As U.S. Customs and Border Protection prepares to launch Phase 1 of its streamlined tariff refund process on April 20, a wave of consumer class action lawsuits is targeting brands, retailers, and importers seeking tariff-related payouts. Because consumers will not directly receive government refunds, plaintiffs across the country are filing putative class actions against major companies—including Costco, Federal Express, and Lululemon—alleging that defendants raised prices in reliance on unlawful IEEPA tariffs and that consumers are entitled to refunds of what they paid. With the estimated cost to consumers reaching approximately $1,751 per household and total IEEPA tariff revenue calculated at $165 billion, these cases are expected to grow considerably as plaintiffs’ firms focus on this area.

Claims are typically framed as equitable causes of action, such as unjust enrichment, or as statutory claims under state consumer protection laws. Despite the fact-intensive nature of these claims, strong defenses are available: companies may be able to invoke mandatory arbitration or class waiver clauses, and defendants can argue that prices set under then-lawful tariffs were neither unjust nor inequitable. Companies should be prepared to defend against these suits and should carefully consider their internal and external messaging to consumers regarding price increases and tariff refunds.

For more on this topic, read our latest client alert.

Background

With the existing EU steel safeguard expiring on 30 June 2026, the Proposal for a Regulation of the European Parliament and of the Council addressing the negative trade‑related effects of global overcapacity on the Union steel market (COM(2025) 726) (the new steel measures) is designed to replace the existing safeguard measures and would instal a new tariff‑rate quota (TRQ) regime from 1 July 2026. In‑quota TRQ volumes would be markedly lower (roughly half of today’s levels), and any volumes above quota would attract a 50% duty. Coupled with a new “melt-and-pour” documentation requirement that could affect how quotas are allocated, these changes materially tighten market access. Against this backdrop, interinstitutional negotiations have intensified as 30 June 2026 approaches. We expect the political negotiations to conclude by mid-April. In this piece, we share our expectations on the new measures and provide more details on the political decision-making process.

Our three key areas to watch for the new TRQ regime

  1. The most immediate impact for steel importers is the reduction in tariff-free import volumes by roughly 50% from current levels, combined with a doubling of the out-of-quota duty from 25% to 50%. This is a structural tightening, not a marginal adjustment. Importers should expect significantly more shipments to fall outside quota limits, triggering the higher duty rate. Building dual landed-cost models (in-quota versus out-of-quota) for Q3–Q4 2026 onward is essential, as the financial gap between the two scenarios will be substantial. The Council’s proposed floor and ceiling for total quota volumes also mean future adjustments via delegated acts could either modestly ease or further tighten access depending on market conditions.
  2. The outcome on melt and pour is the single most consequential open question for importers. As it stands, the Commission has proposed melt and pour as a transparency and traceability obligation only; importers must identify the country where steel was originally melted and poured, but this data does not determine quota allocation. The Parliament, however, proposes that the country of melt and pour shall directly determine quota allocation, which would disrupt existing supply chains built around further processing in third countries. Even the Council’s middle ground – a mandatory review within two years on whether melt and pour should become the basis for allocation – signals that this shift may be a matter of “when” rather than “if”. Importers should begin mapping melt-and-pour origins across their product portfolios now, and consider embedding documentary-evidence clauses in supply contracts to ensure they can comply with whichever outcome emerges.
  3. Downstream manufacturers and their suppliers should closely track how the final text addresses downstream industry concerns. The Council has introduced a “Union interest” principle requiring the Commission to consider significant price increases that seriously undermine downstream competitiveness when setting and adjusting quotas. The Parliament goes further, calling for impact assessments on Small and Medium Enterprises (SMEs) and foundries, measures to prevent stockpiling, and fair quota access. The Council also seeks a formalised stakeholder consultation to be launched by October 2026 to inform scope reviews and adjustments. These provisions, if adopted, would create both a legal basis and practical channels for importers and downstream users to submit data on EU supply availability, pricing impacts, and competitive harm.

