New Compliance Pressures and Changes for Supply Chains

Two recent developments signal a tightening and harmonization of transatlantic trade and compliance standards, with direct implications for importers, manufacturers, and other globally integrated businesses, particularly around supply chain due diligence and critical mineral sourcing. More specifically, the U.S. has expanded its forced labor enforcement under the Uyghur Forced Labor Prevention Act (UFLPA), while the E.U. has committed to aligning with the U.S. on critical mineral restrictions and sustainability regulations.  Together, these actions reflect growing regulatory convergence over supply chains.

On August 19, 2025, the U.S. Department of Homeland Security designated steel, copper, and lithium, as high-priority sectors under the UFLPA.  A high-priority sector designation indicates that entities in the sector have a higher risk of forced labor or state labor transfer of Uyghurs and other ethnic minorities from the Xinjiang Uyghur Autonomous Region (XUAR).  The UFLPA’s “rebuttable presumption” applies to all goods produced by entities on the UFLPA Entity List, which currently includes 144 entities across XUAR and other provinces in China.  While aluminum has been on the list since July 2024, this expansion intensifies scrutiny on imports linked to forced labor in China.  Importers and manufacturers must timely reassess supply chain exposure, especially for EV batteries (lithium, copper) and structural components (steel), or face U.S. enforcement actions.

Additionally, on August 21, 2025, the U.S. and E.U. issued a Joint Statement outlining a “Framework on an Agreement on Reciprocal, Fair, and Balanced Trade.”  The Framework Agreement sets the stage for deeper cooperation and regulatory alignment between the two markets.  Key E.U. commitments include:

• Export restrictions: Coordinated action with the U.S. on countering and mitigating the risks posed by third countries that impose export limits on critical minerals and “similar resources.”
• Forced labor: Joint efforts to ensure strong protection of internationally recognized labor rights, including with regard to the elimination of forced labor in supply chains.
• Sustainability directives: Revisions to the Corporate Sustainability Due Diligence Directive (CS3D) and Corporate Sustainability Reporting Directive (CSRD) to reduce administrative burdens and avoid trade barriers. The E.U. has also agreed to propose changes to the requirement for a harmonized civil liability regime for due diligence failures and to climate-transition-related obligations.

Together, these actions indicate that there remains trans-Atlantic consensus on supply chain sustainability due diligence, particularly in relation to forced labor in certain high-priority sectors.

Action points for companies:

• Audit supply chains for exposure to newly designated high-risk materials (steel, copper, lithium).
• Track regulatory developments under the Framework Agreement to anticipate compliance shifts.
• Enhance due diligence and traceability systems to meet UFLPA and applicable E.U. sustainability standards.