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US importers demand refund of Trump-era tariffs on Chinese goods worth billions of dollars
Khushboo Razdan in New York
Published: 12:31am, 28 Feb, 2023
More than US$150 billion has been collected under Section 301 tariffs in the last four years, according to the US customs agency. Photo: Shutterstock
“China will pay.”
The slogan was used by then-US president Donald Trump in 2018 to sell his higher tariffs on Chinese imports to American manufacturers, retailers and consumers.
Five years later, thousands of disgruntled American
importers are demanding 
billions of dollars in reimbursements in a US court as President Joe Biden has stuck with most of Trump-era tariffs since taking office in January 2021.
These firms contend that the US government unlawfully disregarded public comments and did not assess the damaging effects on the American economy before imposing additional duties, ranging from 7.5 to 25 per cent, on Chinese goods worth US$300 billion.
“Did you take into account any of these comments? Did you come to some sort of modicum of independent judgment that these tariffs were appropriate in light of the devastating economic harms predicted by the largest industry organisations and consumer organisations in the United States?” a lawyer for the plaintiffs asked during a hearing this month at the US Court of International Trade in New York.
Countering the argument from the Office of the United States Trade Representative (USTR) that it had been following the president’s orders, the lawyer said: “The president could have ordered 500 per cent duties on 100 per cent of China trade.”
Faced with rising prices for consumer goods, the Biden administration has been mulling partial lifting of the tariffs to ease inflation.
An analysis by economist Pablo Fajgelbaum of the University of California, Los Angeles, found that tariffs through 2019 had led to a net loss of US$16 billion annually to the US economy, including losses to firms and consumers.
Another study co-written by Mary Amiti of the New York Federal Reserve Bank, said that “US tariffs continue to be almost entirely borne by US firms and consumers”.
US retailers claim tariffs on Chinese goods hurt business during pandemic
Acting on his protectionist “America First” policy, Trump announced four tranches of China tariffs under Section 301 of the Trade Act of 1974, which lets the president take retaliatory action to press foreign countries to abandon harmful trade practices.
The decision followed a 2017 investigation by USTR that accused China of indulging in discriminatory trade practices, costing US commerce an estimated US$50 billion.
The first two sets of additional 25 per cent taxes, popularly known as List 1 and List 2, were levied on Chinese goods worth US$50 billion in July and August 2018.
In the ensuing months, Trump also imposed a 10 per cent tax on another US$200 billion worth of Chinese goods in List 3. This was later raised to 25 per cent. In 2019, Trump announced List 4a – an additional 7.5 per cent duty on Chinese goods worth US$120 billion.
The lawsuit was originally filed in September 2020 by HMTX Industries, a Connecticut-based global manufacturer of vinyl tiles.
It challenged the legality of the USTR’s authority to extend the tariffs to Chinese goods beyond List 1 and List 2 and its compliance with the Administrative Procedure Act, which requires federal agencies to involve the public in decision-making by publishing notices on proposals and seeking comments.
Within months, the case was amended to include more than 3,000 similar lawsuits filed by other American importers and handed over to a panel of three judges. The number of plaintiffs has now surpassed 6,000.
In April 2022, the court handed a partial victory to the tariffs’ opponents. While it rejected the claim that the USTR overstepped its authority in imposing the duties, it ordered the federal agency to justify its evaluation of comments submitted in response to the initial proposal to levy the third and fourth rounds of tariffs.
In a 90-page response in August, the USTR said it was unable to exclude a wide range of products mentioned by public commenters because Trump had asked it to identify US$300 billion in annual trade to punish China.
It also said that comments on the rate at which tariffs were to be imposed were deliberated in light of presidential instructions.
Experts following the case say that 2023 could set the stage for a final ruling, but that neither party will settle without an appeal to a higher federal court.
The proceedings have also brought into focus the long-standing question of whether the Trade Act of 1974 gives too much power to the executive.
Nicole Bivens Collinson, who leads the international trade and government relations practice at Sandler, Travis and Rosenberg, a Washington-based law firm serving as lead counsel for more than 1,000 plaintiffs in the case, reckoned that the judges could either tell the USTR to justify the decision again, or could “vacate the decision and say it’s contrary to the law”.
“In other words, they violated the law,” she said. “And so they could say that the USTR did not follow the [Administrative Procedure Act] and that they violated the trade communities’ rights and therefore they could be entitled to getting those refunds of all the duties.”
US-China trade set a record at US$690 billion in 2022. Photo: Xinhua
Harlan Stone, the chief executive of HMTX, stressed that it was American importers who are paying these tariffs, not the Chinese, since the duties are collected by the US customs agency when goods enter the country.
He added that these taxes have ultimately been passed on to American consumers.
Data from US Customs and Border Protection shows that as of September 2022, more than US$150 billion has been collected under Section 301 tariffs in the previous four years.
Stone said that HMTX alone has paid around $100 million in “excess” duties since 2018, “less the amount that was refunded to us for the brief period from November 2019 to September 2020 in which we were excluded”.
Stone called the imposition of tariffs “bad policy” affecting both American importers and consumers by drastically escalating costs – construction of new houses and renovations in his company’s case. He said
China possesses the most advanced technology to process polyvinyl chloride, or PVC, a type of plastic that is a key ingredient in vinyl flooring.
The firm has been making efforts to reduce reliance on China but not without what Stone called “unintended consequences” of the tariffs.
He said HMTX was constructing a factory in Pennsylvania, “but the tariffs also included all the machinery that I needed to import from China” to build it, he said. “So we think that the policy is flawed in that it didn’t achieve its goal.”
The Biden administration, however, views the tariffs as a “significant piece of leverage” in dealing with Beijing. US Trade Representative Katherine Tai told Congress last year that lifting tariffs could “undermine the need to make ourselves more competitive” against China.
