To date the Trump Administration has issued multiple proclamations imposing varying rates of import duties on steel and aluminum and certain derivatives, including construction materials. These measures have added volatility and financial pressures to the construction sector both in the United States and abroad. Most recently, on June 3, 2025, President Donald Trump issued a proclamation under Section 232 of the Trade Expansion Act of 1962, doubling tariffs on imported steel and aluminum from 25% to 50%, effective June 4, 2025. This action aims to counteract the continued influx of lower-priced, excess steel and aluminum imports that, according to the administration, threaten U.S. national security by undermining domestic production capacity. The proclamation notes that while prior tariffs provided some price support, they were insufficient to achieve the necessary capacity utilization rates for sustained industry health and defense readiness. The United Kingdom remains temporarily exempt at the 25% rate until July 9, per the U.S.-U.K. Economic Prosperity Deal.

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We are proud that our International Trade Practice is again ranked in Chambers USA, with three national practice area rankings and five ranked lawyers for 2025!

*Indicates first or second tier ranking

A hearty congratulations to all for these notable achievements!

For more information on Crowell’s overall rankings across practices, please take a look at the firm-wide announcement.

Continuing to focus on the Trump Administration tariffs, in this session, Crowell hosts Nicole Simonian and Dj Wolff, Co-Chairs of the International Trade Group, talk with Daniel Wolff, Crowell’s Litigation and Trial partner, as they review and consider the impact of the Court of International Trade’s recent decision on the tariffs imposed pursuant to the International Emergency Economic Powers Act (IEEPA). Global Trade Talks is a podcast that shares brief perspectives on key global issues on international trade, current events, business, law, and public policy as they impact our lives.

Listen: Crowell.com | PodBean | SoundCloud | Apple Podcasts

The Court of International Trade (“CIT”) and the District Court for the District of Columbia (“DDC”) both issued decisions enjoining the Trump IEEPA tariffs.  In both venues, the government appealed the courts’ decisions, and both orders are currently stayed. The DDC stayed its own preliminary injunction pending appeal; the U.S. Court of Appeals for the Federal Circuit issued an administrative stay of the CIT order which will remain in effect until the court rules on the government’s motion to stay pending appeal. Briefing on that motion will be complete on June 9, 2025, after which the Federal Circuit is likely to rule quickly on whether the CIT’s injunction will remain paused or take effect.  In the short term, this means that importers must still pay tariffs on their imports; in the long term, importers are advised to keep records of their imports and duties paid in the event that courts rule that the tariffs are unlawful and order that refunds be issued. 

CIT

In the CIT, the 3-judge panel issued a decision ruling that the president’s IEEPA tariffs are unlawful and granted summary judgment to the plaintiffs and a permanent injunction on the government’s ability to collect tariffs pursuant to IEEPA.  V.O.S. Selections Inc. v. Trump, Case No. 25-00066 (CIT, May 28, 2025); Oregon et al. v. Trump Case No. 25-00077 (CIT, May 28, 2025) (declaring IEEPA tariffs invalid and unlawful and granting permanent injunction).  V.O.S. and Oregon were consolidated on appeal by the Federal Circuit under V.O.S., Case No. 25-1812.

As noted, that decision is administratively stayed but a more substantive decision from the Federal Circuit on the government’s motion to stay pending appeal is expected as early as the week of June 9.

DDC

The DDC held that the IEEPA tariffs are unlawful, stating that the IEEPA statute does not provide authority to set tariffs at all. The DDC granted a preliminary injunction (i.e., not final judgment) which, unlike the CIT’s injunction, only applies to the plaintiffs in that case, and thus does not prevent the government from continuing to collect the tariffs from other importers.  Learning Resources, Inc. v. Trump, No. 25-1248 (D.D.C. May 29, 2025).

The government appealed the DDC decision to the DC Circuit. On June 3, the DDC stayed its preliminary injunction pending appeal. On June 5, 2025, plaintiffs filed a motion to expedite briefing on the appeal over the summer months and requested argument to be scheduled by September. 

Other Cases to Watch on Appeal

Ninth Circuit

The District Court of the Northern District of California State in California v. Trump considered the State of California and Governor Newsom’s identical challenge to the President’s authority under IEEPA to impose tariffs. On June 2, 2025, the N.D. Cal. dismissed the action due to lack of jurisdiction, agreeing with the government that the case should have been filed at the CIT. California promptly appealed the dismissal to the Ninth Circuit. California v. Trump, No. 25-3493.