Status of negotiations

The new steel measures have been under trilogue since Q1 2026 (i.e., informal three‑party negotiations between the European Parliament, the Council, and the Commission to agree on a compromise text). The third and very likely final trilogue meeting is scheduled for 13 April 2026. Recent reporting confirms that negotiators treat this session as the conclusive round of talks. While the most recent publicly available positions of the Commission (7 October 2025), Council (9 December 2025 mandate), and Parliament (3 February 2026 INTA) still diverge on core points, a compromise text dated 30 March 2026 (which post-dates the second trilogue of 17 March) indicates that institutional alignment is now close. Key features such as the carry-over mechanism remain under active debate (see outstanding issues below). The institutions aim to finalise trilogues as soon as possible to allow entry into force on 1 July 2026 at the latest, considering alignment on the compromise text, legal-linguistic review, formal adoption, and publication steps. We understand that the discussion at the final trilogue will focus on overall alignment and textual refinement, indicating that we are close to seeing the near-final outcome of the regulation.

Details on the outstanding issues in the negotiations

1. Melt and pour: Transparency tool or quota allocation basis?

  • The Commission proposes melt and pour as a transparency and traceability obligation only – importers must identify the country of melt and pour, but this does not determine quota allocation.
  • The Council maintains it as a transparency requirement but adds a review clause: within two years of entry into force, the Commission must assess whether melt and pour should become the basis for tariff quota allocation, and may submit a legislative proposal.
  • The Parliament goes furthest: it proposes that the country of melt and pour shall directly determine the country of allocation of tariff rate quotas. The Parliament also proposes a ban on imports of products melted and poured in Russia or Belarus.

2. Quarterly carry-over of unused quotas

  • The Commission proposes no carry-over: unused tariff quota volumes in one quarter shall not be carried over to the next quarter.
  • The Council allows limited carry-over within the same yearly period. Reportedly, a blocking minority of 10 EU member states is still pressing for the inclusion of carry-over.
  • The Parliament’s position does not explicitly address carry-over in the operative articles, but it calls for adjustments to ensure “fair access for all operators” and to “respond swiftly to changes in market conditions.”

3. Downstream industry protections

  • The Commission’s proposal contains no specific downstream protection mechanism or product exclusion procedure.
  • The Council introduced the Union interest principle, requiring the Commission to consider “substantial price increases seriously undermining the competitiveness of downstream industries” when allocating quotas and adjusting volumes.
  • The Parliament goes further with multiple changes: it recognises the downstream steel processing industry as “of vital importance” and calls for impact assessments on “SMEs and foundries”; it requires consideration of the impact on “downstream value chains”; and it calls for measures to prevent stockpiling and ensure fair quota access.

4. Product scope and review timeline

  • The Commission proposes a product scope review within two years and an effectiveness evaluation before 1 July 2031 and every five years thereafter.
  • The Council shortens the first scope review to 18 months from entry into force, requires the Commission to launch a stakeholder consultation by 1 October 2026, and accelerates the effectiveness evaluation to four years from entry into force with subsequent evaluations every two years.
  • The Parliament calls for an initial scope review assessment within six months of entry into force, followed by annual reviews, and adds that the Commission should assess impacts on downstream sectors, including SMEs and foundries. The Parliament also proposes empowering the Commission via delegated acts to add new product categories to prevent circumvention.

5. Quota volume adjustment: Delegated acts framework

  • The Commission empowers itself to amend quota volumes via delegated acts, taking into account demand evolution, import market shares, overcapacity developments, supply availability, and crowding-out effects.
  • The Council adds a floor and ceiling for total quota volumes: no lower than 15.2 million tonnes and no higher than 22.2 million tonnes. It also adds “significant price increases seriously undermining the competitiveness of downstream industries” as a factor.
  • The Parliament adds the decarbonisation path of the steel sector and the impact on downstream value chains as additional criteria. It also adds the Union’s security and defence policy interests.

6. Russia and Belarus

  • The Commission’s proposal excludes Russian and Belarusian imports from quota calculation (as they are subject to import bans).
  • The Council maintains this position.
  • The Parliament goes further: it proposes a strict prohibition on imports of products for which steel was melted and poured in Russia or Belarus, with no access to any tariff quota. It also seeks to codify this principle.

7. Bilateral safeguard measures (FTA partners)

  • The Commission empowers itself to impose bilateral safeguard measures on imports from Free Trade Agreement (FTA) partner countries, which would “replace” the tariff measures under the regulation.
  • The Council clarifies that bilateral safeguard measures must “take into account the Union interest”.

