoming New Hampshire’s AG. Formella highlights his career in private practice, his role as legal counsel to Governor Chris Sununu, and his eventual appointment as AG in 2021. As the new president of the National Association of Attorneys General (NAAG), Formella outlines his initiative to combat substance abuse and drug trafficking, emphasizing bipartisan collaboration and support for law enforcement. He also addresses emerging issues such as elder abuse, data privacy, civil rights, and mental health.

Eighth Circuit Finds State Standing to Challenge EEOC’s Pregnancy Accommodation Rules

By Troutman Pepper Locke State Attorneys General Team, Jeff Johnson, and Lauren Hancock Miller

Last week, in Tennessee v. EEOC, the Eighth Circuit reversed a district court’s decision and reinstated a lawsuit by 17 states (led by the Tennessee and Arkansas attorneys general (AGs)), holding that these states have standing to sue the Equal Employment Opportunity Commission (EEOC) over its regulations implementing the Pregnant Workers Fairness Act, 42 U.S.C. § 2000gg. This decision deserves mention because the court seemingly made it easier to demonstrate standing by finding that the “realities facing” regulated parties can demonstrate a concrete injury even without a threat of enforcement.

FTC and DOJ Issue Antitrust Guidelines for Business Activities Affecting Workers

By Troutman Pepper Locke State Attorneys General Team, Kyara Rivera Rivera, and Christy Matelis

On January 16, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued “Antitrust Guidelines for Business Activities Affecting Workers” (2025 Guidelines). The 2025 Guidelines aim to “promote clarity and transparency” in demonstrating how the agencies identify certain business activities that may violate the antitrust laws. The 2025 Guidelines are intended to replace the 2016 “Antitrust Guidance for Human Resource Professionals,” (2016 Guidelines).

DOJ and 18 States Reach False Claims Act Settlement with QOL

By Troutman Pepper Locke State Attorneys General Team, Michael S. Lowe, and Amy Pritchard Williams

The U.S. Department of Justice (DOJ) and 18 state attorneys general (AGs) announced a settlement with Boston-based QOL Medical, LLC (QOL) and its CEO, Frederick Cooper, to resolve allegations that the company provided unlawful kickbacks to health care providers. Under the terms of the settlement, QOL and Cooper agreed to pay $47 million to resolve allegations that QOL manipulated health care providers into prescribing a drug called Sucraid — an FDA-approved therapy for a rare genetic disorder, Congenital Sucrase-Isomaltase Deficiency (CSID). Regulators alleged that QOL and Cooper violated the Anti-Kickback Statute and federal and state False Claims Acts.

Vermont AG Clark Secures $2.7M Judgment Against Mental Health Counselor

By Troutman Pepper Locke State Attorneys General Team

On February 4, a Vermont Superior Court judge entered a judgment of over $2.7 million against Phoenix Counseling & Wellness, PLC (Phoenix), and the company’s owner for alleged violations of the Vermont False Claims Act (VFCA). Vermont Attorney General (AG) Charity Clark and her office’s Medicaid Fraud and Residential Abuse Unit (MFRAU) received complaints regarding the quality of care and maintenance of patient treatment records by Phoenix.

Emerging Trends: Federal Enforcement of Contract Cybersecurity Requirements

By Hilary Cairnie, Sadia Mirza, Daniel Waltz, and Bonnie Gill

Government Contracting and Cyber/Privacy Attorneys at Troutman Pepper Locke LLP discuss the U.S. Justice Department’s efforts to combat cybersecurity fraud and some best practices for government contractors seeking to mitigate noncompliance risks.

22 AGs Challenge New York’s Climate Superfund Law

By Troutman Pepper Locke State Attorneys General Team and Warren F. “Jay” Myers

A coalition of industry associations and 22 state attorneys general (AGs), led by West Virginia AG JB McCuskey, filed a lawsuit against the State of New York in the U.S. District Court for the Northern District of New York challenging the validity of the state’s recently enacted Climate Change Superfund Act. The complaint asserts that the act’s retroactive imposition of multibillion-dollar fines on fossil fuel companies is both preempted by federal law and violates several bedrock constitutional principles.

Minnesota AG Releases Report Detailing AI and Social Media’s Impact on Minors

By Troutman Pepper Locke State Attorneys General Team, Kyara Rivera Rivera, and Trey Smith

On February 4, the Office of the Minnesota Attorney General (AG) released its second Report on Emerging Technology and Its Effect on Youth Well-Being, outlining the effects young Minnesota residents allegedly experience from using social media and artificial intelligence (AI). The report highlights alleged adverse effects that technology platforms have on minors and claims that specific design choices exacerbate these issues.

New York Issues Proposed Regulations About Overdraft Fees

By Troutman Pepper Locke State Attorneys General Team and Dascher Pasco

Given the future uncertainty of the Consumer Financial Protection Bureau’s (CFPB) efforts to regulate bank overdraft fees, New York’s Department of Financial Services (DFS) has stepped in to fill a perceived gap. The DFS announced proposed regulations to tackle what it perceives as unfair overdraft fees. The proposed regulations will “ensure consumers will no longer be burdened with overdraft fees for minor transactions and require banks to provide timely notifications to consumers about overdraft fees to improve transparency.”

Sweepstakes Casinos: Thriving in an Ever-Changing Industry – Interview with Attorney Stephen C. Piepgrass

By Stephen C. Piepgrass

Stephen Piepgrass, co-leader of Troutman Pepper Locke’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, was interviewed in the February 17, 2025 CasinoReviews.net article, “Sweepstakes Casinos: Thriving in an Ever-Changing Industry – Interview with Attorney Stephen C. Piepgrass.”

