U.S - China Trade War Litigation

Many of our clients are asking us to help them take advantage of a cost-effective opportunity to pursue a refund or damages for the 25% additional duties as a result of the List 3 tariffs in the U.S.-China Trade War. As a result of litigation commenced by other importers last week, you now have the opportunity to challenge the additional duties by filing a complaint in the U.S. Court of International Trade while allowing others carry the burden of litigating the key statutory interpretation issues. Absent federal executive or legislative action, you will not have any chance to receive any refunds of duties if you do not file a complaint by Monday, September 21. (The same option to file a complaint is available to clients who have paid duties on List 4A tariffs, but the deadline for challenging that regime is in August 2021.) 

The Litigation:
A large and respected D.C. law firm filed a complaint in the U.S. Court of International Trade on September 10, 2020, on behalf of HMTX Industries LLC and two of its subsidiaries, claiming that the United States violated substantive and procedural processes when imposing Section 301 Tariffs on imports from China under List 3, which went into effect on September 24, 2018. List 3 tariffs include most of the tariffs in effect on Chinese import in the ongoing US-China Trade War. The plaintiffs argue that the US Trade Representative (“USTR”) did not have authority under the Trade Act of 1974 to “litigate a vast trade war for however long, and by whatever means, they chose,” but rather that the USTR had a limited time to determine any actions to take. They also contend that the arbitrary manner in which the USTR implemented the List 3 tariff actions violates the U.S. Administrative Procedure Act (“APA”).  Thus, nationwide, importers of Chinese products are now filing copycat complaints, requesting stays of their complaints (which everyone expects will be granted, given the large number of complaints), and, if HMTX prevails, will pursue damages, namely refunds of duties paid. 

More specifically, HMTX contends the following:

• The USTR failed to make a determination or finding that there was an unfair trade practice that required a remedy;
• The USTR instituted tariffs beyond the 12-month limit stated in the governing statute 19 U.S.C. §2412;
• How the USTR implemented the tariff action violates the APA;
• The USTR failed to provide adequate opportunity for comments throughout the process;
• The USTR failed to consider relevant factors when making its decisions, such as an analysis of increased burden on U.S. commerce from unfair trade practices; and
• The USTR failed to explain how the comments received by USTR shaped the final implementation of products selected for lists.

The lawsuit seeks the following relief from the U.S. Court of International Trade:          

• A declaration that the Trade Act of 1974 did not authorize USTR’s actions resulting in List 3 tariffs;
• A declaration that USTR arbitrarily and unlawfully promulgated List 3 in violation of the APA;
• A vacation of China Section 301 List 3 rulemaking;
• A refund, with interest, on any duties paid by any complainant; and
• A permanent injunction of the USTR’s ability to apply List 3 or collect any duties under List 3.