A recently filed suit filed in the Court of International Trade (CIT) seeks refunds of all Section 301 tariffs imposed to date on List 3 goods imported from China. Interested companies may also file their own independent claims with the CIT challenging the tariffs on both the List 3 and List 4A; however, those claims need to be filed with the Court by Friday, September 18, 2020 as the statute of limitations will soon expire.

The complaint that was filed with the CIT last week, HMTX Industries, LLC, Halstead New England Corporation and Metroflor Corporation vs. United States, challenges the Trump Administration’s authority to impose tariffs on List 3 goods and requests that, among other things, the Court issue a refund with interest of the List 3 duties paid. The complaint argues that—

  • The United States Trade Representative (USTR) failed to establish that the imposition of tariffs on the List 3 goods was due to an unreasonable or discriminatory act, policy or practice of China that burdens or restricts US commerce as required by the Trade Act of 1974.
  • The Trade Act of 1974 requires USTR to determine the action to be taken within 12 months after the initiation of an investigation; however, USTR’s action giving rise to the List 3 tariffs occurred over a year after the Section 301 investigation was launched.
  • The Trade Act of 1974 authorizes USTR to “modify or terminate” an action taken when the burden imposed on US commerce from the foreign country’s investigated unfair acts increases or decreases; however, it does not permit USTR to increase tariffs for reasons unrelated to those unfair acts.
  • The Trade Act of 1974 also authorizes USTR to “modify or terminate” an action taken when it “is no longer appropriate” by delaying, tapering or terminating such actions—the Act does not authorize USTR to increase tariff actions.
  • USTR exceeded its authority under the Trade Act of 1974 in imposing the List 3 Tariffs and therefore did not act in accordance with the law; therefore, the Administrative Procedure Act (APA) authorizes the Court to set aside the tariffs that were imposed.
  • USTR failed to offer evidence for any asserted “increased burden” from China’s intellectual property policies and practices that were the subject of USTR’s Section 301 investigation, and promulgated List 3 in an arbitrary and capricious manner because it did not provide a sufficient opportunity for comment, failed to meaningfully consider relevant factors when making their decisions, and failed to adequately explain its rationale.

The ultimate success of the case is uncertain and it is anticipated that the government will strongly oppose it; however, importers may wish to consider filing a claim.  If companies opt to file claims with the CIT, they may request that the Court issue a preliminary injunction to enjoin the liquidation of entries on which List 3 and List 4A duties were paid—the liquidation of those entries would be suspended while the case is considered by the Court.

Please contact Melissa Proctor (melissa@millerproctorlaw.com) or Peggy Chaplin Louie (peggy@millerproctorlaw.com) should you have any questions about this case or if you need assistance in assessing other avenues for mitigating the impact of the Section 301 tariffs on your business operations.