Court Splits on China 25% Tariff

NEW YORK ––   The fate of the 25% tariffs imposed on most goods from China – including all hard surfaces – will remain unsettled until this summer, as a federal court opinion led to a kind of split decision between the U.S. government and a large group of U.S.-based importers.

A three-judge panel of the Court of International Trade issued a decision April 1 that the Section 301 tariffs imposed on most Chinese imports to the United States are legal and proper. However, the agency imposing the tariffs – the U.S. Trade Representative (USTR) – may have erred in dealing with the concerns of U.S. importers.

Section 301 tariffs, originally ordered on select Chinese goods by former President Donald Trump in 2017 over unfair trade issues, expanded into a near-blanket action against most imports from China in 2019. A single appeal to the U.S. Court of International Trade to that expansion in September 2020 snowballed into more than 3,600 complaints by U.S. importers, leading to the judge panel.

In their April 1 “slip decision,” the judges ruled that the USTR, had the authority to impose the expanded tariffs and turned down the requests of the importers to vacate the USTR’s actions. So, the tariffs remain in place.

However, the ruling also found that the USTR failed to fully follow federal procedures in responding to issues raised by importers before the decision to expand the tariffs. The judges directed the USTR, by the end of June, to further explain the 2019 tariff expansion in light of the objections raised by importers.

It’s highly unlikely that the court-ordered explanations will lead to any significant reversals of the tariffs by the USTR. However, the agency could make changes in the types of products affected and the rates.

Any legal action on the Section 301 tariffs will have no effect on the 300-percent-plus unfair-trade duties imposed on Chinese quartz surfaces in 2019 and Chinese ceramic products, including porcelain, in 2020.