What is De Minimis?

De minimis is a Latin term that means “of the smallest things,” “trifling,” “insignificant.” In the U.S., the de minimis rule dates back to the Tariff Act of 1930. Upon passage of the act, individuals and businesses were permitted to import shipments under $200 without paying duties and taxes. 

The intent behind the exemption was to allow CBP to focus on higher-risk and higher-revenue imports and to encourage small-scale trade. In 2016, the U.S. raised the de minimis threshold to $800 with the passage of the Trade Facilitation and Trade Enforcement Act. 

After the 2016 change, de minimis shipments surged, from 139 million in FY 2015 to 1.36 billion in FY 2024. International retailers took advantage of the new threshold, and many U.S. policymakers began referring to de minimis as a “loophole.” 

Citing safety and fairness concerns, there were dozens of unsuccessful efforts in the U.S. Congress to end de minimis. Finally, the Big Beautiful Bill of 2025 included a provision that permanently repeals the statutory basis for the de minimis exemption worldwide, effective July 1, 2027. However, on July 30, 2025, President Trump signed an Executive Order expediting this timeline, ending the exemption on August 29, 2025. 

What the Changes Mean for Consumers

With the duty-free threshold eliminated, all imported items, no matter how low in value, now face tariffs. This shift will likely translate into higher prices for consumers. Some global postal services including Australia Post and Deutsche Post, have paused shipments to the U.S. As a result, consumers may experience delays and canceled orders. Consumer groups advise consumers to re-read cancellation and return policies for international merchants going forward. 

What the Changes Mean for Importers

Following the Executive Order, CBP began publishing guidance to help importers navigate the change. As of August 29, 2025, all requests for de minimis entry will be rejected by CBP. Importers will be required to submit an entry type filed in the Automated Commercial Environment (ACE), except for shipments sent through the international postal network, along with the payment of all applicable duties, taxes, and fees.

CBP published a Federal Register notice guiding shipments sent through the international postal network that previously qualified for de minimis. For postal shipments, the transportation carriers or other qualified parties approved by CBP must collect and remit duties. The duty rate is based on the effective IEEPA tariff rate applicable to the country of origin of the product as follows:

                        (i) Countries with an effective IEEPA tariff rate of less than 16%: $80 per item;

                        (ii) Countries with an effective IEEPA tariff rate between 16 and 25% (inclusive): $160 per item; and

                        (iii) Countries with an effective IEEPA tariff rate above 25%: $200 per item.

The specific duty will cease to be effective for products entered for consumption on or after February 28, 2026, at which time only the ad valorem duty will be applicable.

 View CSMS #65934463 guidance here and view the list of the qualified parties here.

Questions about how the de minimis change impacts your business? Contact Diaz Trade Law today at 305-456-3830 or info@diaztradelaw.com.

Learn more:

• Bloomberg Law: Tariff Classification Basics
• ICYMI: President Trump Signs America First Trade Policy
• Trump Administration Announces Plan for Reciprocal Tariffs
• New Tariffs on Mexico, Canada, and China: Key Updates for Importers
• Navigating Tariff Increases: Strategies to Minimize Tariff Costs Under the Trump Administration
• Webinar: Navigating Tariff Challenges: Mitigation Tools & Tactics
• Trump Administration Announces Reciprocal Tariffs

On August 19, 2024, the U.S. Department of Homeland Security (DHS) announced that it would be adding steel, copper, lithium, caustic soda, and red dates to the list of high-priority sectors for enforcement under the Uyghur Forced Labor Prevention Act (UFLPA). DHS also announced the release of an update to the UFLPA enforcement strategy.

Addition of High-Priority Sectors

Under the UFLPA, DHS is tasked with identifying high-priority sectors for enforcement. A high-priority sector designation indicates that entities in the sector have a higher risk of forced labor or state labor transfer of Uyghurs and other ethnic minorities from Xinjiang. 

In making the announcement of additional sectors, DHS cited each new addition’s connections to forced labor risks. For example, DHS stated that steel and copper have both been government-backed investment focal points in Xinjiang. Similarly, lithium is a government-identified key sector for investment and development in Xinjiang.

UFLPA Enforcement Strategy Update

DHS serves as the chair of the Forced Labor Enforcement Task Force (FLETF). Each year, the task force updates the UFLPA’s Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China (UFLPA Strategy). The task force is statutorily required to provide annual updates on the UFLPA Entity List, the list of products associated with certain listed entities, plans for enforcement and for identifying additional entities, and high-priority sectors.

The 2025 update highlights several accomplishments since the 2024 update, including:

• Significant expansion of the UFLPA Entity List
• Refinement of internal processes for expanding the UFLPA Entity List
• Providing greater transparency to the trade community
• Supporting the private sector’s due diligence and compliance efforts
• Protecting American industry from unfair trade practices

In the report, Christopher C. Pratt, acting DHS undersecretary for strategy, policy, and plans, reiterates that ending forced labor is “an economic and national security imperative for the United States.”