New US AG Shifts Resources Away From Tobacco Enforcement

By Bryan Haynes, Agustin Rodriguez, and Nick Ramos

Our colleagues recently wrote about 14 memoranda from the new U.S. Attorney General (AG) Pam Bondi to Department of Justice (DOJ) employees framing the DOJ’s current policies and enforcement priorities. In a memorandum addressing DOJ’s general charging, plea bargaining, and sentencing policy, the AG stated the following: “To free resources to address more pressing priorities, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) shall shift resources from its Alcohol and Tobacco Enforcement Programs to focus on matters relating to the other priorities set forth herein. No resources shall be diverted from the ATF’s regulatory responsibilities, such as federal firearms licenses and background checks.”

California and Denver Impose New Restrictions on Nicotine Analog Products

By Bryan Haynes, Agustin Rodriguez, and Michael Jordan

In what appear to be the first restrictions of their kind, the state of California and the city and county of Denver have adopted bans on flavored tobacco products that cover not only products containing tobacco and nicotine, but also nicotinic alkaloids and nicotine analogs.

FDA Withdraws Proposed Bans on Menthol Cigarettes and Flavored Cigars

By Bryan Haynes, Agustin Rodriguez, and Zie Alere

In late January, the U.S. Food and Drug Administration (FDA) withdrew its proposed rules to prohibit menthol as a characterizing flavor in cigarettes and all characterizing flavors in cigars. Although either proposal could be revived under a future administration, the withdrawal ends both of the current rulemaking processes. The move also strongly indicates shifting FDA priorities under the second Trump administration. Amid these changes, industry may find the agency more receptive to its arguments — particularly those submitted in comments to proposed rulemaking.

Supreme Court Weighs Vape Venue Dispute

By Bryan Haynes, Agustin Rodriguez, and Michael Jordan

On January 21, the Supreme Court heard arguments in a case addressing who may challenge Food and Drug Administration (FDA) marketing denial orders for new tobacco products.

Virginia’s Path to a Regulated Marijuana Market: Legislative Advances and Political Hurdles

By Jean Smith-Gonnell and Chuck Slemp

The Virginia General Assembly has once again advanced legislation to establish a regulated market for recreational marijuana sales. Virginia is unique in that it allows personal possession of cannabis but bans retail sales outside of medical marijuana dispensaries. The legislation, HB 2485 sponsored by Delegate Paul Krizek, D-Fairfax County, and SB970 by Senator Aaron Rouse, D-Virginia Beach, passed the Democratic-controlled legislature on a party-line vote (53-46 in the House and 21-19 in the Senate). The bills now move on to Virginia’s Governor Glenn Youngkin.

Missouri Legislature’s Proposals to Regulate Hemp-Derived Consumable Products

By Jean Smith-Gonnell and Nick Ramos

Last year, we wrote about the former Missouri governor’s efforts to curb the availability of intoxicating hemp products to Missouri consumers by executive order. There are now several proposed bills in the Missouri legislature that seek to regulate hemp-derived consumable products in the state, a few of which we summarize below. In general, the proposed legislation addresses issues related to youth access, licensing, taxation, advertising and marketing, testing, and labeling. This type of proposed legislation is worth monitoring in Missouri, and other states, as states take more aggressive action to prohibit or regulate the availability of such products to consumers in the absence of a coherent, federal regulatory framework.

A Need for Balance – How SB25-076’s Requirements Could Hurt Licensed Cannabis Businesses in Colorado

By Jean Smith-Gonnell and Cole White

On January 22, lawmakers in Colorado introduced SB25-076, (the act) which aims to address concerns surrounding the availability of intoxicating products (including regulated cannabis products) within the state, especially to children and young adults. To address these concerns, the act would impose new requirements on licensed businesses related to serving sizes and labeling requirements and would restrict sales of certain products to adults under 26 years old. While the intent behind the act is to mitigate potential risks associated with high-potency cannabis, the approach taken is arguably too extreme and places excessive burdens on the industry. A more nuanced strategy is needed to balance public health concerns with the operational realities of licensed cannabis businesses.

Stephanie Kozol, Senior Government Relations Manager – State Attorneys General, also contributed to this newsletter.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.

One day after President Donald Trump’s inauguration, on January 21, Trump issued Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (EO 14173). In the text of EO 14173, Trump first, stated its purpose — to ensure the enforcement of civil-rights laws “by ending illegal preferences and discrimination” — and second, announced a new policy — “to protect the civil rights of all Americans and to promote individual initiative, excellence, and hard work.” In EO 14173, Trump also directed the federal government to take numerous specific actions to terminate all “diversity, equity, and inclusion” (DEI) and “diversity, equity, inclusion, and accessibility” (DEIA) initiatives and conduct, including directing the heads of all federal agencies “with the assistance of the Attorney General” to advance this policy in the private sector.

Consistent with these directives, on February 5, newly appointed U.S. Attorney General Pam Bondi issued a memorandum regarding EO 14173 titled “Ending Illegal DEI and DEIA Discrimination and Preferences” (the Bondi Memo), which stated that under her leadership the Department of Justice’s (DOJ) Civil Rights Division will “investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational institutions that received federal funds.” The Bondi Memo also directed the Civil Rights Division and the Office of Legal Policy to provide the associate attorney general with a report by March 1 that outlines recommendations for enforcing federal civil rights laws and encouraging the private sector “to end illegal discrimination and preferences.” The report must also provide details on how to deter the use of DEI and DEIA programs, including proposals for deterrence through criminal investigations.

