U.S. Defends Tariffs on Mainland Chinese Goods as Refund Case Moves Ahead

The Biden administration has outlined its primary defences to the more than 3,500 cases filed at the U.S. Court of International Trade against Section 301 tariffs on List 3 and 4A goods from mainland China. These cases have been assigned to a panel of three CIT judges, who are considering a proposal to establish and proceed with a single test case.

The plaintiffs generally allege that the Section 301 tariffs on List 3 and List 4A goods (imports of which are collectively valued at more than US$300 billion a year) were imposed in violation of the authority provided under the Trade Act of 1974 and the Administrative Procedures Act. For example, the plaintiffs argue that these tariffs were levied more than a year after the underlying investigation was initiated and were based not on that investigation but other reasons, including retaliating against mainland China, compelling it to import more U.S. goods and collecting revenue for the U.S. treasury. The plaintiffs also contend that the tariffs were levied in an arbitrary and capricious manner because federal officials failed to meaningfully consider relevant factors when making their decisions and failed to adequately explain their rationale.

In response, the United States asserts that USTR had statutory authority to issue the List 3 and 4 tariffs because the burden or restriction on U.S. commerce by the mainland Chinese acts, policies and practices at issue in the Section 301 investigation had continued to increase and the List 1 and 2 tariffs had proven ineffective in eliminating them. The United States adds that USTR’s authority to modify previous tariff actions is not limited to delaying, tapering or terminating them, as the plaintiffs assert. Other defences raised include that USTR was acting at the direction of the president, who is not subject to the APA, and that the court is precluded from reviewing the president’s discretionary decisions and USTR’s implementation of them.

If this litigation 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. U.S. importers can still join this challenge and preserve their rights to such refunds by filing a complaint in the CIT.