More than 6,000 disgruntled American importers are demanding billions of dollars in reimbursements of Trump-era tariffs. The firms contend that the U.S. government unlawfully disregarded public comments and did not assess the damaging effects on the American economy before imposing additional duties, ranging from 7.5% to 25%, on Chinese goods worth USD300 billion. “Did you take into account any of these comments? Did you come to some sort of modicum of independent judgment that these tariffs were appropriate in light of the devastating economic harm predicted by the largest industry and consumer organizations in the United States?”, a lawyer for the plaintiffs asked during a hearing this month at the U.S. Court of International Trade in New York. Countering the argument from the Office of the United States Trade Representative (USTR) that it had been following the President’s orders, the lawyer said: “The President could have ordered 500% duties on 100% of China trade.” Faced with rising prices for consumer goods, the Biden administration has been mulling the partial lifting of the tariffs to ease inflation.
An analysis by economist Pablo Fajgelbaum of the University of California, Los Angeles, found that tariffs through 2019 had led to a net loss of USD16 billion annually to the U.S. economy, including losses to firms and consumers. Another study co-written by Mary Amiti of the New York Federal Reserve Bank, said that “U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers”.
Former U.S. President Trump announced four tranches of China tariffs under Section 301 of the Trade Act of 1974, which lets the President take retaliatory action to press foreign countries to abandon harmful trade practices. The decision followed a 2017 investigation by USTR that accused China of indulging in discriminatory trade practices, costing U.S. commerce an estimated USD50 billion. The first two sets of 25% taxes, known as List 1 and List 2, were levied on Chinese goods worth USD50 billion in July and August 2018. In the ensuing months, Trump also imposed a 10% tax on another USD200 billion worth of Chinese goods in List 3. This was later raised to 25%. In 2019, Trump announced List 4a – an additional 7.5% duty on Chinese goods worth USD120 billion.
The lawsuit was originally filed in September 2020 by HMTX Industries, a Connecticut-based global manufacturer of vinyl tiles. It challenged the legality of the USTR’s authority to extend the tariffs to Chinese goods beyond List 1 and List 2 and its compliance with the Administrative Procedure Act, which requires federal agencies to involve the public in decision-making by publishing notices on proposals and seeking comments. Within months, the case was amended to include more than 3,000 similar lawsuits filed by other American importers and handed over to a panel of three judges. The number of plaintiffs has now surpassed 6,000. In April 2022, the court rejected the claim that the USTR overstepped its authority in imposing the duties, but ordered the federal agency to justify its evaluation of comments submitted in response to the initial proposal to levy the third and fourth rounds of tariffs. In a 90-page response in August, the USTR said it was unable to exclude a wide range of products mentioned by public commenters because Trump had asked it to identify USD300 billion in annual trade to punish China. Experts following the case say a ruling could come in 2023, but that neither party will settle without an appeal to a higher federal court, the South China Morning Post reports.
Data from U.S. Customs and Border Protection shows that as of September 2022, more than USD150 billion has been collected under Section 301 tariffs in the previous four years.