As U.S. companies await the release of this more fulsome report from the Civil Rights Division and the Office of Legal Policy, the text of EO 14173 provides some clues on what companies can expect. Section four of EO14173, titled “Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences,” clarifies that the Trump administration is particularly interested in dismantling DEI within private companies and is willing to use a wide array of legal tools at its disposal to do so. For example, EO 14173 introduces a new requirement mandating that the head of each government agency include two new provisions in every government contract with private company contractors. The first provision requires the private contractors to “agree that [their] compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of Section 3729(b)(4) of Title 31, United States Code.” The second provision requires private contractors to certify that they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” While EO 14173 does not explicitly state what it considers to be “promoting DEI,” the Bondi Memo suggests that any programs that involve quotas, mandates, or preferential treatment would likely be interpreted as promoting DEI. The Bondi Memo’s citations to the Supreme Court’s decision in Students for Fair Admissions provides additional hints by signaling that DOJ will likely be concerned with any instances of companies, in the words of Justice Gorsuch’s concurrence, treating “some [people] worse than others in part because of race.”

FCA Implications

Another legal tool that the Trump administration is likely to utilize to enforce its anti-DEI agenda is the federal False Claims Act (FCA). The FCA allows the federal government and whistleblowers suing on behalf of the federal government (referred to as “relators”) to bring claims against private companies that submit false claims for payment to the government. The FCA also applies to others, such as subcontractors, that cause the submission of false payment claims even if they do not get paid directly by the government. Liability under the FCA requires proof that a company knowingly or recklessly submitted a false claim or statement that was material to the government’s decision to pay a claim, which caused the government to pay money. EO 14173 explicitly references the section of the FCA that defines the term “material,” so its requirement that companies agree that compliance with applicable federal anti-discrimination laws is material to the government’s payment decisions makes clear the intent to use the FCA as an enforcement mechanism. By so agreeing, private companies who contract with the government effectively admit to the FCA’s materiality requirement, and thereby relieve the government or a relator from having to prove that element of FCA liability. But even companies that have not explicitly admitted the materiality of compliance with federal anti-discrimination laws, including those companies with contracts predating EO 14173, may still face scrutiny, as the government maintains the option of proving materiality independently. Further, EO 14173’s requirement that companies certify that they do not operate DEI programs is another signal of pending FCA enforcement efforts. By so certifying, private companies wishing to contract with the federal government must either end their DEI programs (thereby making the certification accurate) or risk the government finding a false certification (thereby making the claim “false” under the FCA). Overall, these two requirements in government contracts will make it significantly easier for the government and relators to bring FCA suits against companies suspected to be engaged in “illegal DEI discrimination and preferences” per EO 14173.

Adding to the uncertainty faced by contractors, many existing government contracts or regulations contain requirements that directly conflict with EO 14173. Some government contractors are already pushing back against EO 14173, including the National Association of Diversity Officers in Higher Education, which filed a lawsuit against Trump and various federal agencies in the U.S. District Court for the District of Maryland. Plaintiffs in that case argue that the EO is unconstitutionally vague and violates the First Amendment’s free speech clause and separation of powers principles. On February 21, the court issued a preliminary injunction blocking the certification requirement in EO 14173. This injunction prevents the president and federal agencies from requiring contractors to make certifications and from enforcing the FCA based on the EO’s certification provision. While the injunction may seem like a win to contractors, the president’s swift appeal of the decision serves as a reminder that companies should continue to review their DEI policies, and that this question is far from settled.

Preparing for the Forthcoming Report

Any company that has found itself on the receiving end of an FCA investigation or qui tam lawsuit from an FCA relator understands how costly it can be. Not only is there the risk of treble damages under the FCA, but internal investigations and defense costs can easily accumulate into the millions of dollars. Add to that the potential for being barred from future government contracts and substantial reputational damage, and it is no surprise that companies are eager to avoid running afoul of the FCA.

In light of the text of EO 14173 and the Bondi Memo, it seems clear that the Trump administration will use the FCA as a weapon to combat DEI in the private sector. Thus, any company that contracts with the federal government going forward will be at risk for an FCA investigation (civil and criminal) or a qui tam lawsuit if it has policies in place that might be construed as promoting DEI or DEIA as this new administration interprets those terms. A recent survey by Littler Mendelson P.C. of government contractors revealed that 74% of government contractors are strongly considering changing their current DEI policies. This is a stark contrast to the 8% of companies from the general survey, highlighting that EO 14173 poses the greatest threat to companies that regularly contract with the government. The two new contract requirements will require these companies to take a very close look at their internal policies and general business practices, even if the companies view those policies and practices as being unrelated to the contract. Companies will need to take a broad view when identifying policies, practices, or programs that DOJ may construe as advancing DEI, and companies should likewise devote considerable attention to how they might refashion these policies, practices, and programs to support the certifications made in government contracts and avoid FCA liability. Companies should pay close attention to announcements by and communications from the agency with which they have contracted or that has oversight of the government programs in which they participate. Companies should also consider seeking clarification from the applicable agency. In some cases, companies may determine that, based on their risk tolerance, certain policies, practices, and programs cannot be refashioned or revised to sufficiently mitigate FCA risk, leaving those companies no choice but to rescind or abandon the policy, practice, or program altogether.

Moreover, anything in a company’s hiring practices, team compositions, external communications, or other employment-related practices that could be interpreted by this administration as discriminatory or preferential to certain groups could result in FCA risk or liability. The forthcoming report will very likely provide additional context and information on the types of policies, practices, and programs that will be the focus of DOJ’s scrutiny. However, the preview in the Bondi Memo puts companies on notice that DEI programming, even traces of it, will mean increased FCA exposure under the new administration.