Contact Us For Assistance with Forced Labor Compliance

Diaz Trade Law has significant experience in a broad range of import compliance matters, including forced labor compliance and enforcement mitigation. For assistance with forced labor matters, including developing or updating a forced labor compliance plan, forced labor compliance training, or communicating with CBP regarding goods detained by CBP, contact us today at info@diaztradelaw.com or 305-456-3830.

Learn more:

• UFLPA Guidance: What Importers Need to Know
• Uyghur Forced Labor Prevention Act (UFLPA): What You Need to Know
• Bloomberg Law: U.S. Customs Targets the Use of Forced Labor
• CBP Publishes Additional Guidance On Responding to Cargo Detentions Made Under the Uyghur Forced Labor Prevention Act
• UFLPA DHS Forced Labor Guidance – What Importers Need to Know
• Uyghur Forced Labor Prevention Act (UFLPA): What You Need to Know

In the article, “New Transshipment Limits Could Bring Confusion, Enforcement Hurdles,” reporter Brett Fortnam walks through how the Administration’s new approach to combatting transshipment includes goods with significant content from third countries in addition to traditional transshipment. He quoted Jennifer on how this approach is likely to cause confusion up and down the supply chain.

Below are a few snippets from the piece. Read the full article on InsideTrade.com here.

“Diaz said a new approach to transshipment will sow confusion up and down the supply chain. Changing what confers a product’s country of origin ‘adds another pillar of complexity’ to already complicated rules of origin, Diaz said.”

“If I were CBP, I would have a hard time understanding what kind of documentation and proof will be necessary,” Diaz said of the new policy. “Are we going to have the ability to audit raw material for every item? We all need a framework to start with. Now we’re all subject to audit risk, penalties and criminality. We need a good framework to ensure that everyone has the ability to comply.”

Diaz Trade Law is tracking the latest updates to U.S. trade policy.

Learn more:

• The Fine Line Between Transshipment and Substantial Transformation
• Tariffs and Trade Deals
• High Tariffs, High Stakes: The Rise in Customs Fraud and Enforcement Risk

Plan Details

The action plan will enable USDA to work closely with governors, state legislators, and federal partners to further integrate agriculture into the broader national security efforts over the coming months and years.

The USDA and its government partners will take “aggressive action” across seven critical areas:

1. Secure and Protect American Farmland – Address U.S. foreign farmland ownership from adversaries head-on. Total transparency. Tougher penalties.
2. Enhance Agricultural Supply Chain Resilience – Refocus domestic investment into key manufacturing sectors and identify non-adversarial partners to work with when domestic production is not available. Plan for contingencies.
3. Protect U.S. Nutrition Safety Net from Fraud and Foreign Exploitation – Billions have been stolen by foreign crime rings. That ends now.
4. Defend Agricultural Research and Innovation – No more sweetheart deals or secret pacts with hostile nations. American ideas stay in America.
5. Put America First in Every USDA Program – From farm loans to food safety, every program will reflect the America First agenda.
6. Safeguard Plant and Animal Health – Crack down on bio-threats before they ever reach our soil.
7. Protect Critical Infrastructure – Farms, food, and supply chains are national security assets and will be treated as such.

The action plan is the next pillar of the USDA “Make Agriculture Great Again” initiative and seeks to protect the country’s agricultural supply chains from security vulnerabilities. 

Increased Enforcement

Notably, the plan also states that the federal government is looking to increase enforcement on “logistics providers, customs brokers, and other trade intermediaries” that are responsible for importing “dangerous biochemicals and biological agents.” 

According to the plan, the USDA intends to review and modernize import restrictions to prevent the spread of dangerous chemicals and agents. USDA will work with federal partners, including CBP, “to strengthen our nation’s borders against entry of restricted goods that could carry animal disease, plant pests, and biological pathogens that can be weaponized against the American public.”

Response and Next Steps

Several members of Congress, governors, and state Agricultural Secretaries issued statements praising the plan, calling it critical to the agricultural economy and to the national security of the United States.

The action plan contains a lengthy list of action items for USDA to take, including an assessment of security risks in the agriculture infrastructure sector, modernizing import restrictions, and eliminating support programs to countries of concern.

Diaz Trade Law will continue to monitor developments as the USDA implements the plan.  

Read more:

• ICYMI: President Trump Signs America First Trade Policy
• USDA Proposes New “Made in the USA” Standard
• USDA Trade Matters

Food Logistics, the only publication exclusively dedicated to covering the movement of product through the global cold food supply chain, and Supply & Demand Chain Executive, the only publication covering the entire global supply chain, named Jen Diaz as one of the winners of this year’s Women in Supply Chain Award, which honors female supply chain leaders and executives whose accomplishments, mentorship and examples set a foundation for women in all levels of a company’s supply chain network.   

