The following lawsuits were filed at the Court of International Trade during the week of May 2-8:
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
Sidley lawyer Ted Murphy says he doesn't expect a review of Section 301 tariffs to lead to a policy change on the tariffs, which cover about $300 billion worth of Chinese imports annually. He said that even though a review of the tariffs has to evaluate how effective the actions have been, and has to analyze how the tariffs have affected consumers, "if it ultimately concludes that the additional duties have been only mildly effective and/or have had a negative impact on U.S. interests (businesses and/or consumers), there is no requirement that the USTR take any action. As a result, we do not think that this effort is likely to present a meaningful opportunity for change." Murphy wrote those sentences in bold, for emphasis. Still, he said it is possible, given the messages from some corners of the administration that goods such as bicycles or apparel should not be facing higher tariffs, that "additional duties on certain non-strategic consumer goods may be lifted."
Slightly more than half of senators want language instructing the Office of the U.S. Trade Representative to reopen a broad exclusion process for China tariffs to make it into the compromise China package, according to a late-night vote May 4. Unlike most votes in Congress, support did not break down mostly along party lines. One independent who caucuses with Democrats and 23 Democrats, including Senate Finance Committee Chairman Ron Wyden, D-Ore., voted for the motion to instruct negotiators to include the language in the final bill; 29 Republicans, also voted for it, including Senate Minority Leader Mitch McConnell of Kentucky and Indiana's Todd Young, one of the original movers to get the U.S. Innovation and Competition Act. Sen. Pat Toomey, R-Pa., asked for the motion, and he is also on the conference committee to blend USICA and the House China package. There were four senators absent from the vote.
Hours before the Senate was due to consider his non-binding instruction to negotiators on the China package to retain language directing the Office of the U.S. Trade Representative to reopen a Section 301 exclusion process, Sen. Pat Toomey, R-Pa., warned that if USTR didn't open such a process if the language becomes law, he would see that as a misuse of power.
The Office of the U.S. Trade Representative released a notice May 3 that asks companies that benefit from the Section 301 tariffs on List 1 to tell USTR if they think the tariffs should continue. They can comment May 7 to July 5. Companies that benefit from the tariffs on List 2 can comment June 24 to Aug. 22.
International Trade Today is providing readers with the top stories from last week in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
The following lawsuits were filed at the Court of International Trade during the week of April 25 - May 1:
CBP issued the following releases on commercial trade and related matters:
The top Republican on the House Ways and Means Committee, who will be one of the negotiators for the compromise China package, expressed pessimism that a version of the bill can be found that can get a majority vote in both the House and Senate. The Senate passed its version, the U.S. Innovation and Competition Act, with 67 votes; the House version, known as the Competes Act, only had one Republican on board.
The following lawsuits were filed at the Court of International Trade during the week of April 18-24: