None of DOJ's Section 301 Tariff Defenses ‘Carries the Day,’ Say Plaintiffs

The Trump administration’s “radical escalation” of Section 301 tariffs on Lists 3 and 4A Chinese goods “transgressed the statutory limits carefully delineated by Congress” when it crafted the 1974 Trade Act and delegated foreign-trade powers to the executive branch, said Akin Gump lawyers for sample case plaintiffs HMTX Industries and Jasco Products. This came in a cross-motion for judgment on the agency record filed Monday at the U.S. Court of International Trade in docket 1:21-cv-52. Akin Gump’s proposed order asks that the Lists 3 and 4A tariffs be vacated, that any duties paid be refunded with interest and that the government be “permanently enjoined” from imposing the tariffs again.

None of DOJ’s “contrary arguments” in its June 1 motion to dismiss the litigation on grounds that President Donald Trump and Office of the U.S. Trade Representative had the discretionary authority to levy the Lists 3 and 4A tariffs (see 2106020008) “carries the day,” said Akin Gump. The government wrongly asks the court “to put a heavy thumb on the scale in its favor,” it said.

Though the court rightfully defers to the executive branch’s Section 301 “factfinding” authority, “no equivalent deference is afforded to pure questions of statutory interpretation,” said Akin Gump: “USTR failed to develop or explain its expansive interpretation of its own authority during notice-and-comment rulemaking.” DOJ didn’t comment Tuesday. The court’s April 13 scheduling order gives the government an Oct. 1 deadline to respond to Akin Gump, plus to file answers to an untold number of plaintiffs’ amicus briefs due next Monday.

The Lists 3 and 4A tariffs on hundreds of billions of dollars of Chinese imports are “contrary to law,” said Akin Gump. “Absent a new investigation, the Trade Act does not permit USTR to increase (let alone by orders of magnitude) the penalties imposed following a targeted Section 301 investigation in response to a foreign country’s decision to apply reciprocal tariffs to U.S. goods.”

Nothing in the Trade Act allows USTR to increase its original Lists 1 and 2 tariff actions “in retaliation for China’s tit-for-tat response to USTR’s initial Section 301 determination,” said Akin Gump. “Making matters worse, both the List 3 and 4A actions were promulgated in a procedurally suspect and arbitrary and capricious manner that violated the Administrative Procedure Act,” it said. The rulemakings were “a sham process that made it impossible for USTR to review, let alone give reasoned consideration to, the thousands of comments objecting to the action (whose outcome was long preordained),” it said.

USTR’s “half-baked approach” to the comment process “reveals that its actions were arbitrary and capricious” in violation of the APA, said Akin Gump. “Thousands of American businesses and trade associations submitted comments and gave testimony describing the wide-ranging detrimental impacts that these additional tariffs would have on global supply chains, U.S. jobs, and U.S. consumer prices.” The agency “could not possibly have carefully reviewed the six days of hearing testimony and the over 6,000 comments submitted for List 3 in the eleven days between the submission of final comments and the announcement of List 3,” it said.