In similar challenges filed in federal district courts in the Northern District Court of Florida (Emily Ley Paper, Inc. v. Trump) and Montana (Webber v. U.S. Department of Homeland Security), the courts agreed that the cases should have been filed at the CIT. Unlike the N.D. Cal, however, the Florida and Montana federal courts transferred the cases to the CIT. In Webber, the plaintiffs appealed the district court’s transfer of the case to the CIT, arguing that the CIT does not have exclusive jurisdiction over the IEEPA and Section 232 issues raised by plaintiffs. In Emily, plaintiffs sought a stay of the N.D. Fl. order to transfer the case to the CIT to have the transfer reviewed by the Eleventh Circuit, a motion which the district court denied on May 21, 2025.  Once transferred to the CIT, the government filed a motion to stay proceedings of Emily Ley on June 4, 2025, pending the final decision in V.O.S. Plaintiff’s response is due June 25, 2025. 

Implications

The legality of the President’s use of IEEPA to support the imposition of tariffs and the jurisdictional question that goes with it are both appealing issues for Supreme Court review.  With a motion to expedite the appeal at the DC Circuit, a potential circuit split, numerous amicus briefs from high-profile legal practitioners, and urgent issues concerning the global economy, one or both cases are likely to reach the Supreme Court.

In the meantime, the outcome of the government’s motion to the Federal Circuit to stay the CIT’s injunction will weigh heavily on whether importers will need to continue paying the tariffs while the cases are decided on the merits.

In November 2024, the UK Government introduced regulations which granted its financial sanctions regulator – the Office of Financial Sanctions Implementation (“OFSI”) – greater intelligence gathering and enforcement powers. Our previous blog post on these amendments can be found here.

The changes included the extension of mandatory financial sanctions reporting obligations (“UK Reporting Regime”) to cover Insolvency Practitioners (“IPs”), high-value dealers, art market participants and letting agencies (being industries identified as representing a higher risk for financial sanctions evasion). The changes are intended to encourage better sanctions compliance and assist OFSI in identifying potential circumvention gaps and financial sanctions breaches.

The new requirements came into force on 14 May 2025. We provide below an overview of the UK Reporting Regime and recommendations for how IPs (and those now affected by the regulations) can ensure compliance with the Regime, including adequate monitoring and prevention of potential UK sanctions breaches, and reporting requirements.

To whom do the new reporting requirements apply?

The following now fall within the definition of “Relevant Firm” and are subject to the new UK Reporting Regime:

  • Insolvency Practitioner: those acting as IPs within the meaning of s388 of the Insolvency Act 1986 (the “IA 1986”) (or article 3 of the Insolvency (Northern Ireland) Order 1989 (“IO Northern Ireland 1989”)) and their firms.
  • High value dealer: A firm or sole trader which trades or deals in goods (including an auctioneer) and makes / receives cash payment(s) (not bank transfer or digital payments) of at least €10,000 in total, whether the transaction is executed in a single operation or in several linked operations.
  • Art Market Participant: A firm or sole practitioner who is registered or required to register with HMRC as an art market participant.[1] In the context of financial sanctions reporting, this captures firms or individuals who in the course of carrying out their business:
    • trade in, or act as an intermediary in, the buying or selling of works of art, where the transaction value (or the value of a series of linked transactions) is €10,000 or more; or
    • store works of art where the value of the art so stored for a person amounts to €10,000 or more 
  • Letting Agent: A firm or sole practitioner who carries out, or whose employees carry out, letting agency work (defined as things done in response to instructions received from a prospective landlord or tenant for a month or more and done in relation to a prospective landlord or otherwise in the course of concluding an agreement for letting land for a month or more).

Industries that were already classified as Relevant Firms, and therefore subject to the UK Reporting Regime, include regulated financial institutions, currency exchanges, auditors, providers of accountancy, legal, tax and trust services, employment agencies, casino operators, precious metal sellers, cryptoasset exchange providers, and custodian wallet providers.

What information needs to be reported to OFSI?

