The U.S. Court of International Trade (“CIT”) has again rejected the U.S. Department of Commerce’s (“Commerce”) determination that chassis manufactured in Vietnam with Chinese-origin parts are covered by the antidumping (“AD”) and countervailing duty (“CVD”) orders on chassis from China. In Pitts Enterprises, Inc. dba Dorsey Intermodal v. United States, Slip Op. 26-121 (October 7, 2026), Judge Claire R. Kelly remanded Commerce’s redetermination for a second time. The court held that Commerce’s reading of the orders to cover “unfinished subassemblies” is contrary to their plain meaning, and that, in any event, the phrase “any other processing” in the orders does not include welding or fabrication.

The decision matters to any company that imported chassis made outside China, in Vietnam or elsewhere, with Chinese parts welded or fabricated into subassemblies, and paid China AD/CVD deposits on them. Those deposits are substantial: chassis from China are subject to a China-wide AD cash deposit rate of 177.05% and a CVD rate of 44.32%, for a combined rate of roughly 221%. No Chinese producer has a lower company-specific rate. Under Commerce’s original scope ruling, those duties applied to the full value of the finished chassis.

A Former Petitioner Challenges the Scope of Its Own Case

Pitts Enterprises, Inc. dba Dorsey Intermodal (“Pitts”), one of the U.S. producers that petitioned for the China orders, imported chassis made by THACO in Vietnam. In October 2022, acting on an allegation by the U.S. affiliate of the principal Chinese producer subject to the orders, U.S. Customs and Border Protection (“CBP”) initiated an Enforce and Protect Act (“EAPA”) investigation into whether Pitts was evading the orders. CBP issued an affirmative evasion determination in 2023, which Pitts has separately challenged at the CIT.

THACO manufactures finished chassis in Vietnam, welding and fabricating Chinese-origin axle and landing gear components into running gear and landing gear subassemblies and attaching them to chassis frames it produces from steel. Pitts imported the finished chassis. Pitts requested a scope ruling, and in January 2024, Commerce found the chassis in scope.

Commerce Adopts a New Theory After the First Remand

In October 2025, the CIT remanded that ruling. Commerce had reasoned that the Chinese components became subject merchandise when they were shipped to Vietnam for assembly into chassis. The court disagreed, holding that the orders’ coverage of components “entered” for assembly with a chassis refers to entry into the United States.

On remand, Commerce conceded that the Chinese components were not subject merchandise when shipped to Vietnam, because they had not entered the United States. It nonetheless found that THACO had imported “unfinished” running gear and landing gear subassemblies from China, and that welding them in Vietnam was the kind of third-country “processing” that, under the orders, does not remove merchandise from scope. On that basis, Commerce treated the subassemblies in the finished chassis as subject merchandise and limited duties to their value.

Court Rejects an “Unfinished Subassembly” Category

The court held that Commerce’s theory runs counter to the plain language of the orders. It identified eight places where the scope uses the word “unfinished” and found that, in each one, the adjective modifies “chassis,” not “subassembly.” The orders cover subassemblies “whether assembled or unassembled,” and provide that importing any listed subassembly “constitutes an unfinished chassis.” The court acknowledged that a chassis may be unfinished in numerous ways, and that an unassembled subassembly is itself an unfinished chassis. But the orders contain no separate category of “unfinished subassemblies,” and Commerce could not create one to reach Chinese parts incorporated into a non-subject chassis.

Court Finds Welding and Fabrication Are Not “Processing”

The court further held that, even if the orders covered unfinished subassemblies, the welding and fabrication performed in Vietnam would remove the merchandise from scope. The orders provide that processing “such as trimming, cutting, grinding, notching, punching, drilling, painting, coating, staining, finishing, assembly, or any other processing” in China or a third country does not remove a product from scope. The court reasoned that the listed operations are all non-transformative, and that operations going beyond processing logically remove otherwise subject merchandise from scope. Neither welding nor fabrication is on the list, and neither falls within “any other processing.” The court found support in the original investigation record. The petition, testimony at the U.S. International Trade Commission (“ITC”) hearing, and the ITC’s final determination all treated welding and fabricating subassemblies as the core of chassis production, distinct from bolting finished subassemblies together.

Decision Reaches Beyond Vietnamese Chassis

Although the case involved chassis from Vietnam, the court’s reasoning is not limited to Vietnam. It should apply equally to chassis produced in Mexico, Thailand, or any other country where Chinese components are welded or fabricated into subassemblies. Importers of those chassis, however, are not covered by the Pitts scope ruling itself and may need to take their own steps to obtain relief.

The new AD orders on chassis from Mexico, Thailand, and Vietnam and CVD orders on chassis from Mexico and Thailand, which Commerce issued in 2026, raise similar questions, because their scope language largely tracks the China orders, including the same third-country “processing” provision. Although Pitts does not control how those orders will be interpreted, the court’s reasoning may apply to them as well.

How This Decision May Affect Your Company

The companies most directly affected are U.S. importers of chassis made outside China that incorporate Chinese axle, running gear, or landing gear parts welded or fabricated into subassemblies there. Importers that paid AD or CVD duties under the new orders on chassis from Mexico, Thailand, or Vietnam may be in a similar position if those chassis were actually produced in another country, using components from those countries that were welded or fabricated there.

