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Chinese Product Tariff Challenge Causes Flurry of Importer Lawsuits

Client Alert
March 26, 2021

A lawsuit filed late in 2020 at the U.S. Court of International Trade (“CIT”) challenging the U.S. Trade Representative’s (USTR) implementation of Section 301 “List 3” and “List 4” duties on products from China, HMTX Industries LLC et al. v. United States (Court No. 20-00177), has resulted in the filing of thousands of additional lawsuits brought by other affected importers. There are now 3,700+ companies added to the list, including Ford, Home Depot, Target, Tesla, and Walgreens, along with many other smaller importers.

BACKGROUND

In 2017, USTR was directed by the President to initiate a targeted investigation pursuant to Section 301(b) of the Trade Act of 1974 regarding China’s laws, policies, practices, and actions related to intellectual property, innovation, and technology. Upon the release of the report, USTR imposed a 25% tariff on a list of 1,333 items with a total trade value of $50B. This was followed by subsequent lists of additional products from China with tariffs ranging from 10% to 25%.The items on List 3 have an annual trade value of $200B and those on List 4 have a trade value of $300B. Items on these lists include furniture, lighting, vehicle parts, machinery, food, clothing and many more.

EXISTING LAWSUIT

On September 10, 2020, HMTX Industries LLC and two of its subsidiaries filed a complaint at CIT alleging an unlawful escalation of the ongoing trade war with China through the imposition of a third round of tariffs on imports covered under List 3 of the Section 301 tariffs. An amended complaint was filed on September 21, 2020 to include List 4A.

Plaintiffs have generally taken the position that, while initial retaliatory tariff action reflected in the implementation of Section 301 Tariffs on products found on List 1 and List 2 may have been lawful, the USTR’s subsequent round of actions (i.e., List 3 and List 4A) failed to comply with requirements under the Administrative Procedures Act.  These lawsuits, if successful, may ultimately eliminate List 3 (and where applicable, List 4A) tariffs and result in refunds.  It remains to be seen whether refunds would be applicable to all importers, or only those who filed complaints. 

The complainants seek to set aside these alleged unlawful actions and obtain a refund of any duties paid on imports of List 3 and List 4 products from China. All complaints are asking for a refund, with interest, of duties paid, costs, and reasonable attorney fees.

JOIN THE COMPLAINT

The strategy behind this type of lawsuit is to file suit and then move to consolidate with the HMTX Industries case or stay the lawsuit pending CIT’s disposition of the HMTX case. This strategy will allow the bandwagon importers to benefit if the HMTX Industries lawsuit is successful without incurring the large expenses of fully litigating their claims.

Because USTR published List 4A in the Federal Register on August 20, 2019, the two-year statute of limitations for filing a List 4A lawsuit based on publication date does not expire until August 20, 2021. This means importers that did not import products from China under List 3 (or chose not to file a List 3 lawsuit now) have an opportunity to file a lawsuit to join this challenge on imported Chinese products subject to duties under List 4A.

HOW BMD CAN HELP

Many of our clients may be directly or indirectly affected by these tariffs. Because of existing protest limitations, joining this lawsuit might be a reasonable option to attempt to recover those costs. If any clients are aware of imported items subject to these tariffs or wish to have their import documents reviewed, please contact International Law Attorney Kevin Burwell directly at kdburwell@bmdllc.com or 330-253-3715.

International LawKevin BurwellTariff
Client Alert

Your Workplace Under Biden

November 9, 2020This is my favorite recurring post – Predictions of How a New Administration Will Affect Your Workplace. Four years ago, we accurately called the emasculation of the 2016 proposed FLSA Overtime Rules (the salary exemption threshold was set at $35,568 in 2019, rather than $47,476 as proposed), we forecasted a conservative shift of the NLRB and its results (a roll-back of employee rights, social media policy evaluations, and joint employer rules), and we nailed the likelihood of multiple conservative appointments to the United States Supreme Court and its long-term effects (although I completely failed to predict that my ND classmate Amy Coney Barrett would fill the final vacancy during the Trump administration). This time, the L+E Practice of BMD has decided to make it a group effort at predicting what will happen, what probably happen, and what might happen under President Biden. As always, please save this in your important files and pull it out four (or eight) years from now to judge our accuracy.Client Alert

HHS Provider Relief Funds Reporting Requirements: Important Updates Every Provider Should Know

November 4, 2020HHS continues to revise its reporting requirements for the use of the Provider Relief Funds. Providers with more than $10,000 in Provider Relief Fund payments must report on the use of the funds through December 31, 2020. The reporting window will begin on January 15, 2021 and providers must complete reporting obligations for FY 2020 by February 15, 2021 through a portal designed by HHS. However, providers that have unexpended funds as of December 31, 2020, will have an additional 6 months to use the remaining funds through June 30, 2021. These providers must submit a second and final report no later than July 31, 2021.Client Alert

Should I Apply for Phase 3 Funds? Important Considerations Every Provider Should Know

November 2, 2020On October 1, 2020, the Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers through a Phase 3 distribution. Importantly, providers that previously received HHS Provider Relief Funds or already received payments of approximately 2% of annual revenue from patient care are eligible to apply. Eligible providers have until November 6, 2020 to apply for these Phase 3 Funds. However, the question from providers continues to be: Should I Apply for Phase 3 Funds?Client Alert

CISA Ransomware Practices

October 29, 2020On October 28, 2020, the United States Cybersecurity and Infrastructure Security Agency (CISA) issued an alert warning of imminent threats to US hospitals and healthcare providers. The specific threat involves RYUK Ransomware attacks. RYUK is a novel ransomware that goes undetected by commercial anti-virus/malware detection programs. Once deployed, RYUK encrypts all data and disables systems. In short, it cripples all functionality down to phone systems and automated doors. Healthcare providers should alert their employees to remain hyper-vigilant and report any suspicious activity seen in email or on networks. It has been reported healthcare providers in New York, Pennsylvania and Oregon have been targeted in the last 48 hours. If your organization encounters issues, BMD can assist in mobilizing a response team and has contacts with forensic IT firms that are familiar with RYUK. It is advisable to engage professionals with experience dealing with this specific threat.Client Alert

HHS Announces an Additional $20 Billion In Provider Relief Grants

October 5, 2020The U.S. Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers on October 1, 2020. Eligible providers include those that have already received Provider Relief Fund payments as well as previously ineligible providers, such as those who began practicing in 2020, and an expanded group of behavioral health providers confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic. The new Phase 3 General Distribution is designed to balance an equitable payment of 2% of annual revenue from patient care for all applicants plus an add-on payment to account for revenue losses and expenses attributable to COVID-19.
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