Relevant Firms are subject to the following key requirements:

1. A report must be made to OFSI as soon as practicable if the firm knows or has reasonable cause to suspect that a person:

    a. is either:

      • i. a “designated person” (meaning subject to any UK asset freezing sanctions either by direct designation of the OFSI Consolidated List or by virtue of ownership or control); or
      • ii. a “prohibited person” (this is a specific term in the context of the UK’s Russia sanctions regime and captures the Russian Central Bank, National Wealth Fund, Ministry of Finance, or a person owned or controlled directly or indirectly by, or acting on behalf of or at the direction of, these entities);[2] or

      b. has breached a prohibition or failed to comply with an obligation of specified financial sanctions regulations. Examples of such sanctions include breaching asset freezing sanctions and other sectoral financial restrictions, such as Russian loan and credit or transferable security restrictions.

        A Relevant Firm is only required to report, however, if the information or other matter on which its knowledge or cause for suspicion is based came to it “in the course of carrying on its business”.

        For IPs, this means that they will only be subject to the UK Reporting Regime during the course of them acting as IPs (within the meaning of s388 of the IA 1986 or article 3 of the IO Northern Ireland). The Government guidance has given two examples where an IP is conducting “business that does not constitute insolvency practitioner business”; this is where they act as a receiver in the sale of a property, or undertake an independent business review. In either case, they will not be subject to sanctions reporting obligations.

        2. Where the designated person or prohibited person is a customer of the Relevant Firm, the firm must also report to OFSI the nature and amount or quantity of any funds or economic resources held by it for the customer at the time when it first had the knowledge or suspicion. 

          3. In addition, all UK firms (including but not limited to Relevant Firms) that hold any funds or economic resources owned, held or controlled by a designated person or prohibited person must provide OFSI with a report stating the nature and amount or quantity of these funds and economic resources held by that firm as at 30 September of that calendar year, by no later than 30 November in that same calendar year.[3]

          Failure to comply with the UK Reporting Regime is an offence, and can result in both financial penalties and – in serious cases – potential imprisonment. Further information on requirements and how to report to OFSI can be found here.

          Following the establishment last October of the UK’s new trade sanctions regulator, the Office of Trade Sanctions Implementation (“OTSI”), certain firms (such as financial institutions and legal practitioners) are subject to new reporting requirements for suspected breaches of trade, shipping and aircraft sanctions (see our blog post here for more details). It should be noted that IPs, high-value dealers, art market participants and letting agencies are not presently subject to these mandatory reporting obligations.

          Recommendations for Compliance

          For firms that are now subject to the UK Report Regime, it is even more critical to implement appropriate measures to ensure that they do not breach UK sanctions.

          Unsurprisingly, OFSI recommends implementing a strong sanctions compliance programme, which is appropriate to the firm’s risk exposure. Such a programme may include:

          • Operational policies and procedures for sanctions compliance, which details due diligence requirements.
          • Appropriately sanction-screening business partners against UK and other relevant international sanctions lists.
          • Training staff on the importance of sanctions compliance, firm policies and red flag indicators.
          • Establishing confidential speak-up mechanisms for reporting suspected or actual sanctions breaches, and ensuring employees are protected from any retaliatory measures.
          • In the event that a suspected sanctions breach or dealing with a sanctioned person is identified, having appropriate procedures for reporting such matters to OFSI.

          If you have any questions about the new requirements, and need assistance in developing policies and procedures, please do not hesitate to reach out to the authors or your usual Crowell contact.

          [1] Pursuant to regs. 56(5) and (6) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

          [2] https://www.gov.uk/government/publications/uk-financial-sanctions-faqs/uk-financial-sanctions-faqs

          [3] Prior to 2025, OFSI relied on its general information gathering powers to require firms to report information of frozen assets.  As part of the November 2024 amending regulations, it codified this requirement in sanctions regulations.

          On May 29, a day after the U.S. Court of International Trade (“CIT”) issued summary judgment in V.O.S. v. Trump blocking the IEEPA tariffs, the District Court for the District of Columbia (“DDC”) exercised jurisdiction in Learning Resources, Inc., et. al., v. Donald J. Trump, et. al. (25-cv-1248), denying the government’s motion to transfer the case to the CIT and granting a preliminary injunction to enjoin the government from enforcing the IEEPA tariffs against the Learning Resources plaintiffs.