Given that the forthcoming report will likely trigger aggressive enforcement of DEI-based FCA claims, companies should be thoroughly reviewing their DEI programs to revise any features that DOJ may construe as illegal and formulating a strategy for proactive communication with their government counter-party.

In what may be a surprise to those who thought that restrictions on the use of noncompetes would go away with the change in administration, this week, the Federal Trade Commission (FTC) announced that the agency will form a Joint Labor Task Force that will “prioritize rooting out and prosecuting deceptive, unfair, and anticompetitive labor-market practices that harm American workers.”[1] FTC Chair Andrew Ferguson issued a memorandum reminding everyone that the FTC’s authority includes protecting American consumers in their role as workers.[2]

The announcement follows a television interview where, after reiterating his prior objections to the FTC’s rule banning worker noncompetes, Ferguson explained his vision of the agency’s role regarding employees: “It is really important for the FTC … to do everything it can to protect workers … . [O]ne of the most important things the FTC will do under my watch is focusing very intently on attacking anticompetitive conduct that hurts America’s workers. … One of my top priorities is getting our super talented enforcers at the FTC out there looking for noncompete agreements, no poach agreements that violate the Sherman Act and making sure that the FTC is enforcing those laws.”

Ferguson’s memorandum directed the FTC’s Bureau of Competition, Bureau of Consumer Protection, Bureau of Economics, and Office of Policy Planning to focus all three arms of the agency on addressing “widespread” deceptive, unfair, and anticompetitive labor practices. His memorandum made clear that such labor practices depress workers’ earnings across every industry and are “often overlapping and mutually reinforcing” and that the FTC’s dual consumer-protection and competition mandate makes it uniquely suited to address these purported worker harms. Ferguson instructed the directors of all three bureaus to “break down siloes and bring the[ir] best experience, knowledge, and resources … to bear on behalf of workers.”[3]

The task force was directed to collaborate in the investigation of no-poach, nonsolicitation, and no-hire agreements; wage-fixing agreements; noncompete agreements; labor market monopolies; collusion or unlawful coordination on diversity, equity, and inclusion (DEI) metrics; unfair and deceptive conduct harming gig economy workers; misleading job advertising; deceptive business opportunities; misleading franchise offerings; harmful occupational licensing requirements; and job scams.[4] To address these issues, the task force was instructed to:

Prioritize investigation and prosecution of deceptive, unfair, or anticompetitive labor market practices;
Harmonize their methods and procedures for uncovering and investigating deceptive, unfair, or anticompetitive labor market conduct;
Establish an information-sharing protocol across the bureaus to exchange best practices for identifying and investigating deceptive, unfair, or anticompetitive labor market conduct;
Promote research on deceptive, unfair, or anticompetitive labor market practices and disseminate those findings throughout the agency and to the public;
Identify opportunities to advocate for legislative or regulatory changes that would remove barriers to labor market participation, mobility, and competition;
Engage in public outreach to workers regarding the law and encourage workers to report deceptive, unfair, or anticompetitive labor market conduct to the FTC; and
Coordinate, to the fullest extent possible, all conduct investigations and enforcement actions.

The work of the task force is consistent with prior FTC efforts to protect workers, but the focus appears to have shifted away from the promulgation of rules. Instead, the chair has expressed a commitment to use the agency’s resources for public and legislative advocacy as well as investigations and enforcement actions to protect workers.

Given this commitment, businesses should adhere carefully to existing state laws governing noncompete provisions and consider the following guidelines:

Firms hiring from the same pool of workers are competitors regardless of their product or service offerings to consumers. This means that they must independently determine the terms of employment and compensation they will offer (i.e., not engage in wage fixing or collusion);
Companies should avoid the use of “no poach” covenants in contracts with suppliers and vendors which have the effect of limiting the mobility of workers;
A “one size fits all” approach should not be used with restrictive covenant agreements. Instead, noncompete and nonsolicitation agreements should be used only with certain categories of workers and should be narrowly tailored to achieve the employer’s goals using the least restrictive method available; and
Procompetition objectives should be set forth in any written agreements and should include the benefits that flow to the employee.

[1] Directive Regarding Labor Markets Task Force, Chairman Andrew N. Ferguson, U.S. Fed. Trade Comm’n (Feb. 26, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/memorandum-chairman-ferguson-re-labor-task-force-2025-02-26.pdf.

[2] FTC Launches Joint Labor Task Force to Protect American Workers, U.S. Fed. Trade Comm’n (Feb. 26, 2025), https://www.ftc.gov/news-events/news/press-releases/2025/02/ftc-launches-joint-labor-task-force-protect-american-workers?utm_source=govdelivery.

[3] Directive Regarding Labor Markets Task Force, https://www.ftc.gov/system/files/ftc_gov/pdf/
memorandum-chairman-ferguson-re-labor-task-force-2025-02-26.pdf.

[4] Id.

Introduction

Below is an overview of recent tariff and trade-related actions in Washington, DC. We sought to highlight key legislative and administrative developments, industry reactions, and potential impacts, in addition to some strategic recommendations for stakeholder consideration. The tariff and trade-related landscape continues to change rapidly, so please understand that information may become quickly outdated as new announcements or executive orders are published.

Overview of Recent Tariff Actions

Key Announcements & Proposals:

Canada and Mexico: This week, the administration reiterated plans to impose a 25 % tariff on imports from Canada and Mexico—with a renewed start date of March 4—after earlier delays, but with a reduced 10% tariff for Canadian energy resources. Skepticism remains about their implementation and longevity and a possible delay could align with April 2nd, the date for tariffs on semiconductors and other strategic goods.

