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60-Day Review 'a Safe Bet'

New Section 301 Lawsuits Predicted if USTR Extends List 1 Tariffs Past July 6

July 6 will be the fourth anniversary of the List 1 Section 301 tariffs taking effect on Chinese imports, and the 1974 Trade Act requires their expiration after four years, “unless some conditions are met,” said David Olave, a Sandler Travis associate and trade policy adviser, on a Thursday podcast. “No unilateral 301 action that I know has made it through the four years, so we’re about to witness trade policy procedural history,” he said.

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The “only way” the statute enables List 1 to stay intact is for the Office of the U.S. Trade Representative first to receive a written request to keep the tariffs going from a “domestic industry that benefits” from the existing duties, said Olave. “I believe there’s a strong presumption in the law for the tariffs to terminate after the end of these four years.”

How the government responds to the statutory deadline “could result in later legal challenges, particularly if the USTR decides to extend the tariffs for an additional period,” he said. Importers inundating the U.S. Court of International Trade with complaints to vacate the Lists 3 and 4A tariffs for Trade Act and Administrative Procedure Act violations haven't challenged Lists 1 and 2.

The statute says the written request from “domestic beneficiaries” to extend List 1 can be filed “at any point during the last 60 days of the four-year period,” said Olave. He said he expects USTR will put out a notice seeking public comment on whether to maintain the List 1 tariffs, and will do so well before May 5, when the 60-day window starts closing.

Even if a “valid request” is filed to protect List 1 as is, the law still requires USTR “to undergo a review on the effectiveness of the tariffs,” plus other actions it could take to curb China’s allegedly unfair trade practices, he said. The statute binds USTR in that review also to assess the impact of its actions on the U.S. economy, "including consumers,” he said. “All this must be completed prior to July 6,” or the List 1 tariffs “will be automatically eliminated,” he said.

International trade attorney Ted Murphy thinks it's "a safe bet" a request for continuation will be filed with USTR and the List 1 tariffs "will not expire automatically," he blogged Monday. The resulting review will give the public an "interesting opportunity" to learn more about how the Biden administration "plans on dealing with China," he said.

USTR "will need to decide between just continuing with the status quo or modifying the action taken in an effort to get more movement from China," he said. "To that end, the review presents interested parties an opportunity to push for modifications to the list of products subject to duties, adjust duty rates" or create a new product exclusion process, he said. USTR didn’t comment Monday. Customs and Border Protection says it collected just under $130 billion in four rounds of Section 301 tariffs on Chinese imports through Thursday since the first of those rounds took effect in July 2018.