          As with V.O.S., Learning Resources was filed following President Trump’s invocation of the International Emergency Economic Powers Act (“IEEPA”) which imposed tariffs on a slew of countries. Plaintiffs Learning Resources, Inc. and hand2mind, Inc. contended that:

          • IEEPA does not authorize the President to impose tariffs,
          • If IEEPA does authorize the President to impose tariffs, the challenged tariffs are not legal, and
          • if IEEPA were interpreted to allow for the President to impose the challenged tariffs, the statute itself would be unconstitutional on grounds it violates the nondelegation doctrine.

          Defendants Donald J. Trump and multiple government agencies and officials moved to transfer the case to the CIT, arguing that the CIT has exclusive jurisdiction under 28 U.S.C. §§ 1581(i) and 1337(c). Meanwhile, Plaintiffs moved for a preliminary injunction. After hearing argument this past Tuesday, May 27, the Court ruled for Plaintiffs on both motions, denying the government’s motion to transfer and granting Plaintiffs’ motion for a preliminary injunction.

          The DDC’s exercise of jurisdiction is a departure from several other district courts that granted the government’s motion to transfer substantively identical cases to the CIT on the basis that the CIT has exclusive jurisdiction over actions arising from statutes that provide for the imposition of tariffs. See Simplified v. Trump et al. Case No. 3:25-cv-00464 (N.D.Fla.); Webber et al. v. U.S. Dept. of Homeland Security et al.; and Case No. 4:25-cv-00026 (D. Mont.). A motion to transfer remains pending in California v. Trump, Case No. 3:25-cv-03372 (N.D. Cal.). Unlike those other courts, and unlike the CIT itself in V.O.S., the DDC determined that IEEPA is not properly construed as providing for the imposition of tariffs.

          The DDC stayed its order for 14 days to give the government an opportunity to appeal to the D.C. Circuit, and the government did so the same day. Meanwhile, in V.O.S. case, which the government also immediately appealed to the Federal Circuit, the Federal Circuit entered an administrative stay pending further action on the government’s motion for an emergency stay pending appeal. The DDC decision assures that in addition to the merits question of whether IEEPA authorizes tariffs, the appellate courts (possibly including the Supreme Court) will also have to contend with the jurisdictional question.

          On May 23, 2025, the U.S. Departments of State (“State”) and the Treasury (“Treasury”) took actions that resulted in immediate sanctions relief for Syria. Specifically, Treasury’s Office of Foreign Assets Control (“OFAC”) issued General License 25 (“GL 25”) pursuant to the Syrian Sanctions Regulations (“SySR”), the Weapons of Mass Destruction Proliferators Sanctions Regulations (“NPWMD”), the Iranian Financial Sanctions Regulations (“IFSR”), the Global Terrorism Sanctions Regulations (“GTSR”), and the Foreign Terrorist Organization Sanctions Regulations (“FTOSR”). In parallel, Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and State took supporting actions outlined below.

          Treasury’s press release explained that the sanctions relief is intended to “facilitate activity across all sectors of the Syrian economy,” in order to “help rebuild Syria’s economy, financial sector, and infrastructure.”

          Treasury’s press release also emphasized that sanctions relief was extended “with the understanding that the country will not offer a safe haven for terrorist organizations and will ensure the security of its religious and ethnic minorities.”

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

          On May 28, 2025, the Court of International Trade granted summary judgment in V.O.S. Selections, Inc. et al v. Donald J. Trump Case No. 25-cv-66, ordering that all the executive orders imposing tariffs on the basis of IEEPA (Executive Order 14193, Executive Order 14194, Executive Order 14195, Executive Order 14257), were declared to be invalid as contrary to law.  The operation of the tariff orders is permanently enjoined and the Court ordered that administrative orders to effectuate the permanent injunction shall be issued within 10 calendar days.

          The Court did not rely on the non-delegation doctrine in its opinion, basing its decision on the fact that the President’s Executive Orders exceeded the authority of the IEEPA statute.  Specifically, the Worldwide and Retaliatory Tariff Orders (10% tariff on all imports from all trading partners; temporary 10% retaliatory tariffs on China)  exceed the authority granted to the President by Congress through IEEPA to regulate importation by means of tariffs. The Trafficking Tariffs (imposed when the President declared a national emergency under IEEPA to deal with the fentanyl and drug threats posed by international cartels) fail because they do not deal with the threats set forth in those orders.

          In light of this decision, within 10 days, CBP will likely issue guidance for importers advising on instructions for imports without IEEPA tariffs. Importers should stay tuned for likely appeals and preserve their rights to refunds of duties paid.

