Section 301 Tariffs on Imports from China Upheld Again

The Court of Appeals for the Federal Circuit issued Sept. 25 a decision upholding Section 301 tariffs on hundreds of billions of dollars’ worth of imports from China.

This case, first filed in 2020 and subsequently joined by thousands of importers, argued that the expansion of Section 301 tariffs to so-called List 3 and 4A goods was imposed in violation of the Administrative Procedures Act because the Office of the U.S. Trade Representative failed to allow sufficient time and process for notice and comment and failed to adequately respond to the thousands of comments that were received. In March 2023 the Court of International Trade agreed but allowed USTR to provide the missing reasoning on remand, and the CAFC has now ruled that USTR’s explanation was satisfactory under APA standards. The court did, however, reject the government’s argument that the expansion of the Section 301 tariffs was an unreviewable presidential act, holding instead that it constituted a reviewable agency action.

The plaintiffs also argued that USTR lacked statutory authority to extend the tariffs to List 3 and 4A goods because relevant law provides that a Section 301 tariff increase must be tied to an increase in the burden on U.S. commerce from the Chinese practices that gave rise to the initial round of tariffs (and not, for example, to retaliation by China for those tariffs). However, the CAFC instead relied on a statutory provision allowing Section 301 tariffs to be modified when the prior action is “no longer appropriate.” The CAFC also broadly interpreted the term “modify” to encompass both increases and decreases in tariffs, regardless of their magnitude.

The plaintiffs further cited the major questions doctrine in arguing that Congress would not have granted USTR authority to take action of such economic and political consequence (i.e., the significant expansion of Section 301 tariffs) without a far clearer statement than what is provided in existing law. However, the CAFC concluded that Congress clearly delegated authority to USTR under the applicable law to impose and modify tariffs.

The plaintiffs in this case are considering possible next steps, including seeking an en banc rehearing before the CAFC and/or filing a petition for certiorari with the Supreme Court.