“This year, we received over 400 submissions, the highest amount of applications not only for this award, but also for all of our awards. What’s more, 118 of those applications were submitted by male counterparts, nominating their boss, co-worker or associate. Last year, that figure was just at 75. Also this year, 39 women self-nominated, a tremendous uptick from last year’s award, which just saw 12 self-nominations. This shows progress. This shows hope that one day, we won’t need an award like this because men and women in the supply chain will be equal,” says Marina Mayer, Editor-in-Chief of Food Logistics and Supply & Demand Chain Executive. “While there’s still more work to be done, what we’re doing is working. From truck drivers to CEOs, what these winners are doing matters to the future of all supply chains.”

“Women have been making a significant impact in supply chain management, contributing to the growth and innovation of the supply chain industry. As more women join the supply chain workforce, they bring diverse perspectives that can help address complex supply chain problems and improve global supply chain operations. It is important that we empower, recognize and elevate these achievements through initiatives like the Women in Supply Chain Award, as seen through the overwhelming response. Congratulations to all the winners, those who nominated others and the bravery of those who nominated themselves,” adds Sarah Barnes-Humphrey, founder of Let’s Talk Supply Chain podcast and Blended Pledge project, both exclusive sponsors of the Women in Supply Chain award.

“I am honored to be recognized for this award among so many talented female leaders. I know our work is helping to pave a path for the future generation of supply chain professionals.” – Jennifer Diaz, President, Diaz Trade Law.

Go to https://foodl.me/fdx1zi to view the full list of winners. Recipients will be honored at this year’s Women in Supply Chain Forum, set to take place Nov. 14-15, 2023 in Atlanta. Go to www.WomenInSupplyChainForum.com to register and learn more. 

About Food Logistics and Supply & Demand Chain Executive

Food Logistics reaches more than 26,000 supply chain executives in the global food and beverage industries, including executives in the food sector (growers, producers, manufacturers, wholesalers and grocers) and the logistics section (transportation, warehousing, distribution, software and technology) who share a mutual interest in the operations and business aspects of the global cold food supply chain. 

Supply& Demand Chain Executive is the only supply chain publication covering the entire global supply chain, focusing on trucking, warehousing, packaging, procurement, risk management, professional development and more. Food Logistics and Supply & Demand Chain Executive also operate SCN Summit and Women in Supply Chain Forum. Go to www.FoodLogistics.com and www.SDCExec.com to learn more.

CBP held a Forced Labor Technical Expo from March 14-15, comprised of experts and service providers highlighting tools to utilize for supply chain transparency to comply with The Uyghur Forced Labor Prevention Act (UFLPA) and the general “reasonable care” obligations of U.S. importers. UFLPA was signed into law December 31, 2021, and seeks to prohibit imports of certain goods from China’s Xinjiang Uyghur Autonomous Region, where it has been reported that the Chinese government is using forced labor of Uyghur Muslims and other ethnic and religious minorities in detention camps and factories. For more information about the UFLPA, please see our previous blog articles here and here.  

CBP Data Dashboard  

CBP launched a UFLPA data dashboard where the trade community can now monitor forced labor enforcement by origin, commodity, CBP Center of Excellence and Expertise, and more. See the screenshot of the new dashboard below and note that the countries of export most targeted are NOT China, contrary to popular belief. This is partly due to the fact that most UFLPA enforcement to date has been on solar panels, which may include Chinese-origin raw materials but are generally further manufactured outside of China. Notably, CBP is actively tracking many different types of products across many different industries with raw materials that originate in China and that are further manufactured in other countries for forced labor enforcement.  

Summary of Technologies Announced at the Expo 

Below is a summary of the vast array of technologies discussed at the Expo, such as artificial intelligence (AI), machine learning (ML), and big data analytics to identify goods produced using forced labor. Along with other capabilities, this technology can analyze all available public and private data to identify patterns that indicate the possible use of forced labor which will facilitate compliance with the UFLPA and general “reasonable care” obligations.  

AI – Supply Chain Mapping 

• Altana Atlas platform is a dynamic, multi-tier map of the global supply chain that continuously updates and grows by learning from public and proprietary data. It reveals product origins and supplier networks and allows companies to fuse their data with the Atlas for unprecedented visibility of their entire supply chain without sharing proprietary data.  
• Mesur.io’s Earthstream uses imaging, mapping, and science-based modeling, to help companies track the origin and movement of cotton, which is a particularly challenging product to trace because it is often further manufactured in multiple locations in multiple countries. 
• Kharon focuses on risk management solutions, backed by proprietary research and data analytics. 
• TrusTrace offers AI-based solutions for UFLPA trade compliance. They provide a digital supply chain custody system for enterprise-level companies with thousands of suppliers using an ecosystem approach to map and provide supply chain evidence. 
• Sayari Analytics, LLC offers an SAS platform that allows for instant worldwide corporate transparency and identification of supply chain risks through parsing and matching data to watchlists. 
• Exiger Government Solutions focuses on AI-powered research to provide enhanced supply chain visibility and identify and mitigate forced labor risk. 
• Everstream Analytics matches supply chains to watchlists using open source and import/export records. The platform has a live interface with client ERP data, and continuous monitoring output is delivered through the platform. 
• Assent Inc. is a data supply chain management company that provides a SaaS platform, managed services, including direct supplier engagement, enhanced screening using public domain data, and an Enhanced Supplier Screening service to fill in data gaps, using AI and human expertise. 
• Deloitte Financial Advisory Services, LLP utilizes a Magnify feature to map the supply chain. 
• FRDM maps and monitors supply chains with a focus on procurement. 
• Senergy Technical Services (USA) LLC (STS) offers a supply chain mapping in a 3-step process involving defining the product to be traced, compiling a list of suppliers, and verifying the commercial link between suppliers and traceability of input and output at each stage of the supply chain. 