          As of May 28, 2025, notices of appeal have been filed by the government.

          Webinar Details:
          Wednesday, June 4, 2025
          12:00 – 1:00 p.m. ET
          Register Now

          Our webinar will discuss antitrust risks that can arise as companies grapple with whether and how to adjust their pricing to respond to tariffs being imposed around the world. The webinar is designed to give listeners an understanding of these potential risks, and best practices for companies to manage such risks and minimize scrutiny from antitrust regulators and potential litigants when developing their tariff responses. Our panelists will cover these key concepts:

          • The potential antitrust risks to consider when crafting a pricing response to tariffs, including for multinational companies doing business in the US.
          • Scrutiny businesses may face from antitrust regulators and private plaintiffs, and lessons learned in the wake of similar economic and pricing shocks in the past.
          • The legal framework for analyzing pricing decisions in response to tariff pressure under US antitrust law.
          • Practical guidance on what companies can do to minimize risk, such as:
            • Collective actions that may be allowed, such as political lobbying;
            • Ensuring and demonstrating independent business decisions; and
            • Compliance efforts.

          CLE Credit:
          Continuing Legal Education — This program is pending CLE credit in CA, CO, IL and NY. Credit hours are estimated and subject to each states approval and credit rounding rules. We will apply to have this program accredited in other jurisdictions upon request.

          For questions about this event, please contact Octavia Hutson.

          If you would like to register for this event, please click here.

          • Key takeaway #1The new guidance amounts to prohibitions on U.S. and non-U.S. persons using, selling, transferring, financing, or servicing Huawei’s Ascend 910B, 910C, and 910D chips, as well as other comparable chips from other Chinese companies.
          • Key takeaway #2While the U.S. Department of Commerce Bureau of Industry and Security (BIS) has issued some advanced computing-related license exceptions, none are applicable for these chips because the restriction is based upon “General Prohibition 10,” which requires a separate waiver.
          • Key takeaway #3Companies within the advanced computing and semiconductor industry should review the new BIS list of red flags and diligence requirements and update their internal policies accordingly. If not, BIS could consider this an aggravating factor in a future enforcement action.

          On May 13, 2025, the Department of Commerce’s Bureau of Industry and Security (BIS) formally rescinded the Framework for Artificial Intelligence Diffusion interim final rule published by the Biden Administration, on the basis that it stifled innovation, was overly complex, and undermined U.S. diplomatic relations.

          BIS also issued three new guidance documents that:

          1. Clarify Huawei’s Ascend 910B, 910C, and 910D (and likely other comparable Chinese chips) are prohibited for all persons (U.S. and non-U.S.) to use, sell, export, or finance, among other restrictions;
          2. Emphasize end-use controls on the export, reexport, or transfer of advanced computing ICs and commodities subject to the EAR, and on U.S. persons providing support for training AI models for, when there is “knowledge” that the AI model will be used for Chinese, Russian, and other U.S. arms embargoed country companies; and
          3. Describe red flags exporters should identify and new diligence expectations when exporting chips for the AI sector.

          Below is a summary of these developments.

          I. Huawei’s Ascend Chips, and Other Similar Chinese Chips, Are Now Subject to a Presumption of a General Prohibition 10 (GP10) Violation

          In the first guidance document, BIS explains that Huawei’s Ascend 910B, 910C, and 910D models are subject to the presumption that any activity involving the integrated circuit (IC) required – but did not receive – prior BIS authorization. The failure to receive necessary authorization taints the ICs, as described in GP10 of the Export Administration Regulations (EAR) (736.2(b)(10)). Therefore, any further activity involving these ICs (e.g., future exports, reexports, transfers, financing, servicing, repairing, or using the ICs) constitutes an ongoing violation of the EAR, if no previous authorization from BIS was granted.

          BIS explains that other ICs may be subject to the same presumption if those ICs:

          • Meet the technical requirements described in ECCN 3A090, which controls advanced node ICs; and are
          • Developed or produced by a company that is located in, headquartered in, or has an ultimate parent company headquartered in a U.S. arms embargoed country such as China (e., a country in Country Group D:5) or Macau (particularly if that company is on the Entity List designated with a footnote).

          In both cases, these presumptions can be overcome; although practically, this will be challenging.

