Welcome to Industrials Regulatory News and Trends. In this regular bulletin, DLA Piper lawyers provide concise updates on key developments in the industrials sector to help you navigate the ever-changing business, legal, and regulatory landscape.
Imports from China of rare earth magnets are on the rebound. Chinese imports of rare earth magnets into the US are rebounding in the wake of a US-China trade framework, with 353 tons sent to the US in June, China’s General Administration of Customs announced on July 21. That is a 660 percent rise over the volume of rare earths shipped to the US in May. Under the trade agreement, China committed to send more rare earths to the US. Interestingly, however, shipments from China of two particular rare earths, antimony and germanium, have fallen to what Reuters is describing as some of the lowest levels on record, a consequence of the Ministry of State Security’s crackdown on evasions of critical mineral export controls via smuggling and transshipment. China dominates the world market for rare earths, reportedly mining about 70 percent of the global capacity of rare earth elements while separating and processing more than 90 percent of heavy rare earths. In response to China’s cooperation on rare earths, the US has begun to ease its restrictions on technology products exported to China, such as high-performance AI chips.
EPA withdraws advanced recycling rules. On July 9, the EPA announced that it has withdrawn a set of rules, first proposed in 2023, that addressed advanced (sometimes called “chemical”) recycling and that had attracted significant industry opposition. The agency said that it is withdrawing the Significant New Use Rules (SNURs) that had been proposed under the Toxic Substances Control Act. The SNURs would have required companies that intend to process any of 18 specific chemical substances derived from plastic waste to notify the EPA at least 90 days before commencing any activity that is proposed as a significant new use by the rule, in order for the agency to assess risks and possibly regulate the significant new use. The 18 proposed rules also identify as an additional significant new use the manufacturing or processing of chemical substances that use feedstocks containing any quantity of contaminants listed in the proposed rules. In a statement, Ross Eisenberg, president of America’s Plastic Makers, said that the proposed rules “imposed unnecessary burdens and hindered investments in the advanced recycling industry.”
NHTSA closes its inquiry into Nissan vehicles after automaker issues a recall. On July 21, following a Nissan recall announcement, the National Highway Traffic Safety Administration announced that it has closed a preliminary investigation launched in December 2023 over reported engine failures in certain Nissan vehicles. The company issued a recall of 454,840 Nissans in June this year which focused on dealer inspection for metal debris in the engine oil pan. Nissan also extended the vehicle warranty of affected vehicles to 10 years and 120,000 miles after that inspection. NHTSA’s investigation looked into reported engine failures that led to loss of power and, in some cases, posed a fire hazard, in certain 2019–2021 Nissan Rogues and Altimas and Infiniti QX50 and QX55s. NHTSA cited 1,878 complaints, including 12 cases that resulted in a crash or fire.
Potential major railroad merger. On July 16, the Associated Press reported that Union Pacific and Norfolk Southern are in merger talks to create the largest freight railroad in North America, the first transcontinental US rail network that would connect the East and West Coasts. The merger discussions reportedly began during the first quarter of this year. Such a merger would bring together the largest and the smallest of the six major US freight railroads. If the parties agree to go forward with a merger, they would be required to obtain approval from the federal Surface Transportation Board (STB) before any merger transaction could be completed. There is widespread speculation within the industry over whether such a merger would be approved by the STB, which has only approved one such deal – Canadian Pacific’s $31 billion acquisition of the Kansas City Southern railroad in 2023 – since it adopted more rigorous merger review rules in 2001.
Senate defense authorizers set aside additional money for shipbuilding. On July 16, the Senate Armed Services Committee unveiled the details of its version of the National Defense Authorization Act. The $914 billion draft defense policy bill for FY 2026 includes a boost to the Air Force’s procurement of F-35 combat aircraft, from 24 to 34, as well as am array of other spends, among them a potentially major boost for the US shipbuilding industry in the form of $22 billion for Arleigh Burke class destroyers and an additional $1.2 billion for a Virginia-class submarine; $552 million for four Sikorsky CH-53K King Stallion helicopters for the Marine Corps; and an additional $400 million for industrial facilities associated with Navy munitions. See our earlier coverage of warship production and the readiness of the US fleet here.