Marking and Tagging 

• Oritain developed a unique method of identifying the origin of products based on the naturally occurring chemical and physical properties in raw materials, such as minerals, fibers, and water. This method allows Oritain to determine the authenticity of products and ensure that they have been ethically sourced and produced without forced labor. 
• TailorLux GmbH provides industrial marking solutions to ensure material authenticity for recycling, product protection, and digitization of bulk materials.  
• Covisus offers a revolutionary tag-less track and trace solution called Vtag, which uses the intrinsic surface features of an item to uniquely identify it without any modifications. This provides covert and true item-level traceability and authentication without requiring any alterations to the item. 
• Sourcemap Inc. provides a digital platform to trace products using GPS points and transaction tracking. 

DNA Tracing 

• Haelixa provides solutions to physically mark, trace, and authenticate textiles along the supply chain for transparency. Haelixa’s unique DNA marker is spread on the fiber at each stage, and a forensic test is conducted using yarn or fabric to verify the final garment. Well-known fashion brands and suppliers have implemented their solutions and sell “marked and traced by Haelixa” garments in retail stores. 
• Applied DNA Sciences, Inc. (ADNAS) provides innovative supply chain traceability solutions for forced labor compliance, using DNA tagging, DNA genotyping, and isotope testing. They focus on nucleic acids and have developed a complete tracking system through their three pillars, with a particular emphasis on cotton supply chains. 
• Flora Trade Inc. provides risk management solutions using forensic chemistry and data science. Flora Trace analyzes isotopes from soil and fertilizer to create an “origin fingerprint” of materials. 

Risk Assessment and Training 

• Verité is a nonprofit that has a risk assessment tool based on the International Labour Organization’s indicators of forced labor and includes a range of questions that are designed to identify potential risks at various stages of the worker recruitment process, from the initial recruitment to the placement of workers. In addition to its risk assessment tool, Verité provides training and capacity-building programs and supply chain mapping to help organizations identify and mitigate forced labor risks in their supply chains. 

Future Outlook 

It is clear that all companies that import goods into the U.S. will have to be more pragmatic about their supply chains, but, what is not clear, is at what cost? Will solutions be available to companies of all sizes and budgets? 

Forced labor compliance is NOT just about UFLPA compliance. The U.S. Department of Labor’s sweat and toil app makes clear that forced labor is a concern in MANY countries, not just China, and CBP similarly has made it clear that forced labor enforcement is going to be a priority trade initiative.  

We will see increased scrutiny and enforcement of the UFLPA and forced labor prohibitions generally both for products imported into the United States and globally. Advanced technology like AI and machine learning are helpful to identify potential instances of forced labor in supply chains, but alone are not enough. Proactive supply chain vetting, due diligence, DNA tracking/tracing, and insistence upon a supply chain free of forced labor are our future – will your SME make it to this future?  Diaz Trade Law can help you identify which, if any, technical products would be helpful to use to meet your “reasonable care” forced labor compliance obligations. Of course, no technical product, in and of itself, is sufficient to meet all an importer’s due diligence obligations – human resources will also be necessary to implement and interpret any technical tools.  

Contact Us 

Diaz Trade Law has significant experience in a broad range of import compliance matters including forced labor issues. For assistance with importer due diligence in relation to forced labor requirements; or for assistance in submitting documents to dispute the use of forced labor, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

UFLPA

The Uyghur Forced Labor Prevention Act (UFLPA) establishes a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in the Xinjiang Province of China or by an entity on the UFLPA Entity List are prohibited from importation into the United States under 19 U.S.C. § 1307. However, if an Importer of Record can demonstrate by clear and convincing evidence that the goods in question were not produced wholly or in part by forced labor, fully respond to all CBP requests for information about goods under CBP review and demonstrate that it has fully complied with the guidance outlined in this strategy, the Commissioner of CBP may grant an exception to the presumption.

Clear and convincing evidence is a higher standard of proof than a preponderance of the evidence, and generally means that a claim or contention is highly probable. See e.g., Colorado v. New Mexico, 467 U.S. 310 (1984) (a forced labor case holding that complainant did not meet “clear and convincing” burden of proof because it failed to show that the evidence is highly and substantially more likely to be true than untrue; rather, the fact finder must be convinced that the contention is highly probable).

