Supreme Court Allows China 301 Tariffs on POLYESTER YARN, WOOLSACKS, and HATS

On June 15, 2026, the U.S. Supreme Court DECLINED TO HEAR an appeal from the decision of United States Court of Appeals for the Federal Circuit affirming the Court of International Trade decision that USTR's actions relating to List 3 and List 4 did not violate any federal law.

In other words, the lawsuit is DEAD. The China Section 301 tariffs will continue.

While Agathon Associates does not include an attorney, it was possible to refer clients to an attorney who could file on their behalf.

Agathon Associates clients who joined the lawsuit were importers of the following merchandise:

• Various classifications under Subheading 5402.20 and 5902.20
  • Certain polyester yarns (25% 301 tariff).
• Statistical classification 6305.39.0000
  • Nylon woolsacks (7.5% 301 tariff in addition to General Rate of Duty of 8.4%).
• Statistical classification 6502.00.6030
  • Straw hat bodies (25%, General Rate of Duty is Free).

The Supreme Court docket is available at https://www.supremecourt.gov/docket/docketfiles/html/public/25-1012.html.

Update on China Section 301 Tariff Lawsuits

In September 2020, HMTX Industries LLC, a U.S.- based importer, brought the first of these lawsuits to the CIT. The company, as well as several of its affiliates, challenged the List 3 tariffs, and later amended its complaint to challenge List 4A. Subsequently, approximately 6,000 importers of various goods from China filed similar challenges to the Lists 3 and 4A tariffs as well as List 4B, seeking a refund of duties paid. Collectively, these lawsuits represent the first domestic court challenges to Section 301 tariffs. Not only is this legal challenge unprecedented, but the number of cases is as well. The CIT generally receives a few hundred cases per year; the Section 301 cases, in conjunction with other 2020 filings, increased its caseload by 1,546% from 2019 to 2020.

The CIT has taken several procedural steps reflecting the scope and potentially significant legal implications of these challenges. First, the court assigned all cases to a three-judge panel and created a single “master case” titled In re Section 301 Cases, under which the parties must file all relevant documents. Second, the court decided to manage the disputes by selecting a representative sample of claims, which would be used to assess the legal challenges’ viability and potentially suggest how the court should address the remaining cases. While the test case is considered, all other cases are stayed.

The HMTX case, whose claims served as a model for many subsequent claims, was selected by the CIT to serve as the test case. In their amended complaint, the HMTX plaintiffs contend that (1) the USTR violated procedural requirements for imposing Section 301 tariffs; and (2) the Agency exceeded its statutory authority when imposing the tariffs.

On April 1, 2022, the CIT issued an opinion on the merits. The court first ruled that USTR acted within the authority provided by Section 307 when it imposed additional tariffs under Lists 3 and 4A. Specifically, the court found a “clear connection” between China’s retaliatory actions (i.e., imposition of tariffs on U.S. goods) and USTR’s determination that these retaliatory actions increased the burden on U.S. commerce resulting from China’s unfair acts, policies, and practices such that USTR could rely on Section 307(a)(1)(B) to modify the action.

Although the CIT found that USTR acted within its statutory authority to modify the Section 301 action, it next ruled that USTR violated the Administrative Procedure Act (APA) (5 U.S.C. § 551 et seq.) by failing to respond adequately to public comments in its final action. In particular, the court faulted USTR for failing to explain how USTR arrived at its decision to raise tariffs on particular products despite the numerous public comments contesting the appropriateness of imposing new tariffs and the inclusion or exclusion of particular products. Based on these procedural violations, the court remanded Lists 3 and 4A to USTR for reconsideration or further explanation, but decided to allow the tariffs to remain in place given the “disruptive consequences” of removing them during remand, stating: “For now, the court declines to try to unscramble this egg.”

If USTR chooses to reconsider or provide further explanation, it must submit its decision to the CIT by June 30, 2022. Alternatively, USTR and the plaintiffs may seek to appeal the CIT’s ruling.

Agathon Associates raised questions about the legality of the List 3 tariffs in this September 18, 2018 blog.

Business Groups File Amicus Brief Calling USTR Tariffs Process ‘Flawed’

On August 9, 2021, the Retail Litigation Center, the National Retail Federation, the American Apparel & Footwear Association, the Consumer Technology Association, the Footwear Distributors and Retailers of America, the Juvenile Products Manufacturers Association and the Toy Association today filed a “friend of the court” amicus brief in the U.S. Court of International Trade. The trade groups submitted the brief in support of businesses and their workers that have been negatively impacted by a series of escalating tariffs covering virtually all Chinese imports to the United States imposed by the United States Trade Representative (USTR).

In 2018, following a Section 301 investigation into China’s trade practices regarding forced technology transfer and intellectual property rights protection, the Trump Administration initiated several massive tariffs against Chinese imports. Thousands of American businesses have been forced to pay these taxes to import Chinese goods and products, which ultimately result in higher prices for U.S. consumers. The Biden Administration has kept these tariffs in place when American businesses are doing their best to safely serve customers, and keep workers on their payrolls, during the pandemic.