Hegseth’s new directive prioritizes small, modifiable drones in warfare. On July 10, US Defense Secretary Pete Hegseth published a memo, Unleashing US Military Drone Dominance, directing that every US Army squad be armed with small, one-way attack drones by the end of fiscal 2026, while also enabling troops to modify these small drones as necessary in the field. Hegseth said he was engaging in these initiatives as part of a push to break through policy and acquisition barriers. “While global military drone production skyrocketed over the last three years, the previous administration deployed red tape,” Hegseth wrote in the memo. “US units are not outfitted with the lethal small drones the modern battlefield requires.”
DOJ expands enforcement of trade fraud and tariff evasion. The Department of Justice (DOJ) has announced a significant shift in its strategy for fraud enforcement, consolidating resources from the Criminal Division and the Civil Division to create a new Market, Government, and Consumer Fraud Unit (MGCF Unit) within the Criminal Division’s Fraud Section. The consolidated MGCF Unit will combine previously disparate enforcement units and focus those resources on investigation and prosecution of trade fraud and tariff evasion, in addition to its historic focus on market manipulation and government procurement fraud. This reorganization and prioritization of civil and criminal enforcement strategies aligns with the Trump Administration’s expanded tariff regime and reflects DOJ’s response to the potential proliferation of illicit schemes designed to evade additional tariffs on imports from China and other countries. Such focus also underscores DOJ’s intent to uphold the integrity of US trade policy and support the growth of US businesses, especially those who have invested in strong trade controls compliance programs. Find out more.
US-made vehicle sales in Canada are falling. US-made autos are losing significant market share across Canada, casualties of the reciprocal trade war. The latest data released by Statistics Canada indicates that imports from the US into Canada of motor vehicles and parts fell 13.3 percent in April and another 5.3 percent in May, with the largest decline (9.7 percent) found in imports of passenger autos and light trucks. Automotive News reported this month that Nissan has temporarily suspended US production of three models intended for the Canadian market: Tennessee-built Pathfinders and Muranos as well as Alabama-built Frontiers. The Car Guide, a website focusing on the Canadian automotive landscape, predicted, “As Canadian dealers run out of pre-tariff stock, the proportion of new American vehicles sold in Canada is likely to continue to fall over the coming months.”
Trade deal with Vietnam is imminent, President states. On July 15, President Donald Trump announced that a new trade deal with Vietnam is “pretty well set.” While at this writing the agreement is not finalized, it reportedly would allow US goods to be imported into Vietnam without tariffs; goods from Vietnam entering the US would be subject to a 20 percent rate – significantly lower than the 46 percent rate the President had called for in April. The deal reportedly also addresses illegal transshipments, seeking to levy a 40 percent tariff on goods deemed to be illegally transshipped through Vietnam. Transshipments can have legitimate reasons – for instance, to combine together several small shipments or to move products to a different vessel. Illegal transshipment takes place when goods are sent through an intermediate country in hopes of avoiding tariffs or receiving preferential treatment from Customs officials.
Iconic furniture manufacturer will cease operations. The Howard Miller Company, the iconic furniture and clock manufacturer founded in 1926, has announced that it will cease operations in 2026. In a notice filed under the Worker Adjustment and Retraining Notification Act, the company stated that it will wind down operations this year, with the first round of layoffs taking place in Septembers. The company employs nearly 200 workers at its facilities in Michigan and North Carolina. CEO Howard J. “Buzz” Miller stated that the company’s demise began with a “convergence of market influences beyond our control,” among them inflation and rising interest rates. Then this year, he continued, “our business has been directly impacted by tariffs that have increased the cost of essential components unavailable domestically and driven specialty suppliers out of business, making it unsustainable for us to continue our operations.” In addition to manufacturing home furnishings and clocks, the Howard Miller Company has since 1964 made the grandfather clocks given to NASCAR winners as trophies at Martinsville Speedway.