8. Additional product categories

  • The Parliament proposes adding two new product categories: Stainless Wire and Non-Alloy and Other Alloy Forged Bars. It also proposes adding Tubes, Pipes and Hollow Profiles of Cast Iron.
  • Council does not refer to these additions but proposes amendments to the scope of different product categories, including 4A, 7, 15, and 24.

9. Stakeholder input mechanism for EU users

  • The Commission proposal does not establish a dedicated standing mechanism for importers and downstream users to provide structured input during quota setting and adjustments, beyond standard consultation practices.
  • The Council seeks more formalised engagement, including a requirement for the Commission to launch a stakeholder consultation shortly after entry into force (with preparatory work targeted in October 2026) to inform scope reviews and adjustments.
  • The Parliament emphasises systematic assessment of impacts on downstream value chains, SMEs, and foundries, and calls for measures to ensure fair access and prevent stockpiling; in practice, this would necessitate a regular channel for user input tied to adjustments and reviews.

What to watch and do next

The 13 April trilogue will be critical in narrowing these gaps. Stakeholders should pay particular attention to the outcome on melt and pour (which could fundamentally change how quotas are allocated), the carry-over mechanism (which affects import flexibility), and the downstream protection provisions. If adopted close to its current shape, the regime would materially tighten access for third‑country steel through roughly halved in‑quota volumes and a 50% out‑of‑quota duty, with potential quota allocation shifts driven by melt and pour.

To get ahead of this: (i) map melt and pour across critical Stock Keeping Units and embed documentary‑evidence clauses in supply contracts; (ii) build dual landed‑cost budgets (in‑quota vs. out‑of‑quota) and update pricing for Q3–Q4 2026; (iii) align call‑off schedules and monitor TRQ utilization in real time; and (iv) assemble data on EU availability and downstream harm to use in upcoming consultations and any Union interest assessments.

Key takeaways

  • Industrial Accelerator Act introduces Union origin and low-carbon requirements for public procurement (from January 2029) and support schemes in strategic sectors.
  • Energy-intensive industries face low-carbon and Union origin requirements; electric vehicles require EU assembly, 70% EU content, and phased-in battery/powertrain rules; net-zero technologies face tightening thresholds.
  • Businesses must assess Union origin under customs rules; goods from countries with EU free trade agreements or customs unions may qualify as Union origin, subject to Commission exclusions and the application of the EU’s non-preferential rules of origin.
  • Affected businesses should assess supply chains, origin processes, and documentation to maintain access to EU procurement and subsidy programmes once IAA takes effect.

Background

The Industrial Accelerator Act (IAA), introduced by the European Commission on 4 March 2026, is a legislative proposal aimed at supporting EU manufacturers of low-carbon products and net-zero technologies, as well as businesses in energy intensive sectors. The IAA seeks to strengthen the EU’s industrial resilience, competitiveness, and strategic autonomy. It also aims to reverse the declining trend in European manufacturing by increasing its share of EU GDP from 14% in 2024 to 20% by 2035. We have covered the implications of the IAA on foreign investment in an earlier client alert, which provides additional context on the overall initiative.

The IAA targets three strategic sectors: (1) energy-intensive industries, including the manufacture of paper and paper products, coke and refined petroleum products, chemicals and chemical products, rubber and plastic products, non-metallic minerals, and basic metals; (2) the automotive industry, covering the manufacture of motor vehicles, trailers, and semi-trailers, with a particular focus on pure electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles; and (3) net-zero technologies, encompassing batteries, solar energy, heat pumps, onshore and offshore wind technologies, hydrogen electrolysers, and nuclear fission technologies.

This alert focuses on the customs and international trade implications of the IAA, specifically the Union origin and low-carbon requirements affecting businesses in these strategic sectors.

Strengthening the EU’s strategic industrial value chains through “Made in EU” requirements

The IAA establishes measures to create a lead market for certain products in strategic sectors by introducing Made in EU (or Union origin) and low-carbon requirements in the context of public procurement and public support schemes. In effect, the IAA establishes an EU preference for public procurement and public support schemes.

