Two lawsuits have been filed challenging the legality of the recently announced Section 301 forced labor tariffs imposed by the Office of the United States Trade Representative ("USTR") on imports from numerous countries based on alleged failures to adequately prohibit goods produced with forced labor. A copy of the complaints can be found here and here.
We expect that the forthcoming litigation will principally allege that the USTR exceeded the authority granted by Congress and failed to satisfy the procedural and substantive requirements governing agency action.
Unlike the recent litigation involving tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"), these cases are expected to focus on whether USTR properly exercised its statutory authority under Section 301 and whether its final determination complies with the Administrative Procedure Act ("APA").
The filing of the lawsuit does not suspend the effectiveness of the tariffs. Unless the court issues a preliminary injunction or other relief, importers remain responsible for complying with all applicable customs requirements, including payment of any Section 301 duties.
Importers should consider:
continuing to accurately declare and pay all applicable duties;
preserving complete entry, liquidation, and duty payment records;
monitoring liquidation and protest deadlines where appropriate;
evaluating the potential financial impact of the challenged tariffs; and
consulting counsel regarding whether participation in the litigation or related proceedings may be appropriate.
Should the plaintiffs ultimately prevail, the scope of any available relief will depend upon the court's decision and the remedy ordered.
Among the issues that may arise are:
whether relief extends beyond the named plaintiffs;
whether CBP would establish an administrative refund process;
the treatment of entries that liquidate while the litigation is pending; and
whether any refunds would include statutory interest.
The recent IEEPA tariff litigation demonstrates that even after a favorable judicial decision, significant questions may remain regarding implementation and the mechanics of obtaining refunds. Whether a similar process develops in the Section 301 context will depend upon the specific rulings issued by the courts and the government's response.
Our firm will continue to monitor the litigation and provide updates regarding significant court rulings, procedural developments, and any opportunities that may arise for affected importers.