If the decision is upheld and becomes final, these importers may be entitled to recover the duties they paid. The decision, however, is not final. Commerce’s redetermination is due by January 5, 2027, and the government may appeal to the U.S. Court of Appeals for the Federal Circuit after final judgment.

Companies that imported chassis built in one country with components from China, Mexico, Thailand, or Vietnam that were welded or fabricated there should monitor this case closely. They should also review their entries, including liquidation dates, and consider options to preserve their ability to recover the duties they paid, such as timely protests of liquidated entries.

On October 1, 2026, the U.S. Department of Justice’s (DOJ) National Fraud Enforcement Division issued Directive 26-12: Corporate Enforcement in the Fight Against Fraud. Assistant Attorney General Colin M. McDonald’s October directive follows his August 2026 memorandum setting the Division’s enforcement priorities. The directive signals — in the DOJ’s words — “an aggressive, all-tools” enforcement posture across the Division’s health care, government contracting, tax, and trade fraud priorities, while simultaneously supporting the incentives designed to promote transparency, reward cooperation, and encourage voluntary disclosure of misconduct. 

Beyond reinforcing the Division’s priorities, this October directive outlines the factors the Division will give “great weight” to when making corporate charging and plea decisions. Companies operating in the areas of health care, government contracts, and international trade should take particular note. 

Click here to continue reading the full version of this alert.

  • Key takeaway #1: The U.S.-China trade truce has been extended through January 10, 2027, and the Bureau of Industry and Security’s (BIS’s) suspension of the Affiliates Rule will be extended accordingly.
  • Key takeaway #2: The Affiliates Rule, issued as an Interim Final Rule on September 29, 2025, expanded U.S. export restrictions by subjecting any non-U.S. entity owned 50% or more, directly or indirectly, by one or more parties on the Entity List, Military End-User (MEU) List, or certain Specially Designated Nationals and Blocked Persons (SDN List) to the same license requirements as the listed parent.
  • Key takeaway #3: While the suspension delays immediate compliance obligations, the rule has not been repealed. Companies that have not yet used the past year to build out Affiliates Rule-ready compliance programs should consider doing so before the suspension potentially expires.

What Happened? 

On September 24, 2026, Treasury Secretary Scott Bessent announced that the United States and China agreed to extend their trade truce through January 10, 2027, two months beyond the original timeline established last November. The extension correspondingly pushes back the effective date of the BIS Affiliates Rule, which had been scheduled to go back into effect on November 9, 2026. As of the date of this writing, BIS has not yet published a Federal Register notice formally extending the suspension by two months.

The original truce was reached at the Asia-Pacific Economic Cooperation (APEC) summit in Busan, South Korea on October 30, 2025, with BIS formally publishing a one-year suspension of the Affiliates Rule on November 10, 2025. Under the deal, the U.S. suspended the Affiliates Rule in exchange for Beijing suspending its export restrictions on rare earth minerals.

 A quick refresher on the Affiliates Rule:

What Is the Scope of the Affiliates Rule?

  • Summary: The Affiliates Rule expanded U.S. export restrictions under the Export Administration Regulations (EAR) to cover foreign affiliates owned 50% or more (directly or indirectly) by one or more entities on the Entity List, MEU List, or certain SDN designees (collectively, “covered-list parties”).

Key features include:

  • Rule of Most Restrictiveness: Where multiple listed entities together own 50% or more of an affiliate, the most restrictive license requirements of any owner apply, even if that owner holds the smaller stake. If any owner is subject to a Foreign Direct Product Rule (FDPR), the FDPR applies to the affiliate as well.
  • SDN Coverage: The Affiliates Rule applies to SDNs identified under §744.8 of the EAR, including those designated pursuant to Belarus, Russia, WMD, terrorism, narcotic, and criminal network sanctions programs, to better prevent diversion and align EAR restrictions with corresponding Office of Foreign Assets Control (OFAC) restrictions.
  • Affirmative Duty/Red Flag 29: BIS added Red Flag 29, requiring that if an exporter has “knowledge” that a foreign entity is partially owned by a covered-list party but the ownership percentage is unknown, the exporter must resolve the red flag through additional due diligence or apply for a BIS license.
  • For background on the Affiliates Rule, see our prior client alert here.

What Is the Rationale for the Rule?

BIS explained that the Affiliates Rule was intended to close loopholes allowing restricted parties to operate through “legally distinct” foreign affiliates and subsidiaries. The rule more closely aligns the BIS ownership standard with the traditional OFAC standard for SDN-equivalent restrictions and is consistent with recent BIS enforcement actions holding parties accountable for inadequate due diligence where diversion risks were realized.

What Are the Implications for Exporters?

While the suspension is not a repeal, companies should not treat the extension as a reason to delay compliance preparations further. The Affiliates Rule has been suspended for nearly a year, and companies that have not already begun updating their due diligence procedures, ownership verification protocols, end-user certificates, and contractual provisions should do so now. The Affiliates Rule’s regulatory text and reimposition mechanism remain in place, and the additional two months of runway should not be mistaken for a signal that the rule is going away. A formal BIS Federal Register notice is still required to extend the regulatory effective date, and practitioners should watch for that notice in the coming weeks.

