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USTR Tariff Filing ‘Raises More Questions Than Answers’: AAFA

The USTR’s court-mandated explanation of former President Donald Trump’s latter rounds of Section 301 tariffs “raises more questions than answers,” American Apparel & Footwear Association (AAFA) president and CEO Steve Lamar said.

The Office of the U.S. Trade Representative followed through Monday on an April order from the U.S. Court of International Trade that it provide further explanation regarding the third and fourth rounds of Section 301 duties that Trump imposed on China in 2018 and 2019.

The 90-page “remand determination,” officially authored by Juan Millan, the assistant USTR for monitoring and enforcement, elaborates on the USTR’s determination to remove and not remove certain products from the List 3 and List 4 rounds of tariffs; evaluates comments the office received concerning the duty rate; and outlines comments related to the tariffs’ potential impact on the economy, their legality and efficacy, and potential alternatives.

Since 2020, thousands of importers including Ralph Lauren and Target have sued the U.S. government at the CIT to challenge the USTR’s third and fourth rounds of Section 301 duties. The plaintiffs allege the government imposed the tariffs beyond the time permitted by the statute and without meeting requirements to modify the first and second tariff rounds.

The CIT rejected these arguments in April, but decided that the USTR had violated the Administrative Procedure Act by failing to explain its evaluation of comments responding to the office’s initial proposals for the third and fourth tariff rounds. It ordered the USTR to provide these explanations without identifying any new reasoning. The order allowed the USTR to make changes to the tariffs, but did not require it to do so.

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“The court did not say, ‘Go and recreate your work, go and do new work or give us new justifications,’” Lamar said. “They basically said, in effect, ‘Show us your homework or show us your notes from four years ago,’ and I think it’s an open question whether in fact that got done.”

As the head of the American Apparel & Footwear Association, Lamar has long railed against the tariffs Trump rolled out four years ago. In his view, Monday’s remand determination fails to answer the questions companies had in the duties’ early days. “A classic one,” he said, relates to how the last administration placed goods in either List 4a or 4b based on whether China’s share of U.S. imports was higher or lower than 75 percent. “There was no explanation of why the number that they picked had to be the number that they picked,” Lamar said.

“They say ‘These people made some points, these people made some points, these people made some points, but there was no way we could hit President Trump’s number of X amount of trade that had to be covered with tariffs, therefore we had to disregard,’” he continued. “You had the public providing a lot of evidence, but because there was no way to satisfy the evidence and meet President Trump’s arbitrary number, the end result was President Trump’s arbitrary number won, rather than the public need, the public evidence.”

When providing further explanation on why it removed or did not remove certain products from the List 3 round of tariffs, the remand determination described the aggregate level of trade the USTR had been instructed to cover as “an additional consideration.”

“Based on 2017 import values, the proposed tariff subheadings had a value of approximately $209 billion,” Millan wrote. “Accordingly, to maintain the $250 billion aggregate level of trade (that is, aggregated with the approximately $50 billion level of Lists 1 and 2) covered by additional duties directed by the President, only a limited number of subheadings could be removed.”

Later on, Millan said that though the USTR removed certain textile inputs, certain chemicals and rare earth elements and minerals, “to maintain the aggregate level of trade directed by the President, it was not possible for USTR to remove all inputs.” The assistant USTR also noted, however, that, “moreover, most comments urging for additional inputs to be removed failed to demonstrate” how the tariff would not be effective in achieving the tariffs’ goals.

“The overall document, it doesn’t shed new light on why or whether, which is probably more important, whether USTR really looked at the information that came in,” Lamar said. “For example, if the president says you got to hit $200 billion of trade, regardless of what the evidence says—which is, in effect, what they’re admitting—but we’re going to invite the public to come in and talk about that, that just seems like a futile exercise…. I think what this document does is it shows that, to a large extent, their mind was already made up.”

Though reports have suggested that President Joe Biden is mulling the removal of certain Section 301 tariffs—Lamar said a month ago that action could be days away—the USTR ultimately declined to use the remand determination as an opportunity to adjust the four-year-old duties.

With the tariffs set to expire after four years, the USTR is currently weighing a potential renewal. Organizations including the National Council of Textile Organizations (NCTO) are currently pushing Biden to continue his predecessor’s policy.

“We have long advocated for the 301 penalty tariffs to remain on finished textile and apparel products from China,” NCTO president and CEO Kim Glas said in a May statement. “Not only do they increase the government’s negotiating leverage to address the Chinese government’s serious predatory trade practices that have hurt our domestic manufacturing sector and that of our free trade agreement partners for decades; they also send a strong message to China that the United States is committed to addressing systemic predatory trade practices that have undermined domestic industries and their workers.”

In June, the NCTO, alongside the Narrow Fabrics Institute and Industrial Fabrics Institute—both divisions of the Advanced Textiles Association—filed a formal submission expressing support for the continuation of “penalty tariffs” on imports from China.

“For decades, China’s illegal actions have undermined virtually every domestic manufacturing sector and contributed to the direct loss of millions of U.S. jobs. These devastating state-sponsored practices include intellectual property theft as well as pervasive state-ownership of manufacturing, industrial subsidies, and abhorrent labor and human rights abuses in the Xinjiang region,” they wrote. “Cancelling these tariffs would create further unhealthy dependence on Chinese supply chains and embolden future systematic trade abuses as bad actors know that the U.S. will not hold them accountable.”

Lamar and other tariff detractors, however, have long contended the policy has largely failed at accomplishing its goals.

“The administration is saying, ‘We put these tariffs in place to effect change in China,’ right?” Lamar said. “Clearly, the change in China has not been affected. So, were these the wrong tariffs? Were they the wrong tool? The answer to all of that is ‘yes.’ So, the question then is what do they do now and maintaining this, staying the course is not the answer.”