CBP will employ a risk-based approach, dynamic in nature, that prioritizes the highest-risk goods based on current data and intelligence. Currently the highest-risk goods include those imported directly from Xinjiang into the United States and from entities on the UFLPA Entity List. CBP will also prioritize illegally transshipped goods with inputs from Xinjiang, as well as goods imported into the United States by entities that, although not located in Xinjiang, are related to an entity in Xinjiang (whether as a parent, subsidiary, or affiliate) and likely to contain inputs from that region.

Below is a list of high-priority sectors for enforcement:

1. Apparel
2. Cotton and Cotton products
3. Silica-Based Products (including polysilicon)

• Silica is a raw material that is used to make aluminum alloys, silicon, and polysilicon, which is then used in buildings, automobiles, petroleum, concrete, glass, ceramics, sealants, electronics, solar panels, and other goods.

4. Tomatoes and downstream products

In addition for general guidance on how CBP will be implementing the UFLPA, please refer to our prior article “Uyghur Forced Labor Prevention Act (UFLPA): What You Need To Know.”

DHS Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the PRC.

On June 17, 2022, per statutory requirement , the U.S. Department of Homeland Security (DHS) published the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China. The purpose of this publication is to provide guidance as to how the UFLPA will be implemented, and how it plans to prevent the importation of goods made with forced labor to enter into the United States. Below is a summarized guidance for importers with recommendations and guidance as to what evidence importers may provide to rebut the presumption that the goods were made with forced labor under the UFLPA as mentioned by DHS’ June 17, 2022 and earlier guidance published on June, 13, 2022 by CBP  of evidence required. The guidance for importers provided information on three topics:

1) Due Diligence,

2) Supply Chain Tracing, and

3) Supply Chain Management

What does due diligence mean?

DHS stated that for purposes of the guidance, due diligence includes assessing, preventing, and mitigating forced labor risk in the production of goods imported into the United States. An example of effective due diligence, may include the following elements:

• Engage stakeholders and partners
• Conduct a Forced Labor Risk Assessment
• Develop a written code of conduct

To perform a forced labor risk assessment, importers map their supply chains to identify any steps within the chain at risk of using Forced Labor. Such factors used to determine whether a risk exists are, but not limited to:

• Origin of imported goods or any raw materials or components in the imported good.
• Transactions among entities along the supply chain tied to the specific imported goods.
• Locations and identities of entities in the supply chain.

A written code of conduct should provide a framework on how you address the risk of forced labor in you supply chain. In addition, DHS recommends the written code of conduct be incorporated into supplier contracts. We separately recommend that you include your conditions on your purchase order as well.

Importantly, DHS noted that for supply chains that touch the Xinjiang or involve entities that use labor transferred from Xinjiang, the code of conduct MUST explicitly forbid the use of forced labor. Furthermore, as mentioned in our prior DTL post “U.S. Customs Targets Use of Forced Labor ,” importers should review the DOL’s Comply Chain  principles and create a compliance system as a business practice.

What Does it Mean to have an Effective Supply Chain Tracing System?

DHS has defined supply chain tracing, as the ability to demonstrate chain of custody of goods and materials from the beginning of the supply chain to the buyer of the finished product. An effective Supply Chain Tracing system is one that identifies who their suppliers are and labor sources at all levels of the supply chain system. Generally, there are three common practices importers may engage in for effective supply chain tracing:

1. Mapping: Importers should be able to map out their entire supply chain, including suppliers of raw materials used in the production of the imported good or material. Mapping allows the importers to identify who is doing the work at each step in the process of the supply chain and under which conditions the work is being done.
2. Identity preservation: This requires importers to preserve each product input to be packaged, processed, and traced separately from other product inputs or modifications throughout the supply chain. However, under this method product inputs are not allowed to be commingled at any point in the supply chain.
3. Segregation: This approach allows importers to commingle inputs, as long as each input to be commingled is fully traced and documented. It is essential to demonstrate that the inputs are free of forced labor prior to commingling. As an example, importers should have readily available evidence that indicates the source of each component of the good and documents showing how the imported goods was made from raw materials to finished good, by what entity, and where.

Supply Chain Management Measures

Importers should also have Supply Chain Management Measures in place, that reflects the measures taken to prevent and mitigate identified risks of forced labor. DHS identified that effective measures include:

1. Having a process to vet potential suppliers for forced labor prior to entering a contract with them; requiring that supplier contracts necessitate corrective action by the supplier if forced labor is identified in the supply chain; and
2. Outlining the consequences if corrective action is not taken, such as termination of the contractual relationship.
3. Having access to documentation, personnel, and workers for verification of the absence of forced labor indicators, including at the recruitment stage.

DHS noted as well that, under 18 U.S.C. Section 1589 (b), failure to take appropriate remedial action could expose an importer to potential criminal liability if the importer continues to benefit, financially or by receiving anything of value, from participating in a venture engaged in forced labor, while knowing of or recklessly disregarding the forced labor.

