Client Alert: February 25, 2025
America First Investment Policy: In a February 21, 2025, memorandum, President Trump announced the America First Investment Policy. The Policy calls for reforms to both inbound and outbound investment reviews conducted by CFIUS, with the dual intentions of: (1) preventing U.S. companies and investors from “investing in industries that advance the P.R. of China’s national Military-Civil Fusion strategy;” and (2) restricting “PRC-affiliated persons” from investing in certain critical U.S. industries, including technology, critical infrastructure, healthcare, agriculture, energy, raw materials, and other strategic sectors. According to the America First Investment Policy, the Trump Administration will seek to expand the definition of “emerging and foundational” technologies addressable by CFIUS to include additional technologies deemed to be a risk to U.S. national security.
The Policy seeks to facilitate foreign investment in the U.S. from “key partner countries,” while discouraging investment in U.S. adversaries, by easing restrictions on foreign investment in U.S. companies “in proportion to [the foreign investor’s] verifiable distance and independence from” countries deemed to be U.S. adversaries, specifically (but not limited to) the P.R. of China. The Policy does not define “key partner countries” or “verifiable distance and independence.” It remains to be seen how the America First Investment Policy will be implemented in practice. However, what is clear based on the Policy is that the Trump Administration appears focused on further restricting the flow of investment capital to China as well as the influence of Chinese investment in the U.S., particularly in sensitive industries and emerging technologies.
U.S. Expands Sanctions on Iran: On February 24, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced additional sanctions targeting Iran’s “shadow fleet,” imposing sanctions on more than 30 persons and vessels alleged to be involved in the sale or transportation of Iranian petroleum products. Included in the sanctions are oil brokers in the UAE and Hong Kong, as well as tanker operators in India and the P.R. of China, and the Iran-based Iranian Oil Terminals Company, among others.
The timing of the Feb. 24 sanctions against Iran’s shadow fleet is noteworthy, as these sanctions were announced on the same day that the EU and UK adopted their own sanctions packages targeting Russia’s shadow fleet. As reported by many in the media, the U.S. and Russia are engaged in diplomatic discussions seeking a resolution to the conflict in Ukraine. Since at least 2022, U.S. sanctions policies towards Russia have largely aligned with those of the EU and UK. While we can only speculate, the absence of a U.S. response to this week’s EU/UK sanctions against Russia, coupled with OFAC’s instead focus on Iran’s shadow fleet, may be an early indicator of a shift in U.S. sanctions policy aimed at easing tensions with Russia.
U.S. Port Fees on Chinese Vessels: On February 21, 2025, the Office of the U.S. Trade Representative unveiled a Proposal that would impose substantial new “service fees” on Chinese maritime transport operators and Chinese-built vessels entering U.S. ports, as well as vessel operators with prospective orders for Chinese-built vessels. Under the Proposal, P.R. of China-based maritime transport operators would be assessed a service fee up to $1,000,000 per entrance of any of their vessels into a U.S. port. The Proposal would also impose a service fee of up to $500,000 to $1,500,000 on all maritime transport operators, wherever located, upon entrance of the operator’s Chinese-built vessel to a U.S. port, depending on the percentage of Chinese-built vessels in the operator’s fleet.
Further, the Proposal would impose an additional service fee of up to $1,000,000 on maritime transport operators per port call, based on the percentage of vessels that the operator has ordered from Chinese shipyards relative to non-Chinese shipyards. The Proposal seeks to bolster American shipbuilding by offering refunds on a calendar year basis for the above fees of up to $1,000,000 per entry into a U.S. port of a U.S.-built vessel. Likewise, the Proposal seeks to promote the maritime export of U.S.-origin goods through U.S. operators, by requiring that a minimum percentage of U.S. goods be exported on U.S.-flagged vessels by U.S. operators. This requirement will be implemented in stages over the next 7 years.
EU Adopts New Russia Sanctions: On February 24, 2025, the European Commission adopted its 16th package of sanctions against Russia, targeting the Russian energy, trade, transport, infrastructure, and financial services sectors. This sanctions package includes 74 vessels alleged to be part of the Russian shadow fleet, as well as additional listings of companies and persons allegedly involved with the Russian military, Russian sanctions circumvention efforts, Russian cryptocurrency exchanges, and the Russian maritime sector.
This EU sanctions package imposes new restrictions on exports of certain dual-use and industrial goods and bans EU imports of Russian primary aluminum. The new EU sanctions prohibit temporary storage of Russian crude oil and petroleum products at EU ports, and prohibit the provision of goods, technology, and services to crude oil projects in Russia. Additionally, under the new EU sanctions, third-country carriers conducting domestic flights within Russia or supplying aviation goods to Russian airlines will not be allowed to fly to the EU. EU construction operators are also banned from providing construction services in Russia. The financial services/banking sector is also included in the new EU sanctions; 13 financial institutions were added to the EU’s list of entities subject to the prohibition on providing specialized financial messaging services to Russian entities, and 3 banks were added to the EU transaction ban due to their use of the Financial Messaging System of the Central Bank of Russia (SPFS).
UK Announces Largest Russia Sanctions Package: On February 24, 2025, the UK announced its largest package of sanctions against Russia since the conflict in Ukraine began in 2022. The new UK sanctions target the Russian military supply chain, financial institutions, and vessels alleged to be part of Russia’s shadow fleet. The UK sanctions package largely aligns with the spirit and substance of the EU’s sanctions against Russia announced on the same day. Like the EU sanctions package, the UK sanctions target persons in third countries based on their provision of dual-use technologies and restricted machinery to Russia, as well as ships involved in the transportation of Russian oil, and individuals and entities involved in other critical sectors of the Russian economy. Notably, the new UK sanctions mark the first instance of the UK targeting a foreign financial institution; Kyrgyzstan-based OJSC Keremet Bank, based on the Bank’s involvement “in carrying on business in the Russian financial sector.
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