For public procurement, from 1 January 2029, the Commission proposes to apply Union origin and low-carbon requirements to all qualifying procedures above the applicable value thresholds under EU procurement directives. For public support schemes, Member States must apply these requirements to at least 45% of the national budget allocated to energy-intensive industries, and to 100% of the budget for vehicles. Financial support for corporate vehicles may only be granted for vehicles that comply with the Union origin requirements laid down in the IAA, including EU assembly, 70% EU content, and phased-in battery and e-powertrain requirements.

Low-carbon requirements will apply to steel (at least 25% low-carbon), concrete and mortar (at least 5% low-carbon and of Union origin), and aluminium (at least 25% low-carbon and of Union origin) used in buildings, infrastructure, and vehicles. For imported products, emissions data verified under the Carbon Border Adjustment Mechanism may be used to demonstrate low-carbon compliance, which should reduce the administrative burden on businesses. Given the recently proposed measures addressing overcapacity in the EU steel market, the introduction of a Union origin threshold for steel was not considered necessary.

For electric vehicles in public procurement and support schemes, the IAA requires assembly within the Union, at least 70% EU content (ex-works price, excluding the battery), and phased-in thresholds for battery and e-powertrain components of Union origin. Similarly, net-zero technologies such as batteries, solar PV, wind, and electrolysers are subject to phased Union origin requirements that tighten progressively over time. Limited exemptions are available for sole-supplier situations, disproportionate cost (exceeding 25% for procurement or 30% for support schemes), and significant delays (exceeding seven months).

Determining Union origin through customs rules and the impact on trade partners

To determine Union origin, the IAA refers to the customs rules on non-preferential origin. Businesses must ensure their products meet Union origin criteria, submit self-declarations certifying compliance, and, for vehicles, provide origin certification with the certificate of conformity. Affected businesses will therefore need to account for this expansion of the EU rules of origin to intra-EU activities and assess the impact on their trade compliance systems.

Content originating in third countries with which the EU has concluded a free trade agreement (such as Canada or Japan) or a customs union (such as Turkey) or which are part of the WTO Government Procurement Agreement will be deemed to be of Union origin. Accordingly, goods manufactured outside the EU may still qualify as being of Union origin under the IAA. Businesses must carefully assess the applicable origin rules and implement system controls where relevant: while products may qualify for duty preference based on the free trade agreement rules of origin, the conclusion may be different for the purposes of the IAA, where origin is determined on the basis of the Union Customs Code non-preferential rules of origin.

Importantly, however, the Commission is empowered to adopt delegated acts to exclude third countries from the content-equivalent-to-Union-origin provisions on several grounds, including failure to provide national treatment to Union products or entities under applicable trade agreements (i.e., countries that discriminate against the EU); justification to avoid dependencies or other developments threatening security of supply in the EU; and any other applicable exception under relevant trade agreements. These provisions empower the Commission to exclude trade partners from preferential treatment, enabling it to align trade policy with IAA objectives.

Next steps

The IAA is subject to the ordinary legislative procedure, requiring scrutiny and approval by both the European Parliament and the Council of the European Union. While the preparatory documents indicate an expected entry into force in 2027, the ordinary legislative procedure may take longer than anticipated given the political disagreement surrounding the initiative. Once adopted as an EU regulation, the IAA will provide for different phases that progressively tighten Union origin requirements, with stricter thresholds applying from three years after entry into force for net-zero technologies and electric vehicles.

The IAA represents a fundamental shift in EU industrial policy, and businesses that act early to understand and prepare for these requirements will be best positioned to maintain access to EU public procurement and subsidy programmes. Our multidisciplinary team of trade, customs, and competition specialists is ready to assist you in navigating the IAA. We can keep you informed of legislative developments and updates as the proposal progresses through the ordinary legislative procedure. We can also work with you to assess how this initiative specifically impacts your business, considering your existing supply chains and origin determination processes. In addition, we can evaluate whether your current procedures and documentation are in accordance with the evidentiary requirements of the IAA.