Crowell & Moring will continue to monitor the Affiliates Rule and related U.S.-China trade developments.

On Friday, September 18, 2026, the U.S. Department of State issued two rules amending the International Traffic in Arms Regulations (ITAR). The first, an interim final rule effective October 19, narrows U.S. Munitions List (USML) Category XX(a) controls on certain uncrewed underwater vehicles. The second, a final rule effective immediately, clarifies policy-of-denial provisions, updates country policies for Ethiopia and Somalia, and adds Saudi Arabia and Peru to the list of major non-NATO allies.

  1. USML Category XX(a)

The interim final rule removes certain uncrewed underwater vehicles (UUVs) from the ITAR and makes conforming changes to related controls. The Department is also soliciting comments on further refinements to ITAR controls on UUVs and possible enhancements to related license exemptions. Comments are due on October 19, 2026.

USML Category XX(a)(10) currently describes certain vessels exceeding 3,000 pounds gross weight that are designed to operate without human interaction for extended durations or distances. With the concurrence of the Department of Defense, the Department now assesses that such vessels with a gross weight rating of up to 8,000 pounds provide a critical military or intelligence advantage only when described elsewhere on the USML or specially designed to possess navigation capabilities beyond basic waypoint following, station-keeping, and collision avoidance.

The rule revises paragraph (a)(10) to:

  • Continue describing vessels at or under 8,000 pounds only if specially designed to possess such navigation capabilities, and
  • Add a new paragraph (a)(11) covering vessels with a gross weight rating exceeding 8,000 pounds specially designed to operate without human interaction for longer than 24 hours or for more than 70 nautical miles.

Vessels removed from USML Category XX(a)(10) that are not described elsewhere on the USML will become subject to the Export Administration Regulations (EAR). The Department also notes its intent to review ITAR controls on autonomous capabilities, including maritime navigation systems described in USML Category VI.

  • Updates to Country Policies

The second is a final rule that was effective when published on September 18. It clarifies certain policy-of-denial provisions, updates country policies for Ethiopia and Somalia, adds Saudi Arabia and Peru to the list of major non-NATO allies, and makes other miscellaneous corrections.

Clarifying Policy of Denial-Related Prohibitions

The final rule makes clarifying amendments to ensure that the scope of these prohibitions is consistently stated across the ITAR’s exemption provisions.

  • The rule modifies § 126.1(a) to specify that its prohibitions apply to exports, reexports, retransfers, and temporary imports of defense articles and defense services destined for, or originating in, certain countries, and to clarify that brokering-related prohibitions are set forth in § 129.7.
  • Conforming revisions to §§ 120.15(c) and 123.16 similarly clarify that the prohibitions and exemption limitations extend to exports, reexports, retransfers, and temporary imports involving proscribed destinations identified in § 126.1.

Ethiopia and Somalia

  • The rule removes the entry for Ethiopia in § 126.1(n), implementing a February 2026 policy determination by the Secretary of State terminating the policy of denial for defense exports destined to Ethiopian security forces.
  • The rule revises the entry for Somalia to clarify the exclusion from the policy of denial. Case-by-case review may authorize the supply of weapons, ammunition, or military equipment intended solely for the support of certain authorized forces and activities, including those of the European Union (EU), Turkey, the United Kingdom, the United States, and other United Nations (UN) Member States with a status of forces agreement or memorandum of understanding with the Federal Republic of Somalia, provided they inform the relevant UN Security Council committee of such agreements.

Saudi Arabia and Peru

  • The list of “major non-NATO allies” (MNNA) in § 120.23 is revised to add Saudi Arabia and Peru.
  • The updated list of MNNAs in § 120.23 now includes 21 designated countries, with Taiwan treated as though it were so designated.

MNNA status carries practical significance under the ITAR, including eligibility for defense cooperation agreements and preferential treatment in U.S. defense export licensing.

Separately, the rule corrects the Canadian exemptions at § 126.5(b) and (d) to remove requirements to obtain Nontransfer and Use Certificates (Form DSP-83) that contradicted § 123.10. Defense exporters trading with Canada should review their compliance procedures in light of these corrections.

Crowell & Moring will continue to monitor these and other regulatory developments affecting the ITAR and U.S. defense trade controls.

Key Takeaways:

  • Key Takeaway #1: The U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) published a final rule (the “Rule”), effective September 25, 2026, creating the “Sanctions Penalties Regulations” under 31 CFR Part 505: the agency’s first-ever single, unified codification of civil and criminal penalty rules applicable across multiple sanctions programs.
  • Key Takeaway #2: While OFAC describes the rule as reproducing existing requirements without substantive change, a close reading reveals a few new developments that matter in practice. Among the changes that compliance professionals should be alert to:
    • A binding disclosure requirement for enforcement resolutions;
    • An explicit statement of the mens rea for criminal violations of IEEPA, required by Executive Order 14294;
    • A change in submission routing for enforcement responses, and an important carve-out for narcotics-related proceedings.

What Happened?

