Antidumping (“AD”) and countervailing duty (“CVD”) petitions filed on October 28, 2026 cover shopping carts and cart parts from China. The petitions allege dumping margins of 165 percent to 343 percent, along with a range of Chinese subsidies, and Commerce must decide whether to initiate investigations by November 17, 2026.

What Is Covered

The proposed scope covers shopping carts of any size, finished or unfinished, assembled or unassembled, with baskets made primarily of metal, plastic, or a combination. Covered carts have a frame or base of welded steel wire or steel tube and one or more baskets, with or without a lower tray or grill. Covered carts may also be fitted with plastic handle units, child seats, and polyurethane or rubber wheels. The petitions identify HTSUS subheading 8716.80.5090, though the written scope description controls.

The exclusions turn on design tests rather than on how a product is marketed. Carts for individuals with disabilities are excluded only if fitted with a built-in restraint system, specialized seating, or a coupling mechanism that joins a wheelchair and cart into a single fixed unit. Motorized carts, fully collapsible carts, and carts with a permanently or semi-permanently affixed infant carrier in place of a child seat are also outside the scope, as are yokes, casters, and wheels when imported alone. Material handling carts are excluded only if they meet at least three of five criteria: a rated capacity of 1,000 pounds or more, a heavy-gauge steel tube or welded plate chassis, a flat open deck, industrial casters with wheels of six inches or more, and no consumer features such as child seats, bag hooks, or nesting geometry. Warehouse picking carts and logistics trolleys face a similar three-of-four test built on non-nesting rigid frames, upright push-bar handles, multi-tiered open shelving, and a two fixed plus two swivel caster configuration.

The scope separately covers cart parts — frames, baskets, basket walls, upright tubing, trays, back rests, child seats, gates, and handles — whether imported with a cart or on their own, and the petitions state that the parts of a single cart need not enter at the same time or on the same entry summary. The scope also reaches carts assembled in a third country from Chinese parts, and defines the covered processing to include welding, plating, painting, machining, and assembly.

Key Dates

Commerce must decide whether to initiate within 20 days of filing, and the Commission must make its preliminary injury determination within 45 days. Cash deposits do not begin until Commerce issues its preliminary determinations.

EventDeadlineIf postponed
Commerce initiationNovember 17, 2026December 7, 2026
ITC preliminary injury determinationDecember 14, 2026
CVD preliminary determinationJanuary 21, 2027March 29, 2027
AD preliminary determinationApril 6, 2027May 26, 2027
CVD final determinationApril 6, 2027June 14, 2027
CVD orderMay 28, 2027August 5, 2027
AD final determinationJune 21, 2027October 8, 2027
AD orderAugust 12, 2027November 29, 2027

The postponed column assumes Commerce takes the full statutory extensions, so those dates are approximate. If the CVD case is aligned with the AD case, the two orders would issue together.

What Happens Next

The Commission’s preliminary injury phase runs first and ends on December 14. It will collect data by questionnaire from U.S. producers, importers, and purchasers. A negative determination would end both investigations.

Scope language can still change before initiation. Commerce has recently used that period to press petitioners to narrow proposed scopes, as it did in the linear hydraulic cylinders investigations, and it sets the deadline for scope comments in its initiation notice. Commerce will then select mandatory respondents from among Chinese exporters based on quantity and value responses. Exporters that do not participate, or that cannot show independence from government control, fall into the China-wide entity and take its rate, which is typically the highest in the proceeding.

How This May Affect Your Company

The companies most directly affected are U.S. importers and retailers sourcing carts from China, but the scope as drafted also captures importers of cart components, companies assembling carts in a third country from Chinese parts, and suppliers of replacement parts. No duties are owed yet, and the petitions do not allege critical circumstances, so the earliest exposure is cash deposits beginning with Commerce’s preliminary determinations.

Shopping carts from China already carry other duties. HTSUS subheading 8716.80.50 was added to the Section 232 derivative steel list, and now carries a 25 percent tariff on the full entered value. Certain shopping carts are also subject to Section 301 duties.