In May 2023, the European Commission published its proposal for a reform of EU Customs, describing it as “the most ambitious and comprehensive reform of the EU Customs Union since its establishment in 1968”. Since the launch, significant developments have reshaped the debate: e-commerce volumes have continued to surge beyond levels of customs authorities’ capacity for effective controls, while shifting geopolitical dynamics have introduced new considerations for customs policy. The trilogue process is now nearing its end, with political agreement on the reform anticipated in the coming weeks. The reform will bring significant change for all customs stakeholders: business, authorities, and customers. Below are five highlights of how the new Union Customs Code is poised to change the way goods move in and out of the EU.

  1. The EU is tightening the screws on enforcement at its external border. The Reform represents a fundamental shift towards stricter enforcement rather than trade facilitation. While customs authorities currently operate largely on a national basis with only partially harmonised risk analysis and enforcement practices, the establishment of a European Customs Agency marks a significant step towards deeper integration and consistent enforcement across the EU. Under the current decentralised system, goods denied entry at one customs point can often clear through alternative entry points – because of different enforcement means or priorities, or because of a different take on regulatory obligations. The intention is to close the gaps, creating a more cohesive enforcement network with more automated and EU-wide controls that will track and act on compliance issues across the entire EU external border. The European Customs Agency will assume an increasingly prominent role not only in enforcement but also in the interpretation of customs laws, driving greater uniformity in how rules are applied across all Member States. Businesses can expect more operational disruption if shipments do not meet regulatory requirements, but also more clarity on regulatory expectations for customs clearance.
  1. Centralised customs data: empowering business with access while expanding regulatory oversight. The Reform eliminates customs declarations and introduces an EU Customs Data Hub where relevant customs and product data will be shared. Businesses today struggle to manage their customs data: customs brokers are instructed to clear goods, but what happens next is often a black box. Structurally obtaining data that has been submitted in the customs declaration is difficult, disorganised, costly, and sometimes impossible for importers or exporters. The data hub promises to give businesses ownership of their customs data, enabling them to audit their own and their brokers’ performance, improve compliance, and make corrections where necessary. A critical part of the debate on the data hub has centred on who else will have access to that data. One thing is already clear: this data hub will equip a broad range of enforcement authorities to identify errors and fraud faster and more comprehensively. While enhanced fraud detection is a laudable objective, there is a risk that authorities are quick to jump to premature conclusions of fraud; granting sweeping access to customs data across enforcement bodies therefore raises material concerns.
  1. Away with parcels: a new approach to e-commerce. A clear driver of the Reform is the exponential growth of e-commerce and authorities’ inability to cope with the volumes entering the EU. In recent months, EU authorities have sought to demonstrate that e-commerce presents an obvious compliance challenge: control actions targeting e-commerce imports revealed widespread non-compliance with product laws, and undervaluation is allegedly happening at scale. Concerns raised by Member States heavily impacted by e-commerce volumes have contributed to the accelerated removal of the duty relief for low-value consignment. This measure was carved out from the Reform package and already takes effect on 1 July, with a legally disputable interim flat-rate duty of EUR 3 per item in a B2C parcel until at least 2028. Romania, Italy, and France have introduced scrappy national handling fee measures on e-commerce imports; these unilateral measures lack coordination, as shifting e-commerce volumes have simply increased pressure on other EU entry points. The Reform promises to close the ranks: a Union-wide handling fee will replace any national initiatives as early as 1 November, and the interim flat-rate duty of EUR 3 will eventually give way to standard application of the common customs tariff. A new concept of customs warehouses for distance sales is introduced to incentivise bulk imports, though it remains doubtful that any e-commerce business would voluntarily opt for closer customs scrutiny over non-customs warehouses.
  1. Introduction of the “importer” concept. Arguably the most consequential legal change brought by the Reform is the introduction of an “importer” concept. Surprising to many, the current Union Customs Code contains no definition of “importer”; the concept was introduced indirectly through the customs declaration dataset and holds limited weight. Under the existing regime, what matters for customs duty payment is the declarant, who serves as the primary liable party. The Reform changes just that: the importer becomes the primary liable party – and not just for customs duty. The importer must ensure compliance with all laws enforced by Customs and must be able to present records demonstrating such compliance. Specifically for e-commerce, this means that marketplaces or online sellers will act as importers for distance sales, rather than the private individuals buying online as is currently the case. Whether carefully crafted nuances under product laws regarding placing goods on the market will now be abandoned remains to be seen. What is clear, though, is that the new importer concept provides Customs with an identifiable party against whom any non-compliance can be enforced.
  1. Trust & Check Trader: the Reform’s marketing stunt? The EU’s trusted trader programme of Authorised Economic Operators (AEO) has not delivered on its promises. Most businesses holding AEO status today experience additional authority scrutiny and compliance burdens with little to no tangible benefit. In a Reform that emphasises enforcement over facilitation, the new Trust & Check Trader status presents an apparent tension: the most trusted traders, that is, the most transparent businesses, will receive preferential treatment with minimal customs intervention to clear goods. This status will clearly be reserved for a select few exceptionally well-organised businesses. But even for these businesses, a key consideration will be the broader cost associated with obtaining, maintaining, and having the preferential treatment.