Until now, rules and guidance relating to civil and criminal penalties for violations of the International Emergency Economic Powers Act (“IEEPA”) and the United Nations Participation Act (“UNPA”) have been spread across more than 40 different sanctions program regulations, OFAC’s Enforcement Guidelines at Appendix A to 31 C.F.R. Part 501, and the text of the statutes themselves. In its new Sanctions Penalties Regulations, OFAC is now consolidating penalty provisions and authorities that were previously scattered across individual program-specific rules, and codifying certain existing OFAC practices in the Rule.

Following publication of Part 505, OFAC will update individual parts within 31 CFR Chapter V to replace existing penalty provisions with cross-references to the new Sanctions Penalties Regulations. The stated goal is to standardize penalty provisions across programs and to simplify annual inflation adjustments required under the Federal Civil Penalties Inflation Adjustment Act of 1990 (“FCPIA”), as amended by the FCPIA Improvements Act of 2015 (Pub. L. 114-74).

What Does Part 505 Cover Now—and What Does It Not?

Part 505 addresses civil and criminal penalties for violations of sanctions issued pursuant to IEEPA (50 U.S.C. 1701 et seq.) and the UNPA (22 U.S.C. 287c(b)). Penalties for violations of the Trading with the Enemy Act (31 CFR §§ 501.700–501.747) (“TWEA”), the Antiterrorism and Effective Death Penalty Act (31 CFR §§ 597.701–597.705), the Foreign Narcotics Kingpin Designation Act (31 CFR §§ 598.701–598.706), and the Clean Diamond Trade Act (Appendix A to 31 CFR Part 501) remain in their respective program-specific parts and are not consolidated into Part 505. Compliance teams dealing with narcotics trafficking, terrorism-related, or TWEA-covered transactions must still consult those individual regulations.

What are the Key Provisions?

Civil Monetary Penalties (CMPs) Under IEEPA

The maximum civil monetary penalty remains the greater of $377,700 or twice the amount of the transaction that is the basis of the violation.  This amount is subject to periodic adjustment under the FCPIA.

Criminal Penalties Under IEEPA

The rules reprise the IEEPA statutory provision that a person who willfully commits, willfully attempts to commit, willfully conspires to commit, or aids or abets a violation may, upon conviction, be fined up to $1,000,000, or, if a natural person, imprisoned for up to 20 years, or both. Criminal penalty amounts are also subject to adjustment under 18 U.S.C. § 3571.

UNPA Criminal Penalties

Section 505.501 provides that any person who willfully violates or evades any order or regulation issued under the UNPA shall, upon conviction, be fined up to $1,000,000 or, if a natural person, imprisoned up to 20 years, or both.

VSD Penalty Reduction

Base civil penalties are halved in cases where OFAC learns of the violation through a voluntary self-disclosure. This codifies OFAC’s existing guidance in its Enforcement Guidelines at Appendix A to 31 CFR Part 501.

What Is Genuinely New That Merits Attention?

1. A Binding, Codified Disclosure Framework (31 CFR § 505.102)

Section 505.102 requires OFAC to make certain information publicly available—on a routine basis and not less frequently than monthly—about any civil penalty proceeding that results in a CMP or settlement agreement.  This converts a longstanding website-posting practice into a binding regulatory commitment with defined content requirements.

It provides for different information to be published regarding CMPs or settlements with entities versus those with individuals. For entities, this includes:

  • The name and location of the entity involved;
  • The sanctions program(s) involved;
  • A brief description of the violation or apparent violation;
  • A clear indication whether the proceeding resulted in a settlement agreement or the imposition of penalties;
  • An indication whether the entity voluntarily disclosed the violation or apparent violation to OFAC; and
  • The amount of the penalty imposed or the amount of the agreed settlement.

The requirement for proceedings against individuals is similar, but OFAC will publish only aggregate statistics—the number of penalties and settlements for that month, the programs involved, a description of the violations, whether they resulted in settlements or penalties, and the dollar amounts—without identifying any individual by name. Section 505.102(c)(1) provides that OFAC generally will not release the name of any individual violator or alleged violator.  However, the rule also allows OFAC to decide, on a case-by-case basis, to release additional information about any CMP or settlement, which appears to apply for both entity and individual resolutions.

Section 505.102(c)(2) carves out all records and information obtained or created in the implementation of 31 CFR Part 598 (Foreign Narcotics Kingpin Designation Act) from the public disclosure framework. 

The reputational stakes of this framework are high. For entities—particularly financial institutions and multinational corporations—a settlement or CMP will now trigger mandatory publication of name, program, violation description, and dollar amount on OFAC’s website on a monthly disclosure schedule. This includes whether the alleged violations were disclosed voluntarily to OFAC.

2. What about Findings of Violation?

The new rule does not address whether OFAC must publish Findings of Violation, which OFAC historically has published.  It is unclear whether this is meant to signal that OFAC may choose to publish some Findings of Violation but not others. The new rule also provides that, in cases where OFAC ultimately determines that a Finding of Violation is not warranted (e.g., after an appeal by the alleged violator), this fact does not preclude OFAC from taking other enforcement action consistent with its Enforcement Guidelines.

3. Explicit Mens Rea Statement Required by E.O. 14294

Section 5 of Executive Order 14294 of May 9, 2025 (“Fighting Overcriminalization in Federal Regulations”), directed all final rules with criminal consequences to explicitly state a mens rea requirement for each element of a criminal regulatory offense, with citations to the relevant statutory authority, in consultation with the Department of Justice. This requirement applies to all rules published after May 9, 2025—including Part 505.