          These controls apply to U.S. and non-U.S. persons anywhere, with no U.S. nexus other than the asserted Foreign Direct Product (FDP) rule application. BIS explains that it has found that ICs that meet the technical requirements described in ECCN 3A090 (including the three named Huawei chips that are provided as examples) and are developed or produced by one of the companies described above likely are subject to the EAR (and thus U.S. jurisdiction) because there is a high probability that these items were made using U.S. technology, software, or machinery.

          II. Catch-All Controls that May Apply to Advanced Computing Integrated Circuits for Training AI Models

          BIS’ second guidance document explains the following activities may trigger a license requirement under the U.S. person and military-intelligence end use/user prohibitions in the EAR when there is ”knowledge” that the AI model will be used for a Weapons of Mass Destruction (WMD) or military-intelligence end use/user. BIS explains three scenarios where a license could be required:

          • A U.S. or non-U.S. person exports, reexports, or transfers advanced computing ICs and related commodities subject to the EAR to any party, such as foreign Infrastructure as a Service (IaaS) providers (e.g., data center providers), and the exporter, reexporter, or transferor has knowledge that the IaaS provider will use these items to conduct training of AI models for or on behalf of parties headquartered in D:5 countries (including China) or Macau.
          • A U.S. or non-U.S. person transfers (e., changes the end user or end use in-country) advanced computing ICs and commodities subject to the EAR, which are already in the possession of parties such as IaaS providers, and the transferor has knowledge that the items will be used by the transferee to train AI models for or on behalf of parties headquartered in D:5 countries (including China) or Macau.
          • A U.S. person provides any “support” (g., shipping, transmitting, transferring, facilitating a shipment, transmission, or transfer, or performance of a contract) when there is knowledge such activity will be used for or may assist the training of AI models for or on behalf of parties headquartered in D:5 countries (including China) or Macau.

          In each of these instances, “knowledge” means both active and passive knowledge (e.g., you cannot be willfully blind).

          Importantly, BIS reminds everyone that it can add non-U.S. parties to the Entity List if BIS determines the non-U.S. party is acting contrary to U.S. national security and foreign policy interests, even if there is no violation of U.S. law. Functionally, this type of potential restriction overhanging transactions outside the jurisdiction of the EAR functions as a type of “secondary sanction.”

          III. Industry Guidance to Prevent Diversion of Advanced Computing Integrated Circuits

          The last BIS guidance document urges exporters to take action to address “illegal diversion schemes involving advanced computing integrated circuits (ICs) and commodities that contain such ICs.” BIS organized this guidance into two categories: (1) New Transactional and Behavioral Red Flags and (2) Due Diligence Actions.

          The transactional and behavioral red flags list describes suspicious behaviors of counterparties that indicate a higher risk of potential diversion (e.g., no ultimate delivery or installation address is provided; data center to which the advanced ICs and/or commodities containing such ICs are being exported does not or cannot affirm it has the infrastructure). If companies observe any of these behaviors, they should follow their internal process to further investigate and resolve the red flag before proceeding.

          In the due diligence actions list, BIS articulates expected actions companies should take for all “new customers, as well as evaluating IaaS providers” prior to any transactions for the export or use of advanced computing ICs and/or commodities that contain such ICs. BIS expects companies to take these actions regardless of any red flags present.

          Below in the Appendix we provide copies of both lists in full.

          IV. What’s Next

          • The Trump Administration has made targeting China’s semiconductor and AI sector a priority. Companies should expect an increase in enforcement actions, particularly non-U.S. companies that have products covered by the FDP rule or engage in activities that constitute the equivalent of “U.S. secondary sanctions,” under U.S. export controls (e.g., supporting the PRC government’s Military-Civil Fusion (MCF) Development Strategy).
          • Since the BIS guidance notes that the list of Huawei chips is only an “illustrative list,” expect more chips and related items (made by Chinese companies) to be specifically identified by BIS in the future.
          • The Trump Administration has hinted that, when it ultimately replaces the AI Diffusion rule, it will simplify the rule and take into account U.S. partners that were otherwise disadvantaged in the prior rule (particularly those countries in the Gulf Cooperation Council and in ASEAN, as well as India and Israel).

