A shift in Section 301 duties

Section 301’s in the news

Section 301 duties, or “the Trump Tariffs” as they are known by most, are the additional duties which were imposed on many items in the harmonized tariff originating from China in response to a determination by the previous administration’s US Trade Representative. As a result of the findings of their investigation, duty rates began to be applied in increasing amounts to expanding portions of the harmonized tariff.

Importers had the opportunity to write to the USTR to request exclusions to these Section 301’s and many were granted. These exclusions were not open-ended and some were extended while others were not.

Following the change of administrations, some thought that the Section 301’s applied specifically against China would be lifted, but that has not proven the case as the U.S. continues to try to find ways to work with China on a number of thorny diplomatic and economic issues including human rights, Ukraine and intellectual property and alleged state-sponsored corporate espionage. 

In the past few weeks, there have been two notable pieces of news involving Section 301 duties we want to call your attention to right now.

USTR retroactive reinstatement of 352 previously expired exclusions.

In October, 2021, the administration invited comments on a plan to reinstate 549 previously granted exemptions. Following receipt and adjudication of the comments, the USTR announced in a Federal Register notice dated March 28th their intent to reinstate previously extended exclusions dating back to October 12, 2021 and through December 31, 2022. For importers who were using one of these exclusions, they can request a refund for 301 duties paid from October 12, 2021 onwards.

CIT decision on applicability of Section 301 duties on Lists 3 & 4a.

Thousands of cases were brought before the Court of International Trade and consolidated (the HMTX case) challenging the lawfulness of the Trump administration’s final lists – List 3 and List 4a. Many will recall that List 4b was the list that would have been the catch-all to nearly everything left in the tariff, including consumer electronics such as mobile phones and televisions.

From Crowell’s first paragraph summary:

“On April 1, 2022, a three judge panel of the U.S. Court of International Trade (CIT) unanimously found that the Office of the United States Trade Representative’s (USTR’s) imposition of Section 301 List 3 and List 4A tariffs on Chinese products failed to comply with the Administrative Procedures Act (APA). Specifically, the court ruled that the USTR did not adequately respond to the public comments filed in response to the List 3 and List 4 tariffs – each covering $200 billion and $300 billion, respectively – per the APA.”

The case, however, does not provide complete clarity for plaintiffs who sought an outright refund of the duties paid on Lists 3 & 4a as well as an end to the Section 301 duties for products on those lists.

The CIT found that USTR did have the requisite authority to impose the duties but said the agency did not fully explain in their response why they chose to do so. The panel has given the agency until June 30th to explain themselves and plaintiffs will again have the opportunity to respond.

For companies who are part of the action before the Court, one thing is pretty much assured – regardless of the outcome, it will be appealed to the Court of Appeals for the Federal Circuit (CAFC).

Importers whose merchandise was previously excluded from Section 301 duties and are seeking a refund should contact us for more information. We have the CIT’s decision and interested parties should contact us for a copy. 

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