Accordingly, Part 505 provides, in accordance with IEEPA at 50 U.S.C. § 1705, for criminal liability for willful violations of IEEPA.

This is significant for two reasons. First, it is the first time OFAC has been required to affirmatively state and cite the criminal intent standard in the text of a final rule—a departure from prior program-specific regulations that referenced criminal liability without an explicit mens rea statement. Second, it reinforces the distinction between civil IEEPA liability—which remains strict liability (no knowledge required)—and criminal liability, which requires proof of willfulness.

4. 30 Days to Respond to Pre-Penalty Notices

The Rule also codifies the procedures for Pre-Penalty notices for CMPs previously laid out in OFAC’s Enforcement Guidelines, but now requires any response to a Pre-Penalty Notice within 30 days; failure to submit a response within 30 days is deemed a waiver of the right to respond.  Any oral communication with OFAC prior to a written submission regarding the specific allegations in a Pre-Penalty Notice must be preceded by a written letter of representation, unless the Pre-Penalty Notice was served upon the alleged violator in care of the representative.  Any response to a Pre-Penalty notice must be in writing and signed by the alleged violator or its representative; the Rule specifically allows for electronic signatures.

Crowell & Moring will continue to monitor regulatory and enforcement developments at OFAC.

President Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act into law on September 18, 2026, following bipartisan passage in both chambers. Among its most commercially significant provisions is a sweeping new tariff framework targeting Russia and countries that continue to buy Russian energy.

The Tariffs

The Act creates two mandatory tariff tracks, both with a hard deadline of October 18, 2026:

  • Russian goods: Duties of up to 500% ad valorem on all goods imported from Russia.
  • Secondary tariffs on third countries: Duties of up to 100% ad valorem on all goods imported from countries that are either (1) among the top 5 importers of Russian crude oil or natural gas by volume, or (2) among the top 5 countries facilitating Russian oil sanctions evasion.

Critically, all duties stack on top of existing tariffs — meaning countries already subject to Section 301 or Section 232 duties face potentially severe cumulative exposure.

Who Is Targeted?

The most likely third-country targets are China, India, and Turkey, which appear across multiple qualifying tracks as major buyers of Russian energy and facilitators of sanctions evasion. Slovakia, Hungary, and the UAE are also at elevated risk. The EU is not treated as a single country — individual member states are assessed separately.

The Escape Valves

The Act provides several mechanisms through which countries or businesses may seek relief — but none are straightforward.

Natural gas exception. A country identified as a top importer of Russian natural gas may avoid secondary tariffs if its imports represented less than 15% of Russia’s total annual gas exports during the relevant 12-month period and it has taken “significant steps” to reduce those imports. This exception does not apply to crude oil importers or sanctions evasion facilitators, and the undefined phrase “significant steps” gives the Administration broad discretion over who qualifies.

Presidential waiver. The President may waive any duty under the Act on national interest grounds. However, this requires a formal, unclassified written certification to Congress explaining the basis for the waiver — making it a politically visible act rather than a quiet administrative tool. The waiver mechanism is best understood as a safety valve for exceptional diplomatic circumstances, not a general opt-out from mandatory tariff obligations.

Termination. Tariffs can be terminated entirely, but only upon certification that Russia has signed a peace agreement with Ukraine and ceased all relevant military hostilities. Any termination is subject to a 30 to 60 day congressional review window during which Congress may pass a joint resolution to block it.

Winddown period. Entities engaged in genuine winddown or divestiture of Russian operations have a 270-day grace period from enactment — expiring June 15, 2027 — during which the Act’s measures do not apply to their winddown activities.

The overall picture is one of mandatory tariffs with narrow, carefully conditioned relief. The Administration retains some flexibility through rate-setting (duties can be set anywhere between greater than zero and the statutory ceiling) and national interest waivers, and may use these tools as leverage in bilateral negotiations with affected countries. But there is no general executive discretion simply to decline to impose the tariffs — the “shall” language and “notwithstanding any other provision of law” clause make non-compliance without formal justification legally untenable.

The U.S. Department of Commerce has initiated antidumping (“AD”) and countervailing duty (“CVD”) investigations of Linear Hydraulic Cylinders and Parts Thereof from Canada, China, India, Mexico, and South Korea, effective September 8, 2026. The AD investigations cover imports from all five countries, while the CVD investigations cover imports from China, India, and Mexico.

The investigations stem from petitions filed on July 29, 2026 by the Hydraulic Cylinders Fair Trade Coalition and several U.S. producers. Commerce initially delayed its initiation determination after finding that the petitions did not clearly establish the required level of U.S. industry support and therefore polled the domestic industry. Based on the polling responses, Commerce determined that the statutory industry-support requirements were satisfied and that the petitions were filed on behalf of the domestic industry.

During that extended pre-initiation period, Commerce also continued to question the petitioners about the proposed scope, and in particular its inclusion of components used in third-country production. In a September 4, 2026 response to Commerce’s second supplemental questionnaire, the petitioners rejected several proposals from Commerce that would have narrowed the scope.