For additional guidance as to the type and nature of evidence that CBP will require if the goods are subject to the UFLPA, please refer to the following:

• Xinjiang Supply Chain Business Advisory
• DTL Article: “Importers: If you Can’t Answer these 12 Questions on Forced Labor You’re In Trouble”
• U.S. Department of Labor Sweat & Toil App 

Contact Us

Diaz Trade Law has significant experience in a broad range of import compliance matters including forced labor issues. For assistance with importer due diligence in relation to forced labor requirements; or for assistance in submitting documents to dispute the use of forced labor, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

Sanctions on DNR and LNR regions of Ukraine 

On February 21, 2022, the Office of Foreign Assets Control (OFAC) issued an executive order (E.O.) blocking property of certain persons and prohibiting certain transactions with respect to continued Russian efforts to undermine the sovereignty and territorial integrity of Ukraine in addition to an issuance of Ukraine related general licenses. More specifically, this E.O. prevents any U.S. persons from engaging the Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) (collectively named the “Covered Regions”) in most, if not all activities, including the following:

• new investment in the Covered Regions
• the importation into the United States, directly or indirectly, of any goods, services, or technology from the Covered Regions
• the exportation, re-exportation, sale, or supply, from the United States or by a U.S. person, directly or indirectly, of any goods, services, or technology to the Covered Regions
• any approval, financing, facilitation, or guarantee by a foreign person that would also be prohibited for a U.S. person. 

This E.O. also gives OFAC the authority to impose further sanctions on persons and entities determined to be:

• operating in the Covered Regions
• a leader, official, senior executive officer, or member of the board of directors of an entity operating in the Covered Regions
• owned or controlled by any person whose property and interests in property are blocked pursuant to this order
• materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, any person and property blocked under this E.O. 

Sanctions on Russia 

On February 24, 2022, the United States took significant and unprecedented action to respond to Russia’s further invasion of Ukraine by imposing severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system.

Targeting Russia’s Two Largest Financial Institutions

• The U.S. Treasury is taking “unprecedented action” against Russia’s two largest financial institutions, Public Joint Stock Company Sberbank of Russia (Sberbank)and VTB Bank Public Joint Stock Company (VTB Bank), drastically disrupting their ability to operate in U.S. dollars and process payments through the U.S. financial system.

Correspondent and Payable-Through Account Sanctions on Sberbank

• As part of the sanctions on Sberbank, the Treasury is requiring all U.S. financial institutions to close any Sberbank correspondent or payable-through accounts and to reject any future transactions involving Sberbank or its foreign financial institution subsidiaries within 30 days.
  • To implement these sanctions on Sberbank, OFAC issued Directive 2 under E.O. 14024, prohibiting U.S. financial institutions from:
    • the opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity determined to be subject to the prohibitions of the Russia-related CAPTA Directive, or their property or interests in property
    • the processing of transactions involving any such entities determined to be subject to the Russia-related CAPTA Directive, or their property or interests in property. 
• Sberbank and other affiliated entities determined to be subject to the Russia-related CAPTA Directive have been added to OFAC’s CAPTA List.
  • The prohibitions of the Russia-related CAPTA Directive take effect beginning on March 26, 2022. Accordingly, by March 26, 2022, U.S. financial institutions must have closed any correspondent or payable-through account maintained for Sberbank all other entities listed in Annex 1 to the Russia-related CAPTA Directive, and all foreign financial institutions owned 50 percent or more by the foregoing. 

Full Blocking Sanctions on VTB

• OFAC has imposed full blocking sanctions on VTB Bank and 20 of its subsidiaries, for being owned, controlled by, or acting on behalf of (either directly or indirectly) the Government of Russia the GoR, and having operated in the financial services sector of the Russian Federation economy. Further, all entities owned 50 percent or more, directly or indirectly, by VTB Bank are subject to blocking, even if not identified by OFAC.

Blocking Other Major Russian Financial Institutions 

OFAC has also imposed blocking sanctions on three additional major Russian financial institutions – Otkritie, Novikom, and Sovcom and their identified subsidiaries – for either being controlled by, or acting on behalf of, the Russian Government as well as for operating having operated in the financial services sector of the Russian economy.

• The Treasury also notes that all entities owned 50 percent or more by the above financial institutions are subject to blocking, even if not identified by OFAC.

Debt and Equity Prohibitions Against Major State-Owned and Private Entities 

OFAC also issued Directive 3 under E.O. 14024, implementing new debt and equity restrictions on 13 major firms critical to the Russian economy.

• These restrictions “prohibit transactions and dealings by U.S. persons in new debt of longer than 14 days maturity and new equity of Russian state-owned enterprises, entities that operate in the financial services sector of the Russian Federation economy, and other entities determined to be subject to the prohibitions in this directive”.

