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.

 

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of John Brew John Brew

John Brew is the co-chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office. He has extensive experience in import and export trade regulation, and he regularly advises corporations, trade associations, foreign governments, and non-governmental organizations…

John Brew is the co-chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office. He has extensive experience in import and export trade regulation, and he regularly advises corporations, trade associations, foreign governments, and non-governmental organizations on matters involving customs administration, enforcement, compliance, litigation, legislation and policy.

John represents clients in proceedings at the administrative and judicial levels, as well as before Congress and the international bureaucracies that handle customs and trade matters. He advises clients on all substantive import regulatory issues handled by U.S. Customs and Border Protection and Immigration and Customs Enforcement, such as classification, valuation, origin, marking, tariff preference programs, other agency regulations, admissibility, import restrictions, quotas, drawback, audits, prior disclosures, penalties, investigations, Importer Self Assessment and Customs-Trade Partnership Against Terrorism programs, importations under bond, the Jones Act, vessel repairs, and foreign trade zone matters.

Photo of Frances P. Hadfield Frances P. Hadfield

Frances P. Hadfield is a counsel in Crowell & Moring’s International Trade Group in the firm’s New York office. Her practice focuses on forced labor and withhold release orders (WRO), import regulatory compliance, and customs litigation. She regularly advises corporations on matters involving…

Frances P. Hadfield is a counsel in Crowell & Moring’s International Trade Group in the firm’s New York office. Her practice focuses on forced labor and withhold release orders (WRO), import regulatory compliance, and customs litigation. She regularly advises corporations on matters involving customs compliance, audits, customs enforcement, as well as import penalties.

Frances represents clients before the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit, as well as in proceedings at the administrative level. She advises corporations on both substantive federal and state regulatory issues that involve U.S. Customs and Border Protection, the Federal Trade Commission, Food and Drug Administration, and U.S. Fish & Wildlife in matters pertaining to product admissibility, audits, classification, import restrictions, investigations, marking, licenses, origin, penalties, and tariff preference programs.

Photo of Martín Yerovi Martín Yerovi

Martín Yerovi is an international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection…

Martín Yerovi is an international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). He works closely with attorneys developing courses of action for clients impacted by investigations under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. He also supports unfair trade investigations, including antidumping (AD) and countervailing duty (CVD) investigations, sunset reviews, and changed circumstance reviews before the Department of Commerce and the International Trade Commission (ITC).