The U.S. Department of the Treasury Office of Foreign Assets Control (“OFAC”) issued Russia-related General License 134 (“GL 134”) yesterday, which temporarily authorizes the delivery and sale of Russian-origin crude oil and petroleum products that are already on the water as of March 12, 2026.  It is understood the policy intent is to contain the oil prices that rose significantly after the closure of the Strait of Hormuz by Iran.

GL 134 contains broad authorizations, covering activities such as the “sale, delivery, or offloading of such crude oil or petroleum products include transactions for the safe docking and anchoring of vessels carrying such crude oil or petroleum products; the preservation of the health or safety of the crew of any such vessel; emergency repairs or environmental mitigation or protection activities relating to any such vessel; and services such as vessel management, crewing, bunkering, piloting, registration, flagging, insurance, classification, and salvage.”

Importantly, GL 134 also authorizes dealings with vessels and entities normally sanctioned under the OFAC programs listed at the top of the license, including the Russia program.  From an activity-based sanctions perspective, GL 134 also temporarily pauses the U.S. price cap, which was implemented under Executive Order 14071 of the Russian Harmful Foreign Activities Sanctions Regulations, and is one of the programs that is temporarily relaxed by the general license.  Notably, the EU / UK measures, however, including the application of the price cap and any sanctions on designated persons – still remain.  Practically, this means that parties with EU / UK touchpoints may still be exposed to sanctions under the EU / UK regimes if the applicable price cap is not complied with or if the transaction involves a vessel or entity sanctioned by those regimes.

There are two important limitations to GL 134.  The first is that it only applies to products loaded on the vessel on or before 12:01 a.m. Eastern Daylight Time, March 12, 2026.  The license expires on April 11, 2026.  The second is that GL 134 does not authorize activities or transactions that are prohibited by a legal authority other than the ones explicitly mentioned in the GL.  For example, it would not authorize transactions that are otherwise prohibited by OFAC’s Venezuela, DPRK, or Cuba programs.  Moreover, except as authorized by paragraph (a) of the GL, transactions or activities that involve Iran, the Government of Iran, or Iranian-origin goods or services remain prohibited.

EU customs authorities are intensifying enforcement around customs classification, with scrutiny of goods assembled in the EU after importation. The European Public Prosecutor’s Office (EPPO) 2025 Annual Report explicitly identifies assembly operations performed after import as a common fraud pattern used to evade customs duties. The concern centres on components that, when classified individually, attract significantly lower duty rates than the finished products into which they are assembled. And yet, the importation of individual parts of a finished product can be perfectly legitimate, creating a complex legal and operational balancing act between the lawful import of parts and unlawful import of unassembled components. In this article, we explain the current legal framework for customs classification of parts and components in the EU and provide tools for navigating the practical challenges it presents.

Importing product parts versus importing finished products in an unassembled or disassembled state

Under General Rule of Interpretation 2(a), a tariff heading covering a finished article also covers that article when it is incomplete or unfinished, provided it has the essential character of the complete article. A tariff heading also covers a finished article when it is presented in an “unassembled or disassembled” state.

The Harmonised System Explanatory Notes define “unassembled or disassembled” to mean components that will be assembled using fixing devices such as screws, nuts, or bolts, or through riveting or welding. The complexity of the assembly method is irrelevant; what matters is that only assembly operations are involved, meaning the components do not require any further working operations to reach their finished state. In Humeau Beaupréau (C-2/13), the Court of Justice of the European Union clarified that preparatory operations such as roughing components to improve adhesion for gluing are merely stages in the assembly process and do not constitute working operations for completion.

