Background

The Court of International Trade recently issued its first substantive ruling in a case challenging the Section 301 tariffs on List 3 and 4A goods from China, but importers can still preserve their rights to possible refunds of these tariffs by joining the case. For more information, or assistance filing your claim, please contact attorneys Larry Ordet, Lenny Feldman, Rob DeCamp, or David Cohen at 301Litigation@strtrade.com.

A case first filed in 2020 and since joined by thousands of importers argues that the tariffs on List 3 and List 4A goods were imposed (1) in violation of the authority provided under the Trade Act of 1974 because there was no specific finding from USTR on the impact of China’s actions on U.S. trade, and (2) in violation of the Administrative Procedures Act because USTR failed to allow sufficient time and process for notice and comment and failed to adequately respond to the comments received. If this test case is successful, refunds of all Section 301 tariffs paid on List 3 and List 4A goods, regardless of whether an exclusion was previously available or filed, will potentially become available.

In an April 1 ruling the CIT rejected the first claim, stating that despite the less than clear administrative record USTR properly exercised its authority in promulgating the List 3 and 4A tariffs because there was satisfactory evidence linking China’s retaliatory tariffs (the stated justification for the List 3 and 4A tariffs) with the intellectual property theft that gave rise to USTR’s initial Section 301 investigation and imposition of tariffs.

However, the CIT agreed factually with the second claim, finding that USTR’s near non-existent responses to the thousands of comments received during notice and comment violated the APA. The court then sent the matter back to USTR, instructing it to explain why it imposed the List 3 and 4A tariffs and how it addressed the comments. The court warned USTR that post hoc rationalizations are not permissible and it “may only further explain the justifications it has given for the modifications.”  

USTR now has until June 30 to respond to the court’s demand. If it provides legally sufficient responses, the CIT will likely sustain the List 3 and 4A tariffs; if not, the court will have to consider voiding those duties. The CIT is still expected to conclude its review sometime this fall, and whatever decision it issues is almost certain to be appealed to the Court of Appeals for the Federal Circuit.

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