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China Tariff Process Wildly Flawed, NRF, AAFA, FDRA Argue

The National Retail Federation (NRF) and American Apparel & Footwear Association (AAFA) voiced their support Monday for the thousands of businesses challenging tariffs imposed during former President Donald Trump’s trade war with China.

The pair—along with the Retail Litigation Center, the Consumer Technology Association, the Footwear Distributors and Retailers of America, the Juvenile Products Manufacturers Association and the Toy Association—filed an amicus brief Monday in support of the more than 6,000 businesses—including Target Corp. and Ralph Lauren—challenging the List 3 and List 4A tariffs imposed in 2018 and 2019 as unlawful.

The businesses’ lawsuits, filed in the U.S. Court of International Trade, argue that former United States Trade Representative (USTR) Robert Lighthizer exceeded his authority when imposing the List 3 and List 4A tariffs without attempting to connect them to any underlying investigation into China’s trade policies. The NRF, AAFA and other organizations’ amicus brief supports this argument and claims the USTR violated his statutory obligations under the Administrative Procedure Act by not giving “adequate” opportunity for or consideration of public comments.

The organizations do not take issue with the List 1 and List 2 tariffs that went into effect in July and August 2018 and which impacted approximately $50 billion in goods, but with the rounds that followed when China responded by matching the United States’ tariffs.

From start to finish, the amicus brief claims, the USTR took two months to impose the List 3 tariffs, which affected imports valued at more than $200 billion. Weeks after initially proposing a 10 percent duty, the USTR raised the proposed rate to 25 percent, giving stakeholders less than a month to calculate impact and formulate comments. Rebuttals, the organizations note, were due the same day as initial written comments.

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The brief similarly targets the USTR’s List 4A tariffs, for which written comments were due 31 days after their May 2019 announcement and the same day public hearings were scheduled to begin. The USTR later suspended the List 4B duties before they went into effect as part of the United States’ trade deal with China and reduced the duty rate for List 4A products.

“If USTR had satisfied its obligation to allow for meaningful comments from amici and others and had actually considered them, it would have recognized the considerable harm its actions would inflict,” the amicus brief argued. “The tariffs are a hidden tax on U.S. consumers, hurting domestic producers, retailers, and customers alike. And, as predicted, they have had a significant adverse impact on the U.S. economy.”

The brief pointed to a May Moody’s report that estimated the trade war tariffs most negatively affected American importers. Studies estimate that Chinese exporters absorbed an average of only 7.6 percent of the U.S. tariff rate, with American importers taking the remainder of these duty expenses on the chin, the report found. A 20 percent U.S. tariff would reduce Chinese exporters’ prices by 1.5 percent and hike domestic importers prices 18.5 percent, for example, meaning nearly 95 percent of the 20 percent U.S. tariff falls on the country’s imports from the so-called “world’s factory,” Moody’s said.

“The bottom line: USTR levied two of the largest tax increases on American consumers in history—with minimal input and insufficient analysis of consequences,” the brief argues.

The NRF and AAFA’s participation in the amicus brief comes days after the pair joined with nearly three dozen organizations to urge the current USTR, Katherine Tai, and Treasury Secretary Janet Yellen to return to the negotiating table with China. A year and a half after the U.S. brokered the Phase One trade deal, the Chinese government is falling short of its existing purchase commitments, the coalition said.

“We appreciate that achieving durable, concrete, meaningful results to level the playing field for American businesses, innovators, workers, and farmers will not be easy, and that past bilateral trade consultations have not yielded hoped-for changes in critical areas,” it wrote. “We also recognize that fully resolving tariffs is unlikely, absent substantially more progress by China on core issues.”

The coalition also pushed President Joe Biden’s administration to re-instate the product exclusions that lapsed last year and to champion a “new, fair, and transparent tariff exclusion process.”