Importantly, in Michaelis (C-165/78), the Court of Justice specified that the above rules apply even where the tariff contains a specific subheading for parts of an article. The concept of parts is subordinate to the concept of a complete or finished article. When a product can be considered complete or finished, importers cannot legitimately rely on the customs classification for parts. The determining factor is therefore whether the constituent parts are capable of being fitted together to form a finished product at the time of importation.

Learnings from satellite receiver imports: stretching the requirement of “simultaneous” presentation to the benefit of anti-avoidance

Components must be presented “simultaneously” for customs clearance to be regarded as an unassembled or disassembled article. When an imported shipment contains all components necessary to assemble a finished product, the analysis will be fairly straightforward. But what if components are imported at different times, through different entry points, by different importers?

In X BV (C-107/22), the Court of Justice held that for the analysis of whether goods are presented in an unassembled or disassembled state, what matters is whether objective facts show that the goods belong together as a unit and are intended to be assembled into a single finished product. The fact that components are declared via separate customs declarations, for different customs procedures, and owned by different companies is not decisive for the customs classification analysis.

The court’s reasoning is aimed at preventing manipulation of tariff classification: a different interpretation would allow importers to manipulate tariff classification through the simple filing of separate customs declarations, enabling importers to choose classification as a finished product or as separate parts, whichever is most favourable for their business. According to the court, this would undermine the fundamental principle that tariff classification must be based on the objective characteristics and properties of goods. This principle has been consistently affirmed across EU case law, with the court emphasising that, in the interests of legal certainty and ease of verification, the decisive criterion for classification must be sought in the objective characteristics and properties of goods as defined in the wording of the relevant heading.

European Public Prosecutor enforcement action on electric bicycles demands greater clarity from European courts

The X BV judgment does not provide clarity for scenarios where imports occur in different shipments at different points in time. In the context of a coordinated action by the EPPO, the General Court of the European Union was recently asked in Denver (T-916/25) to clarify the limits to “simultaneous” presentation. A judgment is forthcoming, but we set out the facts of the case here as these are important to understand the current enforcement context.

In Denver, parts of electric bicycles were imported from China on different dates and through different import points in Italy. The Italian enforcement authorities contend that the importers did not import parts of e-bikes but rather disassembled e-bikes under General Rule of Interpretation 2(a). Importantly, while e-bikes originating in China are subject to substantial antidumping duties, their parts are not. The importers argue that the parts underwent further working operations to complete the manufacture of e-bikes and that therefore they are not components of unassembled e-bikes.

In addition to seeking clarity on whether the operations in this case go beyond assembly, the referring Italian court wants the General Court to examine whether General Rule of Interpretation 2(a) truly requires “simultaneous” presentation. If the answer is affirmative, the enforcement authorities could be found to improperly extend the presentation concept to encompass shipments arriving at different points in time. However, even in a scenario where General Rule of Interpretation 2(a) does not apply and the imports indeed technically constitute “parts”, questions may nonetheless arise regarding an abuse of rights if there is a factual finding of a deliberate importer strategy of artificially splitting consignments with the essential aim of avoiding the payment of customs duties.

Operational difficulties for managing customs classification

Regardless of the outcome in Denver, the customs classification of parts and components presents significant challenges for importers and customs brokers. Customs authorities may look beyond a specific declaration and determine that objective factors indicate that separately declared goods constitute components of a finished product, warranting classification as that finished product. This places customs brokers in a difficult position, as they lack the same visibility as the authorities into what importers are bringing in. Importers, for their part, face the risk that enforcement authorities will engage in overreaching interpretations, scrutinising imported volumes of parts to argue that disassembled items have in fact been imported.

These operational difficulties are compounded by the risk of retrospective adjustment. In X BV, the customs inspector issued a payment notice for nearly €400,000 in additional duties almost three years after the original declarations. This case illustrates the significant financial exposure facing importers and customs brokers who make declarations in good faith based on available information. While Binding Tariff Information decisions would normally allow legal certainty, they relate to specific goods presented by the applicant and would not resolve the information asymmetry that arises when a customs broker is unaware of related components that other importers or brokers may be bringing in.

