In September 2020, Americans for Free Trade (AFT), the coalition IHA participates in to fight the Sec. 301 tariffs on Chinese products imposed by the U.S. Trade Representative (USTR), provided a forum for a lawsuit brought by vinyl floor importer HMTX Industries in the U.S. Court of International Trade (CIT). The lawsuit challenges the List 3 and List 4a China 301 tariffs as without statutory basis, because they were prosecuted in an untimely fashion and without statutory authority. The suit also challenges USTR’s procedural failings in seeking comment on and otherwise promulgating the lists. AFT’s platform for the HMTX attorneys and others facilitated more challenges, including lawsuits from IHA members, and by April 2021 more than 3,700 cases had been filed with the CIT. The CIT consolidated these cases (with HTMX as the lead case) and ordered plaintiffs and the government to negotiate several key issues. One of the issues concerned suspending the tariffs during the litigation and, on April 23, plaintiffs asked the CIT for an injunction to ensure they can secure tariff refunds if the consolidated lawsuits succeed.
The CIT ruled for the plaintiffs on July 7, ordering Customs and Border Protection (CBP) not to liquidate (finalize) contested duties by transferring the funds to the U.S. Treasury. In turn, plaintiffs’ attorneys advised their clients that pertaining to earlier data filed with CBP to preserve their claims, there’s no need for CBP to collect entry data at this time and if there’s a final judgment in favor of the plaintiffs, the government will either re-liquidate plaintiffs’ entries to refund the duties or will simply issue a refund without re-liquidation. However, to secure a refund, each plaintiff will need to submit entry details confirming that it paid the duties, though the claims format isn’t clear yet. Therefore, it’s important that plaintiffs keep physical or electronic copies of all entries on which they paid List 3 and List 4a duties (including liquidated entries) as any entries not included in the data supporting claims may not be included in the refund.
Not surprisingly, the CIT’s July 7 ruling sparked more interest in the case, but it should be noted that the CIT issued a stay on the conventional process for new plaintiffs entering challenges after April 1. The court’s process now requires that new plaintiffs be vetted by a legal steering committee (consisting of attorneys who are leading the consolidated case) at least three days before filing a motion to lift the stay in order to be added to the case. Using this new protocol, Intel, Apple and Pfizer joined the case in August. In addition, an amicus brief supporting plaintiffs’ consolidated case was filed on behalf of the American Apparel & Footwear Association, the Retail Litigation Center, the National Retail Federation, the Consumer Technology Association, the Footwear Distributors and Retailers of America, the Juvenile Products Manufacturers Association, and the Toy Association.
IHA members should consider taking the following steps in preparation for tracking of 301 duty expenses:
- Retain 7501 forms, allowing for 301 duty charges to be easily accessed
- Add a line item within the accounting software system, under the “chart of accounts” for 301 duty, allowing for tracking and subsequent generation of reports to show the 301 duty expense paid within the accounting system