Companies with exposure should map which components in their carts originate in China, review any third-country assembly arrangements against the scope language, and ask their Chinese suppliers whether they intend to participate. Those duties stack, so a cost model built on an AD/CVD rate alone will understate the exposure.

On 27 October 2026, the UK Ministry of Defence (“MOD”) published UK Defence Footprint 2026 (the “Footprint”), bringing together defence spending and industrial initiatives, including previously announced investments, and setting out planned defence spending of £298 billion over the next four years. On the same day it published the Footprint, the UK government published an announcement outlining the Warsaw Defence Plan, the first phase of cooperation under the UK-Poland Security and Defence Partnership Treaty, including on drones, cyber security and defence procurement. Together, they highlight two complementary priorities: strengthening the UK’s defence industrial base and deepening cooperation with its allies. 

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On October 14, 2026, Tenaris USA, Vallourec Star LP, and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC (the “USW”) filed petitions with the U.S. Department of Commerce (“Commerce”) and the U.S. International Trade Commission (“Commission”) seeking antidumping (“AD”) duties on imports of seamless carbon and alloy steel standard, line, and pressure pipe (“SSLPP”) from Georgia and India, and countervailing duties (“CVD”) on imports of SSLPP from India.

What Is Covered

The petitions target seamless carbon and alloy steel pipes and redraw hollows with a nominal outside diameter of 16 inches or less, regardless of wall thickness, manufacturing process, end finish, or surface finish. The scope specifically includes pipe produced to ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-589, ASTM A-795, ASTM A-1024, and API 5L specifications. Excluded from the scope are aerospace, hydraulic, and bearing tubing; pipes meeting the chemical requirements of ASTM A-335; unattached couplings; mechanical, boiler, condenser, and heat exchange tubing (unless it meets the dimensional requirements of ASTM A-53, A-106, or API 5L); oil country tubular goods; and pipe meeting the GOST 550-75 specification.

The Requested Duty Rates

Petitioners have estimated the following AD margins:

CountryEstimated AD Margin
Georgia113.87% to 281.24%
India41.03% to 63.57%

In addition to the AD petition against India, Petitioners have filed a CVD petition alleging that Indian producers benefit from a wide range of national and state-level subsidy programs, including duty exemption and drawback schemes, export credit programs, and subsidies administered by the states of Gujarat and Maharashtra. The CVD petition identifies programs that Commerce has previously found countervailable in other proceedings, including the Duty Drawback Scheme, the Export Promotion of Capital Goods Scheme, the Advance Authorization Program, and the Interest Equalization Scheme.

Estimated Timeline

Commerce must determine within 20 days of filing whether the petitions are sufficient to support initiation. The ITC’s preliminary conference and determination will follow within 45 days. Key estimated milestones are as follows:

AD Investigations (Georgia and India)

EventStandardExtended
Petition FiledOctober 14, 2026—
Commerce InitiationNovember 3, 2026—
ITC Preliminary DeterminationNovember 28, 2026—
Commerce Preliminary DeterminationMarch 23, 2027May 12, 2027
Commerce Final DeterminationJune 6, 2027August 5, 2027
ITC Final DeterminationJuly 21, 2027August 20, 2027
AD Order IssuedJuly 28, 2027August 27, 2027

CVD Investigation (India)

MilestoneDateExtended
Petition FiledOctober 14, 2026—
Commerce InitiationNovember 3, 2026—
ITC Preliminary DeterminationNovember 28, 2026—
Commerce Preliminary DeterminationJanuary 7, 2027March 13, 2027
Commerce Final DeterminationMarch 23, 2027August 25, 2027
ITC Final DeterminationMay 7, 2027October 9, 2027
CVD Order IssuedMay 14, 2027October 16, 2027

How This May Affect Your Company

The companies most directly affected are the producers of SSLPP in George and India, as well as U.S. importers and downstream purchasers who source pipe from those origins. Once the investigations are initiated, all interested parties will have opportunities to participate, including by submitting comments on the proposed scope and appearing at ITC hearings. If the ITC makes an affirmative preliminary determination, Commerce will suspend liquidation of subject entries and require importers to post cash deposits based on the AD and CVD rates Commerce calculates at its preliminary determination.

