Some of former President Trump’s Section 301 tariffs will be reviewed by the United States Trade Representative after the U.S. Court of International Trade’s Friday ruling in a closely watched case.
Four plaintiffs laid out the first of roughly 3,600 cases contesting the USTR’s List 3 and List 4 punitive tariffs on $350 billion in China-made goods. HMTX Industries LLC, Halstead New England Corporation, Metroflor Corporation, and Jasco Products Company LLC cited the Trade Act when arguing that the USTR did not have the right to impose duties that surpassed the scope of the original List 1 and List 2 tariffs that were already in place on $50 billion in goods.
The CIT ruled against the USTR’s motion to dismiss the case, saying that the trade agency failed both to adequately respond to public concerns generated before the tariffs took effect and to justify its reasoning for the additional duties. Representative Katherine Tai has until June 30 to issue an explanation for the tariffs, taking into account what effect they had on remedying China’s tilted trade practices and harmful impacts on U.S. commerce.
The CIT’s ruling forces the issue back into play, but doesn’t amount to an outright win for the plaintiffs or their peers. The court rejected the plaintiffs’ claim that the USTR implemented the tariffs unlawfully, noting that the trade actions resulted from Chinese tariffs imposed on the U.S. The CIT declined to require the federal government to remove them or to reimburse companies for the duties they have already paid.
The news comes just over a week after the USTR announced a decision to reinstate 352 extended product exclusions—including a number of silk and polyester fabrics, cashmere, camel hair yarn, backpacks, duffel bags, bathrobes and blankets, among other items—through Dec. 31. Now published to the Federal Register, the exclusions are retroactive to Oct. 12, 2021, meaning that companies will be reimbursed for the Section 301 duties already paid on these goods.
The USTR’s investigation included 549 items eligible for exclusions, though the fashion industry hopes to see more added to the list. “USTR has restarted a targeted tariff exclusions process to ensure that our economic interests are being served, and we will keep open the option of further tariff exclusions processes as warranted,” Tai’s office wrote in the March report.
Punitive measures should push China toward compliance while supporting U.S. companies that manufacture in the Asian nation, USTR wrote. A “large, non-market economy,” China “is uniquely able to distort the marketplace through unfair, anticompetitive practices” that harm workers and businesses in the U.S. and abroad, the report said.
“We are clear-eyed about China’s doubling down on its harmful trade and economic abuses,” USTR wrote. “We are also mindful that rash response measures can create vulnerabilities of their own.”
Chinese President Xi Jinping has aligned with Russian President Vladimir Putin amid the latter’s war on Ukraine. In mid-March, President Joe Biden warned Xi that backing Russia could come with new sanctions and further strain U.S.-China trade relations.