China: An additional 10% tariff on Chinese goods has been slated to take effect concurrently, on top of the 10%tariffs on Chinese imports President Trump imposed earlier this month. There’s a higher likelihood of these tariffs taking effect compared to Canada and Mexico tariffs, but China appears interested in negotiating a new trade deal with the U.S. In addition, the administration plans to eliminate the “de minimis” exemption (largely impacting Chinese imports) as soon as possible.

Sector-Specific Tariffs: Proposals include 25% tariffs on automobiles, pharmaceutical drugs, semiconductors, and lumber. Details on these tariffs are sparse at this point.

European Union: Trump has said he will press ahead with 25% tariffs on EU imports as soon as April.

Steel and Aluminum: Trump already plans to reinstate universal tariffs on steel and aluminum on March 12, based on the previous Section 232 investigations.

Copper: The administration recently commenced another Section 232 investigation that may lead to tariffs on copper and copper derivatives.

Reciprocal Tariffs: So-called “reciprocal” tariffs have been floated, which would be based on higher duties levied by foreign countries, along with other non-tariff barriers to trade that the U.S. government deems to be unfair, still pending recommendations being developed by the government before any specific actions being considered. These are likely to be focused at least initially on America’s biggest trading partners in the G20.

Some of these new tariffs have been imposed or proposed under the president’s International Emergency Economic Powers Act (IEEPA) authority, which is a novel and questionable legal basis for the imposition of tariffs. Others are being enacted under more clear authorities, such as Section 232 for steel, aluminum, and copper. It remains to be seen whether administrative exclusions will be available for these new tariffs. We expect litigation to commence challenging the IEEPA-based tariffs once those become effective.

International Impact:

China: Following the first 10% added tariffs in early February, China imposed retaliatory tariffs on U.S. coal, LNG, crude oil, agricultural machinery, and vehicles.

Canada and Mexico: Both have signaled potential countermeasures, which if implemented could seriously disrupt trade flows and affect supply chains. However, at the same time, Canada reiterated its commitment to stemming the flow of fentanyl this week, and Canadian parliament members met with congressional leaders on securing the border. In addition, the Canadian government sanctioned nearly all the drug cartels that were recently designated by the U.S. as Foreign Terrorist Organizations (FTOs). See our advisory on these developments. Mexico for its part has engaged in unprecedented law enforcement cooperation with the U.S., including major extraditions. Both countries are quietly seeking ways to avoid the imposition of these tariffs by stepping up cooperation in key Trump priority areas.

European Union: EU Agricultural Commissioner Christophe Hansen has mentioned the EU’s use of its Anti-Coercion Instrument (ACI) if President Trump takes strong action against the EU. The ACI provides the EU with broad and flexible authorities to retaliate in a variety of ways. Deploying the ACI, and the discussion of it, is an escalation by EU members.

Legislative Actions and Proposals on Capitol Hill

Recent Bills and Resolutions:

H.R. 694 – Restoring Trade Fairness Act: This bill aims to end Permanent Normal Trade Relations (PNTR) with China, eliminating the need for annual Congressional recertification. It establishes a new tariff column for China, with a minimum 35% ad valorem tariff on non-strategic goods and a 100% ad valorem tariff on strategic goods, phased in over five years. The bill also ends de minimis treatment for covered nations, requires customs brokers for other de minimis shipments, and allocates tariff revenue to support U.S. farmers, manufacturers, and munitions purchases to deter Chinese aggression in the Pacific. Similar bills have been proposed by Republicans for years, and it is unclear if this idea will have enough traction even in this Congress.

STABLE Trade Policy Act – Senators Tim Kaine (D-VA) and Chris Coons (D-DE) introduced legislation requiring Congressional approval for new tariffs on U.S. allies. This bill aims to ensure that any new tariffs proposed by the president, particularly those expected from the Trump administration, receive legislative scrutiny and approval before implementation. This type of congressional pushback, particularly when paired with the expected litigation against the IEEPA-based tariffs, could significantly curtail the executive’s ability to impose unilateral tariffs going forward outside of established trade authorities such as Section 232 and Section 301.

S. 691 – Leveling the Playing Field 2.0 Act – Senators Todd Young (R-IN) and Tina Smith (D-MN) introduced legislation to amend the Tariff Act of 1930 to enhance the administration of antidumping and countervailing duty laws. Key provisions include establishing special rules for successive investigations, addressing cross-border subsidies, modifying definitions and adjustments related to trade, and implementing measures to prevent duty evasion and circumvention. The bill also includes specific requirements for nonresident importers and provisions to counter currency undervaluation, with applicability to goods from Canada and Mexico.

Congressional Hearings & Debates:

February 6, 2025, Senate Finance Committee Hearing:

United States Trade Representative Nominee Jamieson Greer: Defended tariffs as necessary tools to protect American industries and leverage trade negotiations and discussed the following:

Fair and Reciprocal Plan: Discussed the development of a plan to impose tariffs strategically.

Universal Tariffs: Suggested as a potential solution to offshoring and trade deficits. However, as described above, this idea appears to have been sidelined at least for now, in favor of more “targeted” tariffs.

Lawmakers’ Reactions: Expressed both support and concern, with some warning of inflationary pressures and economic disruptions.

February 25, House Ways & Means Trade Subcommittee Hearing:

During the hearing, full committee chair Jason Smith (R-MO) said that reforming the de minimis provision is an “urgent priority” to help advance Trump’s trade agenda.

