On April 1, 2022, a three judge panel of the U.S. Court of International Trade (CIT) unanimously found that the Office of the United States Trade Representative’s (USTR’s) imposition of Section 301 List 3 and List 4A tariffs on Chinese products failed to comply with the Administrative Procedures Act (APA). Specifically, the court ruled that the USTR did not adequately respond to the public comments filed in response to the List 3 and List 4 tariffs – each covering $200 billion and $300 billion, respectively – per the APA.

The CIT rejected Plaintiff’s claims that the USTR did not have the statutory authority to issue List 3 and List 4A tariffs. The court stated that it found that the USTR exercised its authority consistent with sections 307(a)(1)(B) and (C) of the Trade Act when it issued the List 3 and List 4A tariffs.

With respect to the USTR’s violation of the APA, the court stated that the USTR “was required to address comments regarding any duties to be imposed, the aggregate level of trade subject to the proposed duties, and the products covered by the modifications, all in light of section 301’s statutory purpose to eliminate the burden on U.S. commerce from China’s unfair acts, policies, and practices and subject to the specific direction of the President, if any.” The court noted that the USTR’s statements failed “to apprise the court how the USTR came to its decision to act and the manner in which it chose to act.”

The CIT remanded the case to the USTR to further explain why it imposed List 3 and List 4A tariffs. This gives the USTR another limited  opportunity to explain its imposition of tariffs. The CIT stated that “the USTR may only further explain the justifications it has given for the modifications…It may not identify reasons that were not previously given unless it wishes to ‘deal with the problem afresh’ by taking new agency action.”  The court explained that the USTR’s failure to comply with the APA “leaves rooms for doubt as to the legality of its chosen course of action.” Nonetheless, the court decided that it would not vacate the Section 301 List 3 and List 4A tariffs. The CIT found that vacatur would significantly disrupt the ongoing negotiations and declined “for now. . . to try to unscramble this egg.”

The USTR must file its remand results by or before June 30. Afterwards, within 14 days of the USTR’s filing, the parties will file a joint status report and the court will issue a new briefing schedule. There also may be another oral argument before the CIT issues its final decision.  The CIT’s final decision will likely be appealed to the Court of Appeals for the Federal Circuit.

The CIT’s opinion and order can be found here.

For more information on actions regarding Section 301 tariffs as well as the Court of International Trade, contact our team below.