Companies whose supply chains involve SSLPP from Georgia or India — whether as importers, distributors, or end users — should review their current exposures and consider their options for participating in these proceedings.

On October 12, 2026, the EU adopted its largest-ever single round of Russia sanctions listings, adding 826 companies associated with Russia’s military-industrial complex and 743 executives of these companies to Annex I of Regulation (EU) No 269/2014. The 1,569 additions bring listings under the EU’s regime supporting Ukraine’s territorial integrity to nearly 4,600. Separate measures targeted 77 individuals involved in illegal Russian elections in occupied Ukrainian territory and seven parties connected to North Korea.


An Expanded Focus on Russia’s Industrial Supply Chain

The latest listings reach beyond prominent defense contractors into Russia’s industrial supply chains. According to the Council, the targeted companies collectively employ more than 250,000 people and generate at least €20 billion in annual turnover. They supply semiconductors and microcircuits, radar systems and antennas, aviation and missile technologies, explosives, and optical and navigation equipment used in missiles, drones, and aircraft. High Representative Kaja Kallas indicated that more than half of the new listings concern the production chain for Russian ballistic missiles.

Perhaps the most distinctive feature is the basis for identifying the companies – Council Implementing Regulation (EU) 2026/2281 explains that the 826 entities appear on a list recently established by the Russian government identifying enterprises belonging to its military-industrial complex and eligible for state subsidies. The Council relied on that classification in determining that the companies form part of Russia’s military-industrial complex, while the executives were listed for supporting it.

The approach illustrates how Russia’s own industrial-policy classifications can inform EU designations, including where manufacturers are not widely recognized as defense contractors.

Additional Measures Concerning Russian ‘Elections’ in Occupied Ukraine and North Korea

In a parallel action, the Council designated 74 candidates who participated in September’s Russian State Duma elections in occupied Ukrainian territories and three members of Russia’s Central Election Commission. These measures reinforce the EU’s refusal to recognize Russian electoral activity in those territories.

The Council also added three individuals and four entities under its separate North Korea (DPRK) sanctions regime. The targets include Russian real estate developer Samolet Group, associated with the employment of North Korean workers, and Paekyangsan Shipping Co. Ltd., linked by the Council to petroleum shipments from Russia to North Korea, both in violation of UN sanctions. These designations target activities linked to the growing military and economic cooperation between North Korea and Russia, but are legally distinct from the 1,569 Russia military-industrial listings.

Implications

The 1,569 companies and individuals were added to Annex I of Regulation (EU) No 269/2014 and are subject to the existing measures under that Regulation—most importantly, an asset freeze and a prohibition on EU operators making funds or economic resources available, directly or indirectly, to or for the benefit of the listed parties.

Companies and financial institutions should therefore consider re-screening existing suppliers, customers, intermediaries, and pending transactions against the updated lists. Screening alone, however, may be insufficient. The asset freeze and prohibition of making funds available can affect non-listed entities deemed owned or controlled by a listed person or entity. In particular, the designations of hundreds of executives make ownership and control assessments particularly important, including where an unlisted counterparty shares management or corporate affiliations with a listed person. While this in itself does not suffice to establish control, it may do so in certain circumstances (e.g. where the listed party has the power to exercise dominant influence over the company or the right to use all or part of its assets).

Manufacturers and distributors of electronics, aerospace components, industrial equipment, and other products used in the targeted supply chains should also consider revisiting Russia-related supply chains and third-country distribution channels. Existing relationships merit review for exposure to these newly designated actors through payments, contractual obligations, and continuing services, even when the goods are not themselves subject to separate restrictive measures.

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. 

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  • 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.