A hallmark of the Trump Administration trade policy is imposing tariffs — duties under Section 201 (safeguards), Section 232 (national security), and Section 301 (currently against China for intellectual property practices). For many companies, an integral component of supply chain management has included securing exclusions from these tariffs to avoid crushing duties that sideline downstream projects and value chains. But what happens if an exclusion vanishes without process or fair warning? The Administration has abruptly withdrawn exclusions in multiple contexts now, including exclusions covering certain solar panels and certain Chinese goods. In the last month, the US Court of International Trade (which has jurisdiction over trade actions in the first instance) made clear that there are limits on the Administration’s actions, and that federal agencies must, at a minimum, provide notice and comment periods and a reasoned decision before it can reverse course and apply duties to products that were excluded.

When such process is ignored, US courts can step in and provide protection for importers and other entities that reasonably relied on the tariff exclusion.

In depth

The dispute in the recent court case involved US safeguard measures on solar panel imports. (Invenergy Renewables LLC v. United States, No. 19-00192 43 2020 Ct. Intl. Trade LEXIS 76 (Ct. Intl. Trade May 27, 2020.) Based on a 2018 investigation, President Trump authorized import restrictions that include duties and quotas. The President further authorized the US Trade Representative (USTR) to carry out a process whereby interested parties could seek exclusions from the duties. After more than one year of proceedings, USTR excluded double-sided solar panels from the duties in June 2019. Shortly after, USTR reversed course and published a notice of its intent to reinstate the duties on double-sided panels, effective a mere 20 days later.

Several renewable energy companies sued and secured preliminary relief that prevented USTR from again imposing duties on the double-sided panels that it had excluded. In late May 2020, the US Government again urged the court to end the injunctive relief and permit duties to be imposed on the imports based on a new “process” that it carried out in February 2020 (in response to the litigation). The court continued to find legal deficiencies with the process and procedures carried out by the agency in attempting to again withdraw the exclusion. While preliminary injunctive relief continues, double-sided panels are imported duty-free.

Wider impact

While the court’s recent decision is limited to safeguard measures, which are imposed under a specific statutory scheme (Section 201 of the Trade Act of 1974), the court’s analysis has wider implications on a range of agency actions that may occur without process or meaningful opportunity for the public to participate. In the past weeks, USTR has, for example, withdrawn exclusions in the Section 301 context without public input or warning. These examples raise numerous questions, including whether the governing statutes and the Presidential delegation of authority to the agency permits such action at all.

Companies with a financial interest in any exclusion – whether under Section 301 or Section 232 duties – should consider all possible legal actions where the exclusions are revoked or changed without sufficient process. The recent ruling provides authority for defending exclusions and limits the Administration from reinstating duties.

How to Protect Your Company

  • Monitor changes to exclusions, including the scope (i.e., the covered product) and the applicable dates
  • Keep current on US case law to understand available remedies. For example, our Firm has challenged – and succeeded – in preventing the US Government from reinstating duties
  • Participate in administrative and judicial processes to ensure that any relief obtained applies to your products and your imports.
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