          Appendix – Red Flags and Diligence Questions

          New Transactional and Behavioral Red Flags:

          1. The customer (domestic or foreign) never received exports of advanced computing ICs and/or commodities that contain such ICs (i.e., items that meet or exceed the parameters in ECCNs 3A090.a, 4A090.a, or associated .z ECCNs such as 5A992.z) prior to October 2022.
          2. The customer received exports involving advanced computing ICs and/or commodities that contain such ICs prior to October 2022, but also saw a significant increase in exports thereafter.
          3. A domestic or foreign customer has a residential address and provides no alternative location where the advanced computing ICs and/or commodities that contain such ICs will be used. This red flag applies only where the quantity of advanced computing ICs is inconsistent with its individual/personal use.
          4. The company and/or ship-to company, wherever located, has little to no presence online or there are differences between the English and non-English versions of the company’s website that raise red flags.
          5. The ultimate delivery or installation address is unknown. You are unable to determine whether the headquarters of the customer or its ultimate parent is located in a destination specified in Country Group D:5 (including China) or Macau, or the customer refuses to disclose or provides incomplete information about the location of its headquarters or ultimate parent company.
          6. Parties to transactions listed as ultimate consignees or listed in the “consign to” field (e.g., other financial institutions, mail centers, freight forwarders, retailers not involved in electronics, logistics companies) do not typically engage in business consistent with requiring a large quantity of advanced computing ICs (including servers containing such ICs).
          7. The customer is co-located with, or its address is similar to, one of the parties on the Consolidated Screening List, including the BIS Entity List, the Office of Foreign Assets Control’s Specially Designated Nationals (SDN) List, or the U.S. Department of State’s Statutorily Debarred Parties List.
          8. The reported end user, wherever located, is not a unique storefront for that organization (for example a legal office, a virtual office, or a shipping and receiving company).
          9. The address of the purchaser is in a destination specified in Country Groups D:1, D:4, or D:5 (except A:5 or A:6), i.e., is in a destination that requires an export license for advanced computing ICs and/or commodities that contain such ICs, and the compliance date for that license requirement has already passed.
          10. The data center to which the advanced ICs and/or commodities containing such ICs are being exported does not or cannot affirm it has the infrastructure (e.g., power/energy, cooling capacity, or physical space needed to run servers containing advanced ICs) to operate the advanced computing ICs and/or commodities that contain such ICs.
          11. The customer providing Infrastructure as a Service (IaaS) does not or cannot affirm that users of its services are not headquartered in the PRC, whether or not such customer is located inside or outside of China and Macau.

          New Advanced Computing ICs Due Diligence Actions for New Customers and IaaS Providers:

          1. Evaluate the customer’s date of incorporation (e.g., incorporation after October 2022).
          2. Evaluate the customer’s ownership structure to determine if parties are headquartered or have an ultimate parent headquartered in a destination specified in Country Group D:5 (including China) or Macau.
          3. Evaluate the end user and end use of the item (e.g., whether the customer’s line of business is consistent with the ordered items).
          4. Before engaging in business with domestic or foreign customers, notify potential customers that your items are subject to the EAR and would require a license if exported, reexported, or transferred (in-country) to or within destinations specified in Country Group D:1, D:4, or D:5 (excluding destinations also specified in A:5 or A:6).
          5. Before engaging in business with domestic or foreign customers, seek an end-user certification with detailed information on all proposed transaction parties (see § 748.5 of the EAR), including the end user, and the intended end use for specific transactions. The customer should also certify that it will not export, reexport, or transfer (in-country) advanced computing ICs for restricted ‘military-intelligence end uses’ or ‘military intelligence end users,’ or for WMD. This would include transactions where the exporter, reexporter, or transferor has knowledge that a party to the transaction, such as an IaaS provider, will conduct training of an AI model for or on behalf of parties headquartered in destinations specified in Country Group D:5 (including China) or Macau, where such activities may support WMD or military-intelligence end uses/end users (see §§ 744.22; 744.2-744.5).
          6. Request a written attestation from the data center that affirms that:
            1. the end user is authorized to operate at its location, and
            2. it has the infrastructure to operate the type of server containing advanced ICs being exported. It is also a best practice that suppliers conduct on-site visits at the data center, or alternatively, utilize independent third-party certified auditors to confirm attestations.
          7. Evaluate data centers to determine whether they have the infrastructure to operate servers containing advanced ICs greater than 10 megawatts. Data centers at or above this threshold merit additional scrutiny as they may be able to provide access to a large quantity of advanced computing ICs for training AI models for or on behalf of parties headquartered in countries of concern, where such activities may support WMD or military-intelligence end uses/end users.