The 13 identified firms are as follows

Pursuant to E.O. 14024, OFAC identified the following 11 Russian entities as being owned or controlled by, or having acted or purposed to act for or on behalf of, directly or indirectly, the GoR:

• Sberbank is Russia’s largest financial institution. Today, Sberbank was also identified as subject to the Russia-related CAPTA Directive.
• Gazprombank Joint Stock Company is Russia’s third-largest financial institution and is closely affiliated with the energy sector.
• Joint Stock Company Russian Agricultural Bank is Russia’s fifth-largest financial institution and closely affiliated with the agricultural sector.
• Public Joint Stock Company Gazprom is the world’s largest natural gas company.
• Public Joint Stock Company Gazprom Neft is one of Russia’s largest oil producers and refiners.
• Public Joint Stock Company Transneft (Transneft) manages Russia’s network of petroleum-related pipelines.
• Public Joint Stock Company Rostelecom is Russia’s largest telecommunications company.
• Public Joint Stock Company RusHydro is a hydroelectricity company and one of Russia’s largest power companies.
• Public Joint Stock Company Alrosa is the world’s largest diamond mining company, responsible for 90 percent of Russia’s diamond mining capacity, which accounts for 28 percent globally.
• Joint Stock Company Sovcomflot is Russia’s largest maritime and freight shipping company.
• Open Joint Stock Company Russian Railways is one of the world’s largest railroad companies.

Pursuant to E.O. 14024, OFAC identified the following three Russian entities for operating or having operated in the financial services sector of the Russian Federation economy:

• Joint Stock Company Alfa-Bank is Russia’s largest privately owned financial institution, and Russia’s fourth-largest financial institution overall.
• Credit Bank of Moscow Public Joint Stock Company is Russia’s largest non-state public bank and Russia’s sixth-largest financial institution.
• Sberbank, which is described above.

General Licenses 

To ensure that these sanctions and prohibitions have an impact on the intended targets and to minimize unintended consequences on third parties, OFAC has also issued the following general licenses in connection with these actions.

• General License 5: authorizes transactions for the conduct of the official business of certain international organizations and entities
• General License 6: “Transactions Related to the Exportation or Re-exportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates, or the Coronavirus Disease 2019 (COVID-19) Pandemic” authorizes transactions ordinarily incident and necessary for the trade of agricultural commodities, medicine and medical devices.
• General License 7: “Authorizing Overflight Payments, Emergency Landings, and Air Ambulance Services” authorizes transactions ordinarily incident and necessary to:
  • the receipt of, and payment for, services rendered in connection with overflights of or emergency landings in the Russian Federation by aircraft registered in the United States or owned by U.S.
  • provide air ambulance and related medical services to individuals in the Russian Federation
• General License 8: “Authorizing Transactions Related to Energy” authorizes until June 24, 2022, transactions related to energy involving 5 specified entities and their subsidiaries of which they own a 50 percent or greater interest.
  • “For the purposes of this general license, the term “related to energy” means the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources.”
• General License 9: “Authorizing Transactions Related to Dealings in Certain Debt or Equity” authorizes until May 25, 2022, dealings in debt and equity issued prior to February 24, 2022, with 5 specified Russian entities and their subsidiaries. Any divestment or transfer of covered debt or equity must be to a non-U.S. person.
• General License 10: “Authorizing Certain Transactions Related to Derivative Contracts” authorizes until May 25, 2022 all transactions ordinarily incident and necessary to the wind down of derivative contracts entered into prior to 4:00 p.m. EST, February 24, 2022. Any payments to a blocked person must be made into a blocked account.
• General License 11: “Authorizing the Wind Down of Transactions Involving Certain Blocked Persons” authorizes until March 26, 2022, all transactions ordinarily incident and necessary to the wind down of transactions involving Otkritie, Sovcombank, VTB, and any entity in which they one 50% or greater interest.
• General License 12: “Authorizing U.S. Persons to Reject Certain Transactions” authorizes until March 26, 2022, U.S. persons to reject all transactions prohibited by Executive Order (E.O.) 14024 involving one or more of Otkritie, Sovcombank, VTB, and any entity in which they one 50% or greater interest.

Actions Targeting Russian Elites 

On February 25, 2022, the United States continued to impose sanctions on President of the Russian Federation Vladimir Putin and the Minister of Foreign Affairs Sergei Lavrov, along with other members of Russia’s Security Council. These sanctions, along with previous sanctions on Russia’s economic continue to impose unprecedented diplomatic and economic costs on Russia and isolate it from the global financial system and international community.

Sanctions on Belarus 

On February 24, 2022, OFAC sanctioned 24 Belarusian individuals and entities due to Belarus’s support for, and facilitation of, the invasion. Among the sanctioned entities are two significant state-owned banks, as well as multiple entities and individuals associated with the Belarusian defense and security industries.

Along with this action OFAC also issued two general licenses related to the Belarus Sanctions Program:

• General License 6: “Official Business of the United States Government” authorizes transactions for the conduct of the U.S. Government’s official business.
• General License 7: “Official Business of Certain International Organizations and Entities” authorizes transactions for the conduct of the official business of certain international organizations and entities

Looking Ahead 

As these sanctions may only represent the initial stage of an ongoing and volatile economic landscape, we encourage the trade community to stay informed on all latest sanctions and how they may impact YOU. Should you need any assistance navigating OFAC sanctions please contact us at info@diaztradelaw.com.