Petitioners Seek to Preserve Coverage After Third-Country Assembly

One of the most significant positions in the September 4 filing concerns hydraulic-cylinder components that are incorporated into finished cylinders in third countries.

Commerce asked the petitioners to consider language stating that covered steel barrels are within scope when imported or invoiced separately from a hydraulic cylinder. The petitioners declined, explaining that such language would narrow their intended scope. They stated that they also intend to cover steel barrels and piston rods from a subject country when those components are incorporated into hydraulic cylinders in a third country. The petitioners expressly gave the following example: a Chinese steel barrel incorporated into a hydraulic cylinder in Malaysia should remain subject to any China AD and CVD duties imposed as a result of the investigations when the finished cylinder enters the United States.

The practical consequence of the petitioners’ position is significant. Under their proposed approach, assembly of a hydraulic cylinder in a non-subject country does not remove covered subject-country barrels or piston rods from the investigations. Importers would be required to determine the origin of those components and apply the AD/CVD duties, if any, to those components’ relative value.

Petitioners Also Advocate Multi-Country Duty Treatment

The September 4 filing goes further where a covered component from one subject country is incorporated into a hydraulic cylinder produced in another subject country.

The petitioners use the example of a Chinese barrel incorporated into a hydraulic cylinder in Mexico. Under their proposed approach, the Chinese barrel would be subject to China AD/CVD duties, while the remaining value of the hydraulic cylinder produced in Mexico would be subject to any applicable Mexico AD/CVD duties.  The petitioners explain that this treatment is intended to prevent foreign companies from engaging in what they call “duty shopping” or “duty washing” by incorporating covered components from a country with higher dumping margins or subsidy rates into a cylinder produced in another subject country with lower rates.

Commerce’s initiated scope likewise retains broad third-country language. It provides that subject merchandise includes covered hydraulic cylinders, barrels, and rods that undergo “assembly or minor processing in a third country” in a manner that would not otherwise remove the merchandise from scope if performed in the country of manufacture.

This approach would create unusually complex duty calculations and origin-tracing requirements for hydraulic cylinders and components moving through multi-country supply chains.

Petitioners Refuse to Narrow the Chapter 84 Provision

The petitioners also rejected Commerce’s request to narrow the proposed downstream-product language.

Commerce specifically asked the petitioners to replace the broad reference to any equipment or parts of equipment classified in Chapter 84 with specified four- or six-digit HTSUS provisions covering equipment relevant to hydraulic cylinders. The petitioners declined. They argued that the machinery applications using hydraulic cylinders are too varied to identify on an HTS-specific basis and that Chapter 84 is “reasonably inclusive” of equipment and machinery likely to incorporate hydraulic cylinders. The resulting proposed scope continues to cover hydraulic cylinders and parts meeting the physical description when they are “attached to or imported with any equipment or parts of equipment classified in Chapter 84”, while specifying that only the hydraulic cylinder is covered by the scope.

Commerce retained that broad language in the initiated scope. The scope includes hydraulic cylinders and parts meeting the physical description when they are “attached to or imported with any equipment or parts of equipment classified in Chapter 84” of the HTSUS. Where a covered hydraulic cylinder is attached to or imported with Chapter 84 equipment, the scope specifies that only the hydraulic cylinder is covered.

The compliance implications are substantial. An importer entering finished Chapter 84 equipment, such as a forklift or excavator, will need to determine whether the equipment contains a covered hydraulic cylinder, the origin and producer of that cylinder or its covered components, the value attributable to the subject merchandise, and the applicable AD/CVD duty.

Broad Component Coverage Also Remains

The revised proposed scope continues to cover certain steel barrels and steel piston rods, as well as any part or component of a hydraulic cylinder attached to, assembled with, or shipped with a covered steel barrel or piston rod. It also includes attachments, parts, or components imported with, attached to, or invoiced with a hydraulic cylinder or covered barrel or rod, including mounting parts, connectors, pistons, rings, gaskets, seals, valves, sensors, hydraulic tubing, and hydraulic lines. Those ancillary items are excluded when imported or invoiced separately from a hydraulic cylinder. Commerce also asked the petitioners to consider adding diameter dimensions to distinguish covered piston rods from piston rods used in other applications. The petitioners declined, explaining that piston-rod diameter may vary significantly relative to cylinder bore size depending on the particular cylinder design.

Importantly, Commerce itself has now expressed “concerns related to the administrability of certain provisions in the proposed scope.” Commerce specifically identified the definition of covered steel barrels, including language concerning when a barrel has been processed to the point that its sole or predominant use is as a barrel for an in-scope hydraulic cylinder, as an outstanding issue. Commerce adopted that language for purposes of initiation but stated that it will continue evaluating the scope and may make additional modifications to clarify what products are covered or excluded.

How This Scope May Affect Your Company

Commerce has opened the formal scope-comment process. Initial scope comments are due by 5:00 p.m. ET on September 28, 2026, and rebuttal comments are due by 5:00 p.m. ET on October 8, 2026. Commerce specifically invited parties to address its administrability concerns and requested that factual information relevant to scope be submitted during this period. Scope comments must be filed simultaneously on the records of the concurrent AD and CVD investigations. The same September 28 and October 8 deadlines apply to comments and rebuttal comments concerning the physical product characteristics Commerce will use in its AD questionnaires for cost reporting and product comparisons.

