July 7, 2021-In what may be the first of thousands of cases contending Trump-era tariffs on Chinese goods, a high-level U.S. court ruled on Tuesday in favor U.S. importers. According to attorneys for the U.S. businesses, the ruling is likely to impact more than 6,500 plaintiffs who have filed similar lawsuits.
The Case Decided This Week
A group of U.S. companies in the flooring and home-based consumer products argued that import tariffs on Chinese goods imposed “irreparable harm” on their businesses. The case, which is the first of 3,600 cases before the Court of International Trade, relates to the final collection of tariff duties, called “liquidation.”
Specifically, the court ruled that, “Liquidation, as the final computation of duties, will constitute irreparable harm unless an importer can obtain refunds or reliquidation because it cuts off judicial review and eliminates any chance of recovery of unlawful exactions.”
In other words, the court said the companies importing Chinese goods under the tariffs would be unlikely to recapture their losses.
Trump-Era Tariffs
In 2018, former President Donald Trump issued tariffs of an additional 25 percent on a list of products from China. The action was meant to respond to concerns about China’s trade practices, forced transfer of technology and infringement on intellectual property. The initial list of products covered over a thousand goods. According to Trump’s trade office at the time, the list primarily focused on products from industrial sectors benefiting from China’s industrial policy.
The Biden administration has come out in support of Trump’s tariffs. And lawyers for the Justice Department, U.S. Trade Representative, and the U.S. Customs and Border Protection argued the case for the government.
A Win for U.S. Importers and China
It is a significant win for the plaintiffs and their lawyers at Akin Gump Strauss Hauer & Feld LLP. The attorneys argued it was illegal to subject to duties on imports under Section 301 of the U.S. Trade Act of 1974.
In February, the court combined a series of Section 301-related cases into one. The plaintiffs include three flooring companies — HMTX Industries LLC and its subsidies Halstead New England Corporation, and Metroflor Corporation — and Jasco Products Company LLC, a consumer-product company.
Today’s action involves products on two lists of Section 301-related tariffs, List 3 and List 4A.
Attorneys for the plaintiffs provided a background briefer on the case and said it impacts $300 billion in imports from China that are subject to additional duties ranging from 7.5 percent to 25 percent.
China welcomed the decision. According to the state-run media agency Global Times, the court’s decision “is the prerequisite for the two economies to truly re-engage with each other in the trade arena.”
Questions of Presidential Authority Raised
Meanwhile, the case raises questions about a president’s authority to enact new tariffs. Moreover, the court, led by Hon. Mark A. Barnett, said the plaintiffs raised “serious and substantial questions about the scope of the USTR’s statutory authority to act.” Barnett suggested that additional litigation is needed to settle that issue of authority.
For further reading about the impact of tariffs on businesses, see U.S. to Target China’s Strategic Industries in New 25 Percent Tariffs.
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