On February 1, President Trump issued an executive order eliminating the de minimis exemption for low-value products made in China. The administration paused the repeal after it caused mass confusion and backups at customs offices but indicated an intent to revive the repeal once adequate systems are in place to manage these goods.

USTR Leadership and Staffing:

Jamieson Greer Confirmed as USTR: The Senate confirmed Greer on Wednesday, February 27 by a vote of 56-43.

Priorities: Greer has emphasized improving agency staffing, streamlining internal operations, and advancing the administration’s aggressive trade policy. He will be one of the leads in implementing the President’s executive orders.

Outlook on Legislation

While President Trump enjoys his ability to threaten, enact, and withdraw tariffs, all as part of his negotiating tactics, Congress continues to consider their use in budget reconciliation. The House Republican Conference and leadership have actively discussed including tariffs in legislation as a means to offset tax cuts they are pursuing, but the odds remain unlikely for now. Tariffs may only be used as a means to reduce the deficit if they are part of legislation. While amounts into the trillions have been discussed on how much this could offset, the Congressional Budget Office (CBO) would be the ultimate decider in the revenue raised and its benefit to Republicans. Should Republicans pursue this, it’s expected to be narrower in scope than the many tariff possibilities currently looming. Congress passing tariffs into legislation would, however, complicate the president’s leverage in negotiations and create some permanence to any they chose to enact into law.

With an array of unprecedented executive orders and other policies, the Trump administration’s “America First” trade strategy is beginning to take shape. As we monitor these developments, it is becoming increasingly clear that enforcement in these key areas will be ramping up, with just a few possible exceptions, such as CFIUS reviews involving allies and partners.

For updates on the tariff front, please see this companion piece.

Changes to CFIUS

The February 21, 2025, America First Investment Policy memorandum points to a number of possible changes to reviews by the Committee on Foreign Investment in the United States (CFIUS), in particular:

The administration “will cease the use of overly bureaucratic, complex, and open-ended” CFIUS mitigation agreements for investments from “foreign adversary countries.” Relatedly, they will “restrict PRC-affiliated persons” from investing in U.S. “technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.” Taken together, these statements suggest that CFIUS will be even less receptive than it has been in the recent past to allowing Chinese investments in the U.S. However, the memo does state that the administration will allow “only those investments that serve American interests,” indicating that there may still be opportunities on a case-by-case basis to obtain CFIUS clearance for Chinese or other “foreign adversary” investments.
Create a “fast-track” CFIUS process for investments from specific allies and partners in U.S. businesses involved with “advanced technology and other important areas,” subject to “appropriate security provisions.” This suggests that CFIUS will continue to be open to mitigation agreements for investments from allies and partners in sensitive areas. Exactly what the “fast-track” will involve is not clear at this point. The CFIUS statute sets out maximum timelines for declarations (up to 30 days after being accepted by CFIUS) and notices (45 days or more, depending on whether the case must go through an additional investigation). While the administration could decide to expedite the process for these types of cases, the current timelines are already quite short. Additionally, CFIUS currently does not have jurisdiction over non-controlling investments or real estate transactions where the investors are from “excepted” foreign states, which today consist of the Five Eye allies: Australia, Canada, New Zealand, and the UK. So any additional “fast-track” process that may be created would presumably only apply where CFIUS currently has jurisdiction, i.e., where an excepted investor is seeking to obtain control over a U.S. business, or where the investor is from another ally or partner country. In many cases, other regulatory processes (e.g., the ITAR in the defense sector) impose longer foreign investment approval timelines that may negate or diminish the impact of any new CFIUS “fast-track”.
Seek consultation with Congress on “strengthening” CFIUS’s authority over greenfield investments. The topic of greenfield investments has long been a concern for some in the U.S. government, as foreign investors have been able to avoid CFIUS jurisdiction by creating a new business with no acquisition of existing business assets or rights. But, at the same time, these investments have been viewed as generally lower risk from a national security perspective and more economically attractive. Accordingly, we would expect this proposal to generate controversy.
Expand the definition of “emerging and foundational” technologies addressable by CFIUS. This could affect when a mandatory filing is required. However, the definition is already quite broad, covering nearly every type of technology subject to U.S. export controls, and it is not clear how the administration may expand it, other than marginally by including the few remaining export-controlled technology types, which are generally of low sensitivity.
Protect U.S. farmland and other real estate near “sensitive facilities.” CFIUS already has jurisdiction to review foreign investments in real estate (including farmland) near certain sensitive facilities. While quite unclear, this proposed policy could possibly signal an expansion of the current CFIUS real estate provisions. We note that certain states — including Florida and Texas — already have broader statutes in place restricting certain types of foreign investment in real estate, which are currently being challenged in the courts on constitutional grounds.

Expansion of the Outbound Investment Program

The America First Investment Policy memo also points to changes to the new Outbound Investment Security Program, which just took effect on January 2, 2025. The current program, enacted by executive order under the Biden administration, prohibits or requires notification of outbound investments by U.S. persons into certain China-linked entities involved in semiconductors, quantum information technologies, or artificial intelligence.

The America First Trade Policy Memorandum issued by President Trump on January 20, 2025, tasked the Treasury Department with assessing whether the current Outbound program “includes sufficient controls to address national security threats.” Similarly, the America First Investment Policy memo states that the administration will “consider new or expanded restrictions on United States outbound investment in the PRC,” including in the three already-covered sectors and also in biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, “and other areas implicated by the PRC’s national Military-Civil Fusion strategy.” These sectoral categories are quite broad and will require further refinement and clarification in order to become a workable expansion of this new regulatory program.

All of this indicates that the Trump administration plans to double down on this new regulatory regime, despite vociferous opposition from some Republicans, but that it has not yet decided on exactly how to do that.

