On September 25 and after years of litigation, the Federal Circuit upheld tariffs on Chinese goods imposed during President Donald Trump’s first term under Section 301 of the Trade Act of 1974 . The three-judge panel unanimously agreed that the administration had the authority to expand the initial tariffs from USD 50 billion to USD 320 billion worth of Chinese goods on products in 2019. Importers challenged the tariffs arguing they were unlawful. The court found that the Office of the US Trade Representative (USTR) acted within its authority to modify the tariffs in response to unfair foreign trade practices.
The tariffs were first imposed starting in 2018 on two lists totaling USD 50 billion of Chinese goods (List 1 and List 2) after a Section 301 investigation based on allegations of Chinese theft of US intellectual property and other actions. China then imposed its own retaliatory tariffs, leading the US to expand its tariffs based on two additional lists to ultimately cover more than USD 320 billion of additional Chinese imports (Lists 3 and 4A). The central issue in the challenge was whether the expansion of tariffs to include goods identified in Lists 3 and 4A was a modification of the original action or an entirely new action requiring a new process (including notice and comment under the Administrative Procedures Act). The Federal Circuit judges concluded that the law does not limit the USTR’s the discretion to modify the tariffs under Section 301.
Judge Todd M. Hughes, writing for the court, rejected the importers’ arguments that the USTR’s interpretation of the law violated constitutional principles, including the major questions and nondelegation doctrines. In response to arguments that the USTR could only reduce or eliminate Section 301 tariffs because that is how the statute has been used historically, Judge Hughes emphasized that the USTR’s prior actions do not limit the proper interpretation of the statute. The court also upheld the US Court of International Trade’s remand order for the government to provide better explanations for the tariff modifications, though the Federal Circuit rejected the plaintiffs’ contention that the obligation to provide better explanations for the modifications should invalidate the tariffs imposed on goods in Lists 3 and 4A.
This ruling has significant implications for US-China trade relations and the broader context of international trade law. It underscores the broad authority granted to the USTR in addressing unfair trade practices and sets a precedent for future trade disputes, while resolving a legal dispute over Section 301 tariffs that have been in effect since the first Trump administration (and which have been maintained and even expanded for certain imports into the United States from China).