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BIS 

• On January 14, 2022, the Bureau of Industry and Security (BIS) issued a notice of information collection regarding a Defense Production Act requirement for U.S. firms to furnish information to the agency regarding offset agreements exceeding $5,000,000 in value associated with sales of weapon systems or defense related items to foreign countries or foreign firms. BIS is soliciting public comments to help evaluate if the proposed information collection is necessary for the proper functions of the Commerce Department, evaluate the accuracy of their estimate of time and cost burden, evaluate ways to enhance the quality, utility, and clarity of the information to be collected, and to minimize the reporting burden.
  • Comments are due no later than March 15, 2022.

CBP 

• On January 18, 2022, CBP issued the largest agriculture seizures of 2021 with the top three seizures being 12,000+ pounds of marijuana, 750 unfertilized avian eggs, and 15 live giant land snails.
• On January 18, 2022, Customs and Border Protection issued Harmonized System Update (HSU) 2119 resolving issues related to the comingled data and/or missing information in previous HSUs.
• On January 22, 2022, CBP will deploy Phase 1 of the modernization of the ACE Secure Data Portal. These enhancements will include a new login screen, a new home page, and upgraded account information display and edit features.

DOT 

• On January 13, 2022, the Federal Motor Carrier Safety Administration detailed a pilot program that would allow for 18-to-20-year-old truckers drive big rigs from state to state in an effort to help ease the supply chain shortage.

OFAC 

• On January 18, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated three Hizballah-linked financial facilitators and their Lebanon-based travel company because of Hizballah’s efforts as part of the Lebanese government to block economic reform and inhibit much needed change for the Lebanese people.
• On January 20, 2022, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned four individuals engaged in Russian government-directed influence activities to destabilize Ukraine.

USDA 

• Recent USDA import statistics show a surge in U.S. organic fresh produce imports of bananas, blueberries, apples, and pears. Much of the surge originates in the Latin American countries of Mexico, Peru, Chile, Colombia, and Argentina with New Zealand also experiencing a surge of organic produce exports to the United States.

USTR 

• On January 19, 2022, the United States and United Kingdom issued a joint statement announcing the start of bilateral discussions to address global steel and aluminum excess capacity, including the United States’ application of tariffs on imports from the United Kingdom under Section 232 and the UK’s retaliatory tariffs on certain U.S. exports to the UK.

If you have questions about these updates, contact our Customs and International trade law attorneys at info@diaztradelaw.com or call us at 305-456-3830.

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The Bureau of Industry and Security (BIS) 

• BIS published a report summarizing the findings of a Department of Commerce investigation into the effect of imports of titanium sponge on the national security of the United States.
• BIS is seeking public comments concerning the imposition of export controls on certain Brain-Computer Interface (BCI) emerging technology, particularly with respect to its impact on U.S. national security
  • Comments due by December 10, 2021.
  • Contact us at info@diaztradelaw.com for help submitting your comment.
• BIS published this final rule to amend the Export Administration Regulations (EAR) to update the AG Common Control List for dual-use biological equipment.
  • This rule is effective October 5, 2021.

International Trade

• IMF slashes US growth forecast and warns of rising risks to the global economy amid supply chain disruptions and softening consumption.
• 136 countries agree to historic deal implementing a 15% minimum corporate tax rate.

Office of Foreign Assets Control (OFAC) 

• OFAC sanctions Libyan national Osama Al Kuni Ibrahim, who is responsible for serious human rights abuse against migrants in Libya.
• OFAC publishes six Ukraine-related web general licenses (GLs) in the Federal Register: GL 16, GL 16A, GL 16B, GL 16C, and GL 16D, and GL 16E.

U.S. Government 

• U.S. Customs and Border Protection (CBP) is seeking comments on launch of a Global Business Identifier (GBI) Evaluative Proof of Concept (EPoC) aimed at determining a single identifier solution that will uniquely discern main legal entity and ownership; specific business and global locations; and supply chain roles and functions.
  • Comments due by December 6, 2021
  • Contact us at info@diaztradelaw.com for help submitting your comment
• U.S. Department of Labor seeks trade community’s input on three reports issued by the Bureau of International Labor Affairs regarding child labor and forced labor in certain foreign countries.
  • Comments due by January 15, 2022.
  • Contact us at info@diaztradelaw.com for help submitting your comment.

United States Trade Representative (USTR)

• USTR files a request for a Section 332 investigation on the distributional effects of goods and services trade and trade policy to build upon the Biden Administration’s goals of a worker-centric trade policy that is inclusive for all Americans.
• USTR closes investigations into Vietnam‘s acts, policies and practices related to illegal logging and timber trade.
• USTR opened a web portal for importers and other interested parties to comment on whether the USTR should renew certain China tariff exclusions that had previously expired.
  • If you would like assistance submitting a comment about exclusions for your product, reach out to us today.
• USTR Katherine Tai speaks on reimplementation of a targeted tariff exclusion process in speech outlining the Biden-Harris Administration’s new approach to the U.S.-China bilateral trade relationship.

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