Given the current state of the law, importers should consider the following measures to mitigate risk:

  • Apply for Binding Tariff Information decisions where there is doubt about the correct classification of components, disclosing the full scope of imports and post-entry working operations.
  • When importing parts, ensure that post-entry operations go beyond mere assembly and constitute satisfactory working operations, and document the processes.

Customs brokers can implement operational improvements to manage the risk, including:

  • Perform enhanced client due diligence to determine whether goods are components intended for assembly into finished products, and whether the client or associated undertakings are importing complementary components.
  • Include red flags for changes in import patterns when customs duties for items increase, particularly when that leads to parts being imported where previously full items were imported.
  • Document the instructions and available information at the time of the declaration, as well as the basis for customs classification decisions.

When the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in Learning Resources, Inc. v. Trump, the effects were felt far beyond American shores. European policymakers and businesses are now grappling with what this judicial turning point means for transatlantic commerce.

In the second instalment of our tariff podcast series, Philippe Heeren and Justin Angotti examine the European perspective on this significant ruling. The conversation covers how the decision may reshape the broader EU–U.S. trading relationship, its ramifications for trade deal discussions currently underway, and actionable guidance for companies operating in an uncertain environment.

Listen to the full episode.

Please note that this podcast was recorded on Tuesday 3rd March, prior to the news of a threatened Spanish trade embargo. The tariff landscape is rapidly evolving, and some comments may already be outdated, please refer to our Trump 2.0 tariff tracker for the latest tariff information.

The U.S. Supreme Court’s recent 6-3 ruling in Learning Resources, Inc. v. Trump marks a pivotal moment for international trade—but for importers, the questions are only beginning.

In our latest podcast episode, Michael Lowell and Justin Angotti break down what this decision means for businesses navigating the evolving tariff landscape. They discuss what may happen now that the Supreme Court opinions are out, including alternative tariff authorities that remain available to the administration and practical steps importers can take to preserve potential refund rights.

Listen to the episode here.

Key Takeaways

  • OFSI has published updated enforcement guidance introducing a new case assessment matrix, discount structures, a settlement scheme, and fixed penalties for procedural breaches.
  • The new framework allows for cumulative discounts for voluntary disclosure (up to 30%), settlement (20%), and the Early Account Scheme (up to 20%), which can reduce penalties by up to 70%.
  • Fixed penalties of £5,000 or £10,000 will apply to information, reporting, and licensing breaches.
  • OFSI plans to double maximum penalties to £2 million/100% of breach value.
Continue Reading Carrot over the Stick? Reforms to OFSI Civil Enforcement Processes incentivise early engagement and settlement

Earlier today, the Supreme Court issued its opinion in Learning Resources, Inc. v. Trump. By a 6-3 majority, the Court held that the phrase “regulate . . . importation,” as used in the International Emergency Economic Powers Act (IEEPA), does not include the power to impose tariffs.

As a result of the Court’s ruling, the following tariffs issued under IEEPA are invalid: (1) the “fentanyl” tariffs on Canadian-, Chinese-, and Mexican-origin goods; (2) the reciprocal tariffs; (3) the “free speech” tariffs on Brazilian-origin goods; and (4) the secondary tariffs on Indian-origin goods, which were recently terminated.

The Court’s opinion does not, however, address the issue of importer refunds. The Court of International Trade will now need to decide that issue in the first instance, and the question could make its way back to the Supreme Court on a subsequent appeal.

Preserving refund rights

While the refund question remains open, importers should take steps to preserve their refund rights. Absent new guidance from U.S. Customs and Border Protection (CBP), that can include:

  • Filing protests once individual entries liquidate on the basis that the IEEPA tariffs were unlawfully imposed and collected.
  • Filing suit in the Court of International Trade to cover all entries where the importer paid the IEEPA tariffs.

Although CBP has historically allowed importers to file Post Summary Corrections (PSCs) for unliquidated entries when tariff adjustments have applied retroactively, it is unlikely that CBP will approve PSCs removing the IEEPA tariffs from entries while the refund question is pending.