New CIT Case Challenges Imposition of China 301 Tariffs Under Lists 3 and 4a - Could Result in Refunds on Duties Already Paid

Clark Hill PLC

On September 10, 2020, Plaintiffs HMTX Industries LLC (“HMTX”), Halstead New England Corporation (“Halstead”), and Metroflor Corporation (“Metroflor”) filed a complaint at the Court of International Trade (“CIT”) alleging that the Section 301 tariffs on List 3 and List 4A goods were imposed in violation of the authority provided under the Trade Act of 1974 and the Administrative Procedures Act (“APA”). If the litigation proves successful, importers paying Section 301 duties on products in Lists 3 and 4A would be eligible for refunds.

HMTX, Metroflor, and Halstead are all importers of vinyl tiles subject to the 301 Tariffs and are challenging the tariffs on two grounds. First, Plaintiffs allege the Office of the United State Trade Representative (“USTR”) operated outside of its statutory mandate by imposing the List 3 and List 4A Tariffs as both went into effect outside the 12-month window between the conclusion of an investigation into China’s practices and the President’s action on those goods. While tariffs imposed on Chinese imports under List 1 and List 2 did fall in that window, later additions such as List 3 and List 4 occurred well after the year anniversary of the investigation notification. Plaintiffs further state that if USTR alleges that Lists 3 and 4A are continuations or a “modification” of the prior Lists, the Trade Act only allows for modifications to de-escalate a trade conflict, including decreasing the tariff applied to listed products, suspension of the tariff, and revocation of the tariff. Second, Plaintiffs argue that even if the tariffs are deemed proper, USTR’s implementation of the tariffs violates notice and comment provisions of the APA.

There is a tight deadline for importers to protect their and their customers' rights to these potential refunds. 

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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