Trade Controls: Recent Developments and Changes on the Horizon for 2025

The second Trump Administration is expected to mark the return of a more transactional foreign policy approach, with an openness to dealmaking supported by the aggressive use (or threat) of trade controls. 

Boards should, therefore, expect the U.S. government to continue to rely on trade controls as a key foreign policy tool. Although specific actions remain uncertain, significant change is possible on a number of fronts, including sanctions relating to China, Russia, Iran, Syria and Venezuela.  

2024 was an active year in U.S. trade controls against Russia and China in particular. In addition to the continued designations of individuals and entities, foreign financial institutions (FFIs) faced heightened secondary sanctions risks with respect to Russia, and companies dealing with semiconductors, microelectronics and other advanced technologies faced additional restrictions relating to China. Also, the statute of limitations for U.S. sanctions violations increased from five to ten years, exposing companies to greater enforcement risk for historical conduct.[1] 

Russia

Over the past year, the Biden Administration has continued to impose sanctions to limit Russian-government sources of revenue in response to the war in Ukraine. For example, on April 1, 2024, the United States, in coordination with the United Kingdom, issued new prohibitions on the import of Russian-origin aluminum, copper and nickel, and limitations with respect to their use on global metal exchanges and in over-the-counter derivatives trading.[2] The U.S. government also tightened sanctions in the financial sector on a number of fronts. These include blocking sanctions against additional entities in the Russian financial sector, including Gazprombank (the largest and most significant remaining non-sanctioned Russian bank that processed payments for Russian gas sold to third countries since spring 2022) and the National Settlement Depositary, the Russian central securities depository, as well as the expansion of secondary sanctions against FFIs for engaging in certain transactions or services with parties blocked under post-2021 Russia-related sanctions.[3] More recently, the Biden Administration has in its final days imposed sanctions targeting the Russian energy sector, including blocking sanctions against certain Russian oil companies, oilfield service providers, maritime insurance providers and more than 180 so-called “shadow fleet” vessels.

As the war in Ukraine enters its fourth year with a new U.S. administration entering office, the status of Russia sanctions going forward will likely depend on the prospects of a negotiated settlement to the war in Ukraine. Although the continued imposition of sanctions cannot be ruled out in view of a negotiated resolution, we do not expect a wholesale rollback of sanctions in the short term, which could be met with potential U.S. congressional action. However, a change in the pace and volume of new sanctions along with targeted authorizations are more likely. Notwithstanding increased coordination between U.S., UK and EU sanctions authorities in recent years in connection with Russia-related sanctions (including a new memorandum of understanding between the U.S. Department of the Treasury, Office of Foreign Assets Control and the UK Office of Financial Sanctions Implementation for information sharing), greater divergence in the imposition and enforcement of sanctions should not be ruled out in the future.

China

In 2024, the United States continued to impose a number of trade control measures against China, in particular relating to the Chinese military-industrial complex, export controls relating to sensitive technologies and inbound and outbound investment restrictions.[4] For further discussion, see FDI Regimes Ramp up Globally and Enhance Enforcement; U.S. Outbound Investment Regime Goes into Effect. Most recently, and in the final weeks of the Biden Administration, the U.S. Department of Commerce and Bureau of Industry and Security introduced extensive export controls against China relating to semiconductor manufacturing equipment, software tools for developing semiconductors and high-bandwidth memory (which are critical for AI and advanced computing integrated circuits), as well as additional controls on advanced computing AI technology, including advanced computing chips and closed AI model weights. 

In 2025, boards of directors should continue to expect additional trade restrictions against China, including potential updates to the Trump-era Chinese military companies sanctions program, which remained relatively dormant during the Biden Administration. Although we expect trade controls to remain focused on targets relating to the Chinese military-industrial complex and sanctions evasion, third-party commercial actors could be indirectly impacted in sectors in which Chinese products may have both military and commercial non-military applications, such as shipbuilding, drone manufacturing, robotics and other advanced or critical technologies. Boards of directors should, therefore, also be prepared for more targeted and novel sanctions in relation to China, including the potential escalation of sanctions and export controls in conjunction with other trade restrictions, such as tariffs and the new outbound investment regime. China, in turn, may be expected to increase its use of countermeasures against western companies, such as the imposition of sanctions against a U.S. drone manufacturer in October 2024 and export controls against a number of U.S. defense companies in January 2025.

Other Countries

Boards of directors should also be prepared for sanctions developments in response to the geopolitical situation in a number of other countries, including Syria, Iran, Venezuela and Cuba. Following the fall of the Assad regime, the Biden Administration issued an expanded general license authorizing additional sanctions relief for basic human needs in Syria. However, Syria remains subject to comprehensive territory-wide U.S. sanctions and it remains to be seen what conditions the Trump Administration may place for the removal of sanctions. 

With respect to Iran, the first Trump Administration pursued a maximum-pressure campaign, including withdrawal from the Iran nuclear deal and the imposition of additional sanctions. Although the more aggressive use of secondary sanctions targeting Iran’s oil sales and distribution channels is possible, the geopolitical situation relating to Iran remains fluid in light of recent events in the region. 

Following the deterioration of the electoral process in Venezuela, in the spring of 2024, the United States allowed a general license relating to the Venezuelan oil and gas sector to expire. Absent an improvement in U.S.-Venezuela relations or the political situation in Venezuela following the contested presidential elections, additional sanctions in Venezuela also remain possible. Sanctions and sanctions enforcement in relation to Cuba are also subject to potential change with the expected high-level appointments by President-elect Trump of several long-standing critics of the Cuban regime.

Conclusion

In 2025, boards of directors should continue to evaluate their company’s compliance posture in light of sanctions, export controls and geopolitical developments across jurisdictions. Boards should also be aware of the possibility of increased inconsistencies and potential conflicts across jurisdictions, including potential countermeasures from sanctioned jurisdictions.

[1] For additional details, see our May blog post available here.

[2] For additional details, see our April blog post available here.

[3] For additional details, see our November alert memo and December blog post available here and here.

[4] For additional details, see our November alert memo available here.