Importers Take Note: Trump Administration's Section 301 Authority Challenged in Court

Holland & Knight LLP

A lawsuit filed with the U.S. Court of International Trade (CIT) on Sept. 10, 2020, seeks to upend the Trump Administration's authority to levy and collect certain of the tariffs imposed under Section 301 of the Trade Act of 1974 (the Act).1 The plaintiffs,2 U.S. importers of goods captured by List 3 (the third tranche of additional duties against Chinese-origin goods that became effective on Aug. 24, 2018), contend the U.S. Trade Representative failed to meet a timeliness of action obligation under the Act and otherwise violated the Administrative Procedure Act.

Timeliness of action, ironically, is precisely the issue that many in the importer community are struggling with as they decide whether they too wish to challenge the Trump Administration's Section 301 authority. Some in the legal community invoke Sept. 18, 2020 (this Friday) as "the" final day to file an action with the CIT or risk losing any right to seek refunds of duties already paid, while others pronounce it is Sept. 21.

However, both proposals are overly conservative, fail to account for individual importers' unique circumstances and do not properly analyze the relevant statutory language. Specifically, the CIT's residual jurisdiction provision — 28 U.S.C. § 1581(i) — imposes a two-year statute of limitations. The relevant question then is: What event starts the clock? Section 1581(i) explains it is when the "cause of action first accrues,"3 that is, when an importer is actually injured by the Section 301 tariffs. The U.S. government did not begin assessing additional tariffs on items appearing on List 3 until Sept. 24, 2018,4 and on List 4A until Sept. 1, 2019.5 The proverbial clock, as such, does not strike 12 for all importers on the same day. Instead, the relevant question is when your goods made entry.

Nonetheless, anyone who imported merchandise subject to List 3 duties on or immediately after Sept. 24, 2018, should be prepared to file by next week (Sept. 24, 2020) or risk the statute of limitations foreclosing their ability to seek refunds for some of those entries.


Notes

1 The case is HMTX Industries LLC v. United States, Case No. 20-00177 (USCIT filed Sept. 10, 2020).

2 Plaintiffs in the action are HMTX Industries LLC and its wholly owned family companies Halstead New England Corp. and Metroflor Corp., each a supplier of vinyl tiles.

3 28 U.S.C. § 2636(i).

4 China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (notice of modification of Section 301 action) (U.S. Trade Representative, Sept. 21, 2018).

5 China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (notice of modification of Section 301 action) (U.S. Trade Representative, Aug. 20, 2019). Although the aforementioned notice also establishes an effective date for imposition of tariffs on goods covered by List 4B, collection thereof remains suspended at this time. Consequently, it is unlikely that importers of goods on List 4B will have standing to sue, as no cause of action has yet to accrue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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