Consumer Technology Association Considering Legal Action Over Section 301 Tariffs

The Consumer Technology Association is considering a lawsuit to challenge the proposed tariffs on $200 billion worth of goods from China under Section 301, the trade group said in a news release. “We are reviewing all options,” emailed spokeswoman Izzy Santa when asked if CTA will sue to block the levies. CTA's comments "detail how these tariffs may be vulnerable to a legal challenge because they are not based on the required legal finding of unfair business practices by China, and instead are retaliatory in nature and require a separate Section 301 investigation, which USTR did not conduct," it said. Gary Shapiro, CTA's CEO, said "we are skeptical the $200 billion tariffs will be upheld in court if challenged."

The association's comments raised several issues that CTA said would be susceptible to a lawsuit. For example, the Office of the U.S. Trade Representative's notice announcing the third list of tariffs cited China's response to previously imposed tariffs, "rather than on the original Section 301 investigatory findings, as the statute requires," it said. Also, Section 307 of the Trade Act, which the USTR cited as authority to impose the third list based on the initial Section 301 finding, only allows USTR to terminate an existing action, the group said. "It does not authorize USTR to impose brand new penalties that more than quadruple those imposed following the original investigation," CTA said. "Nor does it offer the Administration a blank check to increase tariffs at any time based on events post-dating the initial Section 301 investigation. Such unfettered discretion is inconsistent with the fact-based determination required by Section 301."

It's also unclear that the USTR is giving adequate attention to industry concerns, CTA said. Due to "shifting deadlines and arbitrary practices, CTA and its members are growing increasingly concerned that the administration is not taking its obligation to carefully consider public comments seriously," it said. That could leave USTR open to a challenge under the Administrative Procedure Act, which requires due consideration of public comments. "If the outcome of this process is not to be a fait accompli, USTR must seriously and carefully consider the many thousands of stakeholder views expressed in the comments, not rush to impose tariffs as soon as the comment period is over." Some expect the new tariffs to be approved soon, now that the comment period is closed (see 1808310033).

The agency's decision-making process on the tariffs is also unclear. "CTA can discern no consistent reason for USTR’s decisions to remove certain tariff lines from the proposed lists while others remain," it said. The USTR gave only confusing guidance on its considerations and it seems to have "ignored its own limited and contradictory guidance" so far. CTA asked the Trump administration to rethink its "likely unlawful" Section 301 proposal.

A Congressional Research Service report from earlier this year noted that the Court of International Trade has jurisdiction over challenges to Section 301 tariffs and that CIT has historically given wide deference to the USTR (see 1804100056). “What remains open to challenge before the courts, however, are allegations of statutory misinterpretations on the part of the USTR, violations of the statute’s procedures, actions that exceed the authority delegated to the USTR by statute, and similar claims,” the CRS report said.