The Court of International Trade has ordered that the tariff actions imposed by the Office of the United States Trade Representative, as amended on remand by Further Explanation of the Final List 3 and Final List 4 Modifications Pursuant to Court Remand Order, ECF No. 467, are sustained.

In a nutshell, while the Court ordered the government to correct the record - ECF 466, Sec. 301 Final Lists 3 & Final 4a are valid and remain in place.

On August 14, 2017, the President issued a memorandum instructing the United States Trade Representative (USTR) to consider initiating an investigation consistent with Section 302(b) of the Trade Act, addressing the Government of the People’s Republic of China’s (“China”) “laws, policies, practices, or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development.”

In September 2018 and August 2019, the USTR imposed import duties on specific China products, referred to as “List 3” and “List 4A,” in addition to the initial lists previously implemented.

In 2021, plaintiffs HMTX Industries LLC, Halstead New England Corporation, Metroflor Corporation, and Jasco Products Company LLC were the first of roughly 3,600 cases alleging that the USTR exceeded its statutory authority and violated the Administrative Procedure Act (“APA”), 5 U.S.C. § 706(2), when it promulgated List 3 and List 4A.

In Section 301 Cases, 46 CIT __, 570 F. Supp. 3d 1306 (2022), the United States Court of International Trade (CIT) rejected the Defendants’ (“the Government”) argument that Plaintiffs’ claims were nonjusticiable and addressed Plaintiffs’ substantive and procedural challenges.

Although the court sustained the USTR’s statutory authority to impose the tariffs pursuant to section 307(a)(1)(b) of the Trade Act, id. at 1323–35, the court remanded the matter for the USTR to comply with the APA requirement for a reasoned response to comments submitted during the List 3 and List 4A rulemaking proceedings.

Plaintiffs and Amici subsequently filed comments opposing the remand results and sought to vacate List 3 and List 4A, while the Government filed responsive comments in support of the Remand Results.

The court heard oral argument on February 7, 2023. Docket Entry, ECF No. 488.

Plaintiffs and Amici challenge the Remand Results on some basic grounds.

1. The USTR used impermissible post hoc reasoning - arguing that USTR failed to demonstrate consideration of comments upon which it now seeks to elaborate).
2. The USTR’s reliance on Presidential direction to explain its lack of discretion is legally insufficient given the breadth of USTR’s request for comments. Plaintiffs further contend that USTR responded to major policy concerns raised in the comments in an inadequate and conclusory manner.
3. The Plaintiffs further asserted that USTR failed to explain why the benefits of the actions outweighed their costs in terms of economic harm and argued that USTR failed to address concerns about the perceived ineffectiveness of the tariffs or proposed alternatives to the increased tariffs.

After oral arguments, the CIT issued an Opinion and Order on March 17, 2023 (Court No. 21-00052-3JP) addressing the response to the remand.

Some highlights:

1. The Court said that the contested USTR’s Remand Results are not impermissibly post hoc simply because USTR analyzed and addressed the comments on remand.
2. The Court previously held that the imposition of List 3 and List 4A duties constituted agency—not Presidential—action. Plaintiffs failed to persuade the court that USTR was required to provide additional explanation regarding its reasons for agreeing with the President that the chosen actions were “appropriate.”
3. The Court admonished USTR for its failure to respond to comments “within the context of the specific direction provided by the President.
4. The Court advised that USTR’s decisions at the subheading level reflect a weighing of economic harm, and mere disagreement with USTR’s actions is not a basis for the Court to overturn them.
5. The Court advised that USTR was not bound to agree with commenters characterizing tariffs as an ineffective option simply because List 1 and List 2 duties were deemed insufficient.
6. The Court said that the USTR had adequately explained its disinclination to consider other Tariff alternatives.

With the above opinion and order, the Court sustained Final List 3 and Final List 4 as amended by the Remand Results.

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