In September 2020, more than 6,000 plaintiffs filed lawsuits challenging the List 3 and List 4A tariffs as unlawful under Section 301 of the Trade Act of 1974 arguing that the USTR exceeded its authority when it imposed tariffs without attempting to connect them to any underlying investigation of China’s trade practices. The amicus brief supports the plaintiffs’ arguments and highlights USTR’s violation of its statutory obligations under the Administrative Procedure Act by failing to give adequate opportunity for, or consideration of, public comments.

(Lack of adequate opportunity for, or consideration of, public comments was an objection raised by Agathon Associates on behalf of clients in a Septebmer, 2018, blog post, which also suggested that injured parties may wish to consider suing the government.)

The staggering scale and far-reaching effects of the proposed tariffs required USTR to take a thoughtful approach consistent with its statutory obligation under the Administrative Procedure Act. Instead, USTR imposed compressed public-comment timelines, which often gave businesses only a few days to analyze the impacts on supply chains and retail operations and develop thoughtful comments. To make matters worse, despite receiving nearly 10,000 comments and pieces of testimony, the overwhelming majority of which opposed the tariffs, USTR refused to respond to any of the identified concerns.

According to the amicus brief:

“Those proposed tariffs implicated hundreds of billions of dollars of imports and impacted almost every facet of the U.S. economy. Many stakeholders, including amici’s members must plan out their international supply chains and delivery schedules months in advance. Not surprisingly, these businesses needed time to review the hundreds of thousands of products they sell to evaluate the availability and feasibility of alternative non-Chinese sources and to assess impacts on supply chains and retail operations.”

“If USTR had satisfied its obligation to allow for meaningful comments from amici and others and had actually considered them, it would have recognized the considerable harm its actions would inflict. The tariffs are a hidden tax on U.S. consumers, hurting domestic producers, retailers, and customers alike. And, as predicted, they have had a significant adverse impact on the U.S. economy.”

The amicus brief was written by Joseph R. Palmore and Adam L. Sorensen of Morrison & Foerster LLP. View the amicus brief in its entirety here

Biden Administration Legal Team Outlines Defense in China Section 301 Case

On September 11, 2020, a lawsuit was filed challenging the legality of the Section 301 tariffs on China. It specifically challenges List 3 and List 4. Over 3,000 additional plantiffs have filed copy cat cases.

On March 12, 2021, the government filed its outline of ANTICIPATED DEFENSES

1. USTR was acting at the direction of the President in promulgating List 3 and List 4, and the President is not subject to the Administrative Procedures Act (APA).

2. Review of the President’s discretionary decisions, and USTR’s implementation of those decisions, present a non-justiciable, political question.

3. Even if the challenged actions could be considered actions of USTR, substantial deference is afforded, and the Court should not interpose because there was no clear misconstruction of a governing statute, significant procedural violation, or action outside delegated authority.

4. USTR (acting at the direction of the President) possessed the authority under Section 307 of the Trade Act to promulgate List 3 and List 4, because the burden or restriction on United States commerce of China’s acts, policies, and practices that were the subject of the Section 301 action continued to increase, including following the one-year investigation period, and because the previous actions taken in response to the Section 301 investigation proved to no longer be appropriate, as the actions were not effective in eliminating the unfair trade practices that were the subject of that investigation. In addition, Section 307 does not limit modifications to merely delaying, tapering, or terminating an action.

5. Alternatively, if the challenged actions constitute agency action, they are exempt from the APA’s informal rulemaking requirements, because they qualify for the foreign affairs function exception.

6. Even if the APA’s informal rulemaking requirements apply, USTR’s actions in promulgating List 3 and List 4 complied with all statutory requirements, and they were not arbitrary and capricious, contrary to law, or in excess of statutory authority.

More information is available at https://news.bloomberglaw.com/international-trade/biden-white-house-defends-trump-china-tariffs-in-legal-showdown.

Lawsuit Challenges China 301 Tariff, Deadline Join is Friday, September 18

A lawsuit was filed last Friday challenging the legality of the Section 301 tariffs on China. It specifically challenges List 3 and List 4. The nature of legal remedy they are relying on means that if they are successful the plaintiffs would recover all Section 301 tariffs back to the date the tariff was first applied. HOWEVER relief will NOT BE AVAILABLE to others who have paid those tariffs. The only way to get relief, if relief is granted, is to FILE YOUR OWN lawsuit. AND YOU MUST ACT QUICKLY, the deadline to file is Friday, September 18, 2020.

Here's a link to the lawsuit

https://filehost.thompsonhine.com/uploads/USCIT_-_HMTX_Industries_LLC_et_al_v_United_States_-_Sept_2020_2ea7.pdf

If you Google on "Court No. 20-00177" you will find several trade lawyers who can explain this action.

Back in September 2018 I posted my opinion that a lawsuit might be successful, but due to high cost and the likelihood of winning no one, until now, has attempted this approach.

Now, with this lawsuit commenced I suggest you contact whoever you use as an international trade attorney ask for a consultation to determine whether you should act quickly and file your own suit.