Commerce has also begun respondent selection. For Canada, India, South Korea, and Mexico, Commerce released CBP import data under administrative protective order on September 8 and indicated that comments on the CBP data and respondent selection are due within three business days after publication of the initiation notice, with no rebuttal comments permitted. For China, Commerce will use quantity-and-value questionnaires for respondent selection, with responses due by 5:00 p.m. ET on September 22, 2026.

Companies whose merchandise or supply chains are implicated should review the initiated scope carefully and consider participating early. The scope-comment process is particularly important for companies that import or export downstream machinery or rely on multi-country supply chains and may not otherwise view themselves as participants in a hydraulic-cylinder investigation.

Key Takeaway: U.S. Customs and Border Protection (“CBP”) is considering amending its regulations to require new disclosures designed to give the agency greater visibility into the supply chains of goods imported into the United States. The proposals target three areas: 1. enhanced identification of parties involved in importation; 2. integration of technical tracing solutions; and 3. collection of foreign export documentation.  Crowell is available to provide support to clients in preparing responses to CBP’s ANPRM, in advance of CBP’s deadline on December 1, 2026.

What Happened: On September 2, 2026, CBP issued an advance notice of proposed rulemaking (“ANPRM”) titled, “Heightened Import Disclosures for Supply Chain Visibility.” CBP seeks public comments on sixty-four (64) questions by December 1, 2026.  The answers will help CBP develop changes in the regulations, which will be issued at a later date. 

Scope: Key elements of the ANPRM include:

  • Foreign Export Documentation: CBP is exploring whether importers of record should be required to submit or retain documentation that foreign exporters provide to their own customs authorities, including export declarations, commercial invoices, packing lists, certificates of origin, and export licenses or permits.
  • Party Identification and Global Business Identifiers: CBP is considering replacing or supplementing the existing manufacturer or shipper identification code (MID) with a Global Business Identifier (GBI).  The GBI is a unique private-sector identifier that includes the DUNS number, Global Location Number (GLN), Legal Entity Identifier (LEI), and Altana ID.  The GBI is currently under pilot testing in the voluntary National Customs Automation Program (NCAP) test.
  • Innovative Supply Chain Tracing Technologies: CBP is evaluating AI-driven and other private-sector tracing solutions to detect illegal transshipment before goods arrive at or are released from the U.S. border.

Rationale for Change: The ANPRM is rooted in Executive Order (E.O.) 14411, “Strengthening Customs Enforcement,” signed by the President on June 3, 2026.  E.O. 14411 emphasizes the importance of customs enforcement for national security, foreign policy, and the U.S. economy, and specifically addresses compliance with laws governing forced labor, rules of origin, origin marking, intellectual property, revenue collection, and product safety.

Section 3 of E.O. 14411 directly mandates CBP to establish heightened import disclosure requirements, including: (a) disclosure of foreign tax identifiers, global business identifiers, and detailed supply chain and production method information; and (b) submission of documentation that foreign exporters were required to file with their own customs administrations prior to export to the United States. E.O. 14411 also directs CBP to leverage the Customs Trade Partnership Against Terrorism (“CTPAT”) program to strengthen enforcement across the international supply chain.

CBP maintains that existing tools such as the MID have significant shortcomings: the code is derived from name and address data, is not always unique or consistent, and is not always available to CBP early enough in the entry process to be operationally useful.  Separately, it claims that illegal transshipment continues to deprive the U.S. government of lawful revenue and threatens economic security, prompting CBP to seek more resource-efficient, technology-driven interdiction methods.

Implications for Importers and Trade Compliance Professionals: If the ANPRM progresses to a Notice of Proposed Rulemaking (“NPRM”), the resulting regulations could apply across entry types, commodities, countries, and modes of transportation, with CBP also considering phased implementation timelines and differential treatment for small entities, foreign importers, CTPAT participants, and high-volume filers.  Compliance teams should begin assessing their current supply chain documentation practices now, particularly their ability to obtain and retain foreign export documentation from overseas suppliers.  This may raise practical challenges around document availability, lead times, and accuracy verification.

The ANPRM also signals that CTPAT minimum security criteria (MSC) may be expanded to include cybersecurity and data integrity requirements, potentially including prohibitions on the use of foreign-controlled logistics platforms such as LOGINK that have been identified as national security risks.  CTPAT members and applicants should evaluate their current logistics platform arrangements in light of these potential new criteria.

Companies are strongly encouraged to submit substantive comments by the December 1, 2026, deadline. CBP has indicated that numerical and quantitative responses such as cost and benefit data will be particularly useful.  Commenters should reference specific question numbers within their submissions.  Crowell is available to provide support to clients in preparing responses to CBP’s ANPRM.

Crowell will continue to monitor CBP’s supply chain visibility rulemaking initiatives and further regulatory developments related to heightened import disclosure requirements under E.O. 14411.

The U.S. Department of Commerce must decide by September 8, 2026 whether to initiate antidumping (“AD”) and countervailing duty (“CVD”) investigations of Linear Hydraulic Cylinders and Parts Thereof from Canada, China, India, Mexico, and South Korea.

