Trade Cases

CIT Receives Thousands of Lawsuits Over Section 301 Tariffs

September 27, 2020

The Trump administration has received more than 3,300 lawsuits from manufacturers alleging that the most recent rounds of tariffs against China under Section 301 of the Trade Act of 1974 were unlawful and arbitrary.

The first two rounds of tariffs covered $50 billion worth of Chinese goods. The third was implemented on $200 billion of imports and the fourth on $120 billion. The products in question include everything from household goods and clothing to machinery and auto parts. Plaintiffs allege that the United States Trade Representative exceeded its authority in imposing the third and fourth rounds and are seeking refunds for tariffs already paid.

A number of major automakers have filed lawsuits with the Court of International Trade including Tesla, Volvo, Ford and Mercedes Benz. Tesla called the tariffs “arbitrary, capricious, and an abuse of discretion.”

Mercedes Benz accused the administration of prosecuting “an unprecedented, unbounded, and unlimited trade war. Mercedes added that U.S. law “did not confer authority on defendants to litigate a vast trade war for however long, and by whatever means, they choose.”

The National Law Review states, “Section 301 of the Trade Act of 1974 authorizes the USTR to impose duties to combat certain ‘unreasonable’ or ‘discriminatory’ trade acts by a foreign government.” Tariffs are paid by the U.S. importers of those goods.

The National Review added, “The plaintiffs argue that the Section 301 law was not intended as a tool to engage in an ‘open-ended trade war,’as opposed to an initial response to China’s intellectual property violations.”

Although the lawsuits are consider a long shot at best, the sheer number of complaints are expected to garner serious attention from the CIT. Besides the automakers, major companies include HMTX Industries, Coca-Cola, Home Depot and Target.

“I would hope the court realizes that law firms and companies don’t sue the government on a whim. That while the payout could be significant, they would not do this without having looked at it carefully and done the due diligence to make sure the case is legitimate,” a lawyer told Inside U.S. Trade. “You don’t pull the trigger on suing the government lightly. I think the number of cases and the well-regarded law firms — that should have some impact on any judge’s views of the validity of the claims. I don’t think they can ignore that.”