Forced Labor

One bipartisan issue that we expect to continue receiving support from this administration is the Uyghur Forced Labor Prevention Act (UFLPA), which was signed into law in 2021. A co-sponsor of this legislation was former Senator Marco Rubio, currently the Secretary of State, leading one of the key member agencies of the Forced Labor Enforcement Task Force (FLETF). The law restricts goods from entering the U.S. if they were mined, produced, or manufactured wholly or in part in China’s Xinjiang Uyghur Autonomous Region (XUAR), or by an entity on the UFLPA Entity List. The FLETF reviews and approves entities for designation on the UFLPA Entity List. We would expect continued expansion of the UFLPA Entity List and, accordingly, the scope of these import restrictions.

Sanctions and Export Controls

We expect an increase in restrictions and enforcement efforts in this area, with a few possible exceptions, as detailed below.

Updated Regulations: The Trump administration has signaled an intent to close loopholes relating to advanced technology exports to China in particular. For example, the America First Trade Policy memo directs the government to recommend ways “to maintain, obtain, and enhance our Nation’s technological edge and how to identify and eliminate loopholes in existing export controls -– especially those that enable the transfer of strategic goods, software, services, and technology to countries to [sic] strategic rivals and their proxies.” It also directs the agencies to look at “export control enforcement policies and practices, and enforcement mechanisms to incentivize compliance by foreign countries, including appropriate trade and national security measures.” This last bit indicates that more aggressive extraterritorial policies and enforcement approaches are in the cards.

However, the reported forcing out of two key export control policy makers could stymie the new administration’s ability to craft effective regulations in the short-term, as they take decades of experience out the door with them. President Trump’s nominees to lead the Commerce Department’s Bureau of Industry and Security (BIS), both the Under Secretary of Commerce for Industry and Security, and the Assistant Secretary for Export Administration, do not have significant experience with export controls. Secretary of Commerce Howard Lutnick has made confusing statements seeming to conflate tariffs and export controls, though again expressing a desire to be tougher on China. Therefore, we would expect the new team to take time to develop the expertise needed to manage and update these complex regulations. But the direction of travel, at least as far as China is concerned, is clear.

Enforcement: Senior enforcement officials at BIS have indicated that they are maintaining their tough enforcement posture and the same priorities as they had under the Biden administration, focused on adversaries such as China, Russia, and Iran, and with the “Disruptive Technology Strike Force” still operating as before. The recently departed former head of export controls enforcement at BIS stated that major cases are nearing resolution and should be announced soon.

So, despite the headlines relating to the recent bureaucratic changes at the Department of Justice’s (DOJ) National Security Division (NSD), such as the dissolution of its Corporate Enforcement Unit, the Attorney General’s direction to focus on cartel-related cases, the unwinding of the Russia-focused Task Force KleptoCapture, and the disbanding of the Criminal Division’s Kleptocracy Asset Recovery Initiative, one should not bet on any decrease in export controls or sanctions enforcement. The new administration has emphasized this explicitly in a number of recent policy documents focused on China and Iran in particular.

Where there likely will be significant changes at NSD over the next four years is in enforcement of the Foreign Agents Registration Act (FARA) and related laws. Additionally, anti-corruption enforcement at DOJ may change, as we explained in an earlier advisory. Finally, a new focus on enforcement related to Latin American drug cartels is expected, as described in this advisory.

Below we go through some potential changes in this area for key country programs.

Russia: Depending on how the Trump administration’s Russia policy develops, those that have been listed as Specially Designated Nationals (SDNs) by the Treasury Department’s Office of Foreign Assets Control (OFAC) under its Russia-related authorities should consider submitting delisting requests if they believe they were wrongly identified, the circumstances underlying their designation are no longer applicable, or perhaps even if a case can be made that their removal would promote current U.S. policy objectives. We would expect that the U.S. government may look for attractive SDN delisting cases to use as possible diplomatic tools in engaging with Russia. Otherwise, any significant changes in U.S. export controls or sanctions on Russia appear unlikely in the short-term. See our recent advisory on the most recent major Russia sanctions package.

China: The pause that has reportedly been placed on the issuance of certain new export licenses by BIS has not been officially acknowledged or explained, but suggests that the administration is reassessing its export control licensing approach toward China in particular, likely to make it more restrictive, after years of criticism by leading Republicans. In addition, the America First Investment Policy memo states that the U.S. will “use all necessary legal instruments to further deter United States persons from investing in the PRC’s military-industrial sector,” including the imposition of sanctions. So, along with a strengthened Outbound Investment Security program, as discussed above, more sanctions in this area should be expected.

Venezuela: The Trump administration just announced that it would revoke the OFAC authorization for Chevron to continue to produce oil in Venezuela. Secretary of State Marco Rubio later posted on X that he was issuing “foreign policy guidance to terminate all Biden-era oil and gas licenses that have shamefully bankrolled the illegitimate Maduro regime.” So, while there were initial indications that a rapprochement with Venezuela may be in the cards based on a hoped-for deportation agreement, the administration appears to have done a sharp 180, reverting to the traditional approach of the Republican Party when it comes to Venezuela.

Iran: While a Trump-led “Iran nuclear deal 2.0” is unlikely in the short-term, there is some chance of real engagement with Iran under the Trump administration that will be worth watching. In the meantime, the administration has set out a renewed “maximum pressure” campaign that will see a ramp-up in enforcement against Iran and those doing business with Iran.

Syria: While the EU has begun relaxing certain sanctions on Syria, the Trump administration has not yet prioritized this area.

