In 2020, HMTX Industries, LLC, along with over 3,600 other importers and associations, filed a lawsuit claiming that President Trump exceeded the authority delegated by Congress under Section 301 of the Trade Act when implementing the List 3 and 4a tariffs during a "trade war" with China. The lawsuit alleges violations related to trade secrets and intellectual property rights (IPR) theft.

The plaintiffs argued that the statute related to Section 301 stipulates that any penalty tariffs should be specifically tailored to address particular harms. However, they claimed these tariffs were implemented without providing meaningful due process for interested parties. In response, the government contended that decisions regarding foreign affairs and political matters are not subject to judicial review.

While the Court concluded in 2022 that the USTR properly exercised its statutory authority when it promulgated List 3 and List 4A tariffs as it was inter-related with China’s retaliatory tariff actions, it also ruled that the complaint that the USTR violated the Administrative Procedures Act (APA) had merit. The Court found at that time that the USTR did not sufficiently respond to comments from importers.

Fast forward to May 2023 when a Court of International Trade (CIT) decision held that despite the alleged flaws in the USTR implementation and explanations of the necessity of the tariffs, the Section 301 tariffs were legally implemented.

This issue was immediately appealed to the Court of Appeals for the Federal Circuit (CAFC), and we now hear that the oral arguments for the lead case (HMTX Industries LLC v.US) have been placed on the Court’s calendar for January 8, 2025.

This is novel litigation with several underlying factors to consider.

• Importers may need to file claims to protest their rights in the event of a positive outcome.
• Many refund claims would be time-barred as it has been more than 2 years since some import entries have been liquidated.
• There is no class action lawsuit pending that might benefit all importers in the future.
• Some potential jurisdictional issues may affect when the “date of accrual” might fall. The date for actionable claims must be set and it is unclear what that date would be set and by who.

It is possible that a decision by the CAFC on the current appeal before the Court will take several months to conclude and any decision may face yet another appeal from the losing party. This decision could mean either a request for a rehearing in front of the Federal Circuit or upward to the Supreme Court.

As the trade community waits to learn more about tariff action during the second Trump administration, legal review of the initial tariffs during the first Trump administration continues.