Administration Files Remand Results in Section 301 Tariff Litigation – International Trade and Investment

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On August 1, 2022, the Office of the United States Trade Representative (USTR) filed remand results with the United States Court of International Trade (CIT) in a major dispute over the legality of import duties levied on Chinese goods under of Section 301 of the Commerce Act. from 1974.

Section 301 authorizes the USTR to take action to encourage foreign countries to abandon or mitigate unfair trade practices affecting U.S. commerce. unfairly burdens American commerce. Subject to the President’s direction, the USTR imposed Section 301 tariffs ranging from 7.5% to 25% on four successive rounds of Chinese products between July 6, 2018 and September 1, 2019.

Since late 2020, thousands of import complainants have filed complaints with the CIT, alleging that the USTR imposed the third and fourth rounds of Section 301 duties beyond the period permitted by law, and without satisfying to the legal requirements for modifying the first and second tariffs. Shares. The CIT rejected these arguments in an opinion issued last April. However, the court accepted the importers’ separate claim that the USTR violated the Administrative Procedure Act by failing to explain its assessment of the comments filed in response to the USTR’s original proposals to impose the third and fourth series of tariffs.

In particular, the court pointed to the fact that in imposing the tariffs, the USTR failed to explain:

  • Why did it remove certain products from the proposed lists of goods to be covered, or why did it decide to impose tariffs on certain products which, according to several commentators, should not be subject to customs duties? customs?

  • Its assessment of the comments regarding the rate at which duties should be charged; and

  • His review comments regarding the potential impact of duties on the US economy.

The CIT ordered the USTR to provide the required explanations, without identifying any new reasons for imposing the tariffs. The court order did not require the USTR to make adjustments to rates, but was broad enough to allow the agency to make changes if it wished.

In the results of the 90-page referral, the USTR announced no changes to the third or fourth rounds of tariffs. Instead, he provided additional explanation on:

  • The decision to remove certain rare earths/critical minerals, seafood, antiques and art, consumer electronics, health and safety products, and chemicals and chemical inputs from the scope of initially proposed application of the third series of tariffs;

  • The reasons why the agency refused to remove other goods from the scope of the third round of tariffs or to add steel and additional consumer goods to the list of products covered by the third round tariffs;

  • The decision to remove certain goods (such as religious texts or seafood caught in the United States processed in China) from the scope of the originally proposed fourth set of tariffs, and the removal of certain other goods for national security, health and safety, or because the goods were essential to U.S. port operations;

  • The agency’s position that it was not possible to exclude the vast majority of products that commentators say should not be subject to duties given then-President Trump’s directive that the ‘USTR Identifies $300 Billion in Annual Trade to Be Subject to Fourth Round of Tariffs;

  • the USTR’s consideration of submissions regarding the rate of duty at which tariffs should be imposed and the overall level of trade to be covered, in light of Presidential directives;

  • The agency’s assessment of comments on the potential economic effects of tariffs, the legality and effectiveness of changes, and potential alternatives to imposing tariffs.

The CIT has not yet set a timeline for litigants to comment on the results of the remand. However, import plaintiffs are likely to argue that the USTR’s explanation does not address CIT’s concerns and that the court should order the tariffs lifted. Whether the court will agree remains to be seen.

Although the USTR made no changes to the third or fourth rounds of tariffs in the remand results, it is possible that the administration will make future changes to the tariffs through separate processes. For example, the USTR is currently in the early stages of a four-year statutory tariff review. Similarly, the administration appears to be considering lifting tariffs on some consumer products to fight inflation, as well as creating new processes through which importers can request time-limited exclusions from duties on goods. specific.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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