The petitions, filed on July 29, 2026, seek AD investigations of imports from all five countries and CVD investigations of imports from China, India, and Mexico. The alleged AD margins are substantial: 60.16%–163.42% for Mexico, 78.70%–149.33% for South Korea, 102.59%–461.46% for India, 125.77%–511.41% for China, and 248.33%–744.85% for Canada.

The proposed scope is particularly noteworthy because it extends beyond stand-alone hydraulic cylinders. The petition expressly seeks to cover otherwise subject hydraulic cylinders that are “attached to or imported with any equipment or parts of equipment classified in Chapter 84” of the HTSUS, while providing that “only the hydraulic cylinder is covered by the scope.” As a result, the proposed scope could affect imports of downstream Chapter 84 machinery, including forklifts, excavators, front-end loaders, telehandlers, and certain other construction and material-handling equipment, containing covered cylinders from the subject countries.

Commerce Is Polling the U.S. Industry Before Initiation

Commerce ordinarily determines whether to initiate an AD or CVD investigation within 20 days after a petition is filed. Before initiating, Commerce must determine that a petition was filed “by or on behalf of” the relevant U.S. industry. Producers supporting a petition must account for:

  • at least 25 percent of total U.S. production of the domestic like product; and
  • more than 50 percent of the production accounted for by U.S. producers expressing either support for or opposition to the petition.

In this case, Commerce determined that it was not clear from the petitions whether the statutory industry support requirements had been satisfied and therefore polled U.S. producers regarding their support for or opposition to the petitions. When Commerce must poll or otherwise determine industry support, the statute permits Commerce to extend the normal 20-day initiation period by an additional 20 days. 

The producers’ polling responses are now on the record, and Commerce has provided interested parties an opportunity to comment on those responses. Commerce must now determine whether the industry support requirements are satisfied and whether to initiate the investigations no later than September 8, 2026. 

What Happens If Commerce Initiates?

If Commerce initiates, several important procedural steps will follow quickly. Commerce is expected to establish deadlines for scope comments and rebuttal comments and begin the process of selecting mandatory respondents in the AD and CVD investigations. Depending on the country and proceeding, Commerce may rely on U.S. Customs and Border Protection import data or information obtained from potential respondents to select the exporters or producers it will individually examine.

The ITC has already begun its preliminary injury investigations. Because Commerce extended its initiation deadline, the ITC revised its schedule and must now reach its preliminary injury determinations within 25 days after the date on which it receives notice from Commerce of initiation of the investigations.  If Commerce initiates on September 8, the ITC determinations would be expected in early October 2026.

If the ITC reaches affirmative preliminary injury determinations, the Commerce investigations will continue. Commerce will then issue preliminary AD and CVD determinations under the applicable statutory timelines, subject to extensions. For entries subject to affirmative preliminary rates, Commerce may instruct CBP to suspend liquidation and require cash deposits at the applicable preliminary rates.

Why Early Participation May Be Important

The proposed scope is broad. It covers certain linear acting hydraulic cylinders with:

  • a barrel made of steel;
  • a bore size (inner diameter) of at least 25.4 millimeters (1 inch); and
  • a return (retracted) length of at least 102.1 millimeters (4 inches).

The proposed scope covers numerous cylinder designs, including tie-rod, welded body, telescopic, plunger, rodless, differential, position-sensing, single-acting, double-acting, displacement, ram-type, piggy-back, double-rod, rod-fed, and spring-return linear acting hydraulic cylinders. It also covers certain steel barrel components, steel piston rod components, and components attached to, assembled with, or shipped with a covered steel barrel or piston rod. In addition, attachments, parts, or components imported with, attached to, or invoiced with a covered hydraulic cylinder or component may be included. The subject merchandise is currently identified under HTSUS statistical reporting numbers 8412.21.0015, 8412.21.0030, 8412.21.0045, 8412.21.0060, 8412.21.0075, and 8412.90.9005. The written description of the scope, however, is dispositive.

Most notably, the proposed scope expressly includes hydraulic cylinders meeting the physical description above when they are “attached to or imported with any equipment or parts of equipment classified in Chapter 84” of the HTSUS, while specifying that “only the hydraulic cylinder is covered by the scope.” This means the investigations could affect not only imports of stand-alone hydraulic cylinders, but also imports of Chapter 84 machinery containing covered cylinders, such as forklifts, excavators, front-end loaders, telehandlers, and certain other construction and material-handling equipment.

This downstream-product language could create significant administration and compliance issues. When a covered hydraulic cylinder is imported by itself, the subject merchandise, producer or exporter, entered value, and applicable AD/CVD treatment can be identified directly. Those determinations become more complicated when the cylinder is incorporated into a larger piece of equipment before importation. Questions may arise regarding whether the equipment contains a cylinder meeting the scope criteria, the country of origin and producer or exporter of that cylinder, the value attributable to the subject merchandise, and how the cylinder should be reported at entry when it is not separately imported or classified.

Companies that may be affected should closely monitor Commerce’s September 8 initiation decision and, if the investigations are initiated, the early procedural deadlines that follow. The scope-comment process may be particularly important given the breadth of the proposed coverage, and interested parties should consider whether early participation is warranted to address scope issues before the investigations progress further.

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