Other China-Focused Tech and Data Restrictions

The America First Trade Policy Memo directs the Secretary of Commerce to review BIS’s Information and Communications Technology and Services (ICTS) connected vehicle rulemaking and also to “consider whether controls on ICTS transactions should be expanded to account for additional connected products.” BIS previously indicated that there will soon be another ICTS rulemaking on cloud computing products and services and data center products and services. So more restrictions in this area are in the works and will continue to roll out of BIS’s new ICTS office. For a detailed look at BIS’s ICTS regulations, see here and here.

The Trump administration has still shown no sign that it intends to change the DOJ NSD’s China-focused data security rules, which are still slated to take effect on April 8, 2025. See our advisory on this topic for more detail on how to prepare.

Conclusion

If your company may be impacted by any of these developments, contact the authors of this article.

As state legislatures introduce legislation expanding the reach of their antitrust laws and state attorneys general ramp up their use of antitrust investigations and litigation, the legal landscape continues to become more complex for companies and the courts. Recently, a federal judge confronted the extraterritorial reach of California’s Assembly Bill 824 (A.B. 824).[1]

A.B. 824, signed by Governor Newsom in 2019, attempts to ban settlements between generic and brand pharmaceutical manufacturers colloquially known as “reverse payment” settlements. These sorts of settlements arise when a generic manufacturer takes steps to launch a drug product despite the branded manufacturer’s claim to market exclusivity by virtue of its patent protections over that drug. A reverse payment settlement commonly involves a brand pharmaceutical manufacturer offering something of value to a generic manufacturer in exchange for the generic manufacturer’s agreement to delay its market entry until a date certain in the future.

In FTC v. Actavis, 133 S. Ct. 2223, 2237 (2013), the U.S. Supreme Court examined the legal standard to apply to reverse payment settlements, holding that the agreements should be evaluated under the rule of reason. California’s A.B. 824 was enacted in response, and categorically deemed these agreements anticompetitive as a matter of law and provided for fines of up $20 million or three times the amount received by the violator in striking the deal — whichever is larger.

In August 2020, the Association for Accessible Medicines (AAM), a trade group representing generic pharmaceutical manufacturers, sued the State of California, arguing the law was unconstitutional. In December 2021, the court entered a preliminary injunction, prohibiting enforcement of A.B. 824 pending resolution of the instant lawsuit. In February 2022, the injunction was modified to permit the state to enforce the law only as to “settlement agreements negotiated, completed, or entered into within California’s borders.”

The court entered an order resolving cross-motions for summary judgment, effectively permanently memorializing the state of affairs created by the February 2022 injunction. The court held that A.B. 824 did indeed violate the dormant Commerce Clause insofar as it purported to regulate settlement agreements that had absolutely no connection to California. Accordingly, the court held that the state may enforce the law only as to “settlement agreements negotiated, completed, or entered into within California’s borders.” The order permanently enjoined the state from enforcing A.B. 824 with respect to any settlement agreement that lacked such a connection to California.

At first blush, the order appears to be a victory for the AAM and its member manufacturers. It would seem that so long as generic manufacturers steer clear of negotiating, completing, or executing reverse payment agreements within California borders, they will remain out of the reach of the fines and penalties codified in A.B. 824.

The impact, however, may not be so simple. The order raises two key issues, neither of which its resolves. First, the court expressed its concern that A.B. 824, on its face, permitted California to regulate conduct that had no connection to the state whatsoever. In response, the state attempted to argue that this was not the case, asserting A.B. 824 applied only to settlements that cover drug sales in California. With this limitation, the state suggested that A.B. 824 targeted only settlements with some demonstrable connection to California. The court ultimately rejected this argument — not because the sales connection was too tenuous, but solely because the text of A.B. 824, on its face, did not include a limitation to only settlements involving California sales of pharmaceuticals. Thus, the court has left open the proverbial door for California — and other states — to amend A.B. 824 and similar laws to include a sales limitation. In the absence of a full-throated analysis of this defense, it is unclear whether such a limitation would allow for a broader application of A.B. 824 than that permitted by the instant order, one which would undoubtedly trouble the AAM and its members.

Second, the state argued that it should be permitted to enforce A.B. 824 because many states across the country maintain antitrust statutes that already prohibit conduct akin to that regulated by this particular law. The court quickly dispensed of this argument, noting that no state may enforce antitrust legislation ultimately found to violate the dormant Commerce Clause. To the extent challenges are brought, the question of the constitutionality of these state antitrust laws may well boil down to whether the law contains sufficient limiting language so as to target only that unlawful conduct that bears some connection to the subject state.

The court’s decision, however, does not resolve the risk for market participants. The order may act as a catalyst for suits challenging the breadth of similar state antitrust laws across the country. In particular, the order leaves ambiguous the potential for California — or other states — to expand the breadth of these antitrust laws by including language that would tie their enforcement to activity that involves sales in the subject state. The growing number of state-level premerger notification requirements and new and amended statutes aimed at expanding the scope of the antitrust laws to conduct not deemed per se illegal under the federal law or making it easier for private plaintiffs or enforcement agencies to challenge successfully business activities, will likely complicate antitrust compliance, compliance training, and risk management for companies engaged in interstate commerce.

The Troutman Pepper Locke antitrust team will continue to monitor legal developments at the state and federal levels. Before engaging in activity aimed at resolving disputes over generic entry and brand patent protection, it is important to engage competent counsel to prevent any unnecessary cost and expense that may result from an unwitting violation of state law.

[1] Assoc. for Accessible Medicines v. Becerra, 2:20-cv-1708, ECF No. 92 (E.D. Cal. Feb. 13, 2025).

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