During a recent trip to an optical supply factory in Chicago, Tai faced requests to alleviate the tariffs. Scott Shapiro, chief executive of Europa, a company that owns America’s AO eyewear brand, told her that even though he would like to rely solely on domestic supplies, many key ingredients used in making frames come from China.
A company spokesman called Tai’s visit “extremely productive” and “confirmed the importance of continuing to find ways to support manufacturers in the US”.
The Office of the US Trade Representative, led by Katherine Tai, is reviewing some of the tariffs imposed during president Donald Trump’s administration. Photo: Reuters
Tai’s office, which is reviewing some tariffs imposed during the Trump administration, did not respond to a request for comment on the case.
According to a report by the conservative American Action Forum, a Washington-based think tank, tariffs have made US firms and manufacturers “less competitive
by increasing the cost of doing business, and therefore reducing economic output and growth”.
But there are those supporting Biden’s decision to maintain Trump’s tariffs. Scott Paul, president of the Alliance of American Manufacturers, said that the duties have helped broaden supply chains and boost manufacturing jobs, though he acknowledged that it will “take a while to scale up industries or industrial ecosystems”.
“The discernible shifts that we’ve seen in a number of industries were that there’s a more diversified set of imports coming into the United States,” he said.
US-China trade set a record in 2022 at US$690 billion, but the US also witnessed a surge in trade with other partners, according to figures released by the US Commerce Department this month. The US had record imports from 90 countries in 2022, led by Mexico, Canada and Japan.
As the Biden administration weighs continuing the tariffs, the US Congress has shown renewed interest in reviewing the powers of the executive to make way for greater consultation before new trade actions are enacted. Last year, Congress directed the US International Trade Commission to investigate the effect of Section 301 tariffs on American industries. The report’s release is expected soon.
A Congressional Research Survey published in January said that federal lawmakers “may review and use” the results to inform “potential legislative changes to Section 301”.
Gary Hufbauer of the Peterson Institute for International Economics said that both Republican and Democratic lawmakers now realise that too much of their Constitutional authority over trade has been delegated to the president, but that Congress does not agree on a remedy.
“The laws written in decades past give the president tremendous power to restrict trade,” he said.
- Over 6,000 plaintiffs want reimbursement for billions they have paid in duties, saying the US government didn’t follow proper procedure in instituting them
- The Office of the US Trade Representative says the law gives the president the power to make such decisions and it was just following his orders
Khushboo Razdan in New York
Published: 12:31am, 28 Feb, 2023
More than US$150 billion has been collected under Section 301 tariffs in the last four years, according to the US customs agency. Photo: Shutterstock
“China will pay.”
The slogan was used by then-US president Donald Trump in 2018 to sell his higher tariffs on Chinese imports to American manufacturers, retailers and consumers.Five years later, thousands of disgruntled American
importers are demanding billions of dollars in reimbursements in a US court as President Joe Biden has stuck with most of Trump-era tariffs since taking office in January 2021.These firms contend that the US government unlawfully disregarded public comments and did not assess the damaging effects on the American economy before imposing additional duties, ranging from 7.5 to 25 per cent, on Chinese goods worth US$300 billion.
“Did you take into account any of these comments? Did you come to some sort of modicum of independent judgment that these tariffs were appropriate in light of the devastating economic harms predicted by the largest industry organisations and consumer organisations in the United States?” a lawyer for the plaintiffs asked during a hearing this month at the US Court of International Trade in New York.
Countering the argument from the Office of the United States Trade Representative (USTR) that it had been following the president’s orders, the lawyer said: “The president could have ordered 500 per cent duties on 100 per cent of China trade.”
Faced with rising prices for consumer goods, the Biden administration has been mulling partial lifting of the tariffs to ease inflation.
An analysis by economist Pablo Fajgelbaum of the University of California, Los Angeles, found that tariffs through 2019 had led to a net loss of US$16 billion annually to the US economy, including losses to firms and consumers.
Another study co-written by Mary Amiti of the New York Federal Reserve Bank, said that “US tariffs continue to be almost entirely borne by US firms and consumers”.
US retailers claim tariffs on Chinese goods hurt business during pandemic
Acting on his protectionist “America First” policy, Trump announced four tranches of China tariffs under Section 301 of the Trade Act of 1974, which lets the president take retaliatory action to press foreign countries to abandon harmful trade practices.
The decision followed a 2017 investigation by USTR that accused China of indulging in discriminatory trade practices, costing US commerce an estimated US$50 billion.
The first two sets of additional 25 per cent taxes, popularly known as List 1 and List 2, were levied on Chinese goods worth US$50 billion in July and August 2018.
In the ensuing months, Trump also imposed a 10 per cent tax on another US$200 billion worth of Chinese goods in List 3. This was later raised to 25 per cent. In 2019, Trump announced List 4a – an additional 7.5 per cent duty on Chinese goods worth US$120 billion.
The lawsuit was originally filed in September 2020 by HMTX Industries, a Connecticut-based global manufacturer of vinyl tiles.
It challenged the legality of the USTR’s authority to extend the tariffs to Chinese goods beyond List 1 and List 2 and its compliance with the Administrative Procedure Act, which requires federal agencies to involve the public in decision-making by publishing notices on proposals and seeking comments.
Within months, the case was amended to include more than 3,000 similar lawsuits filed by other American importers and handed over to a panel of three judges. The number of plaintiffs has now surpassed 6,000.
In April 2022, the court handed a partial victory to the tariffs’ opponents. While it rejected the claim that the USTR overstepped its authority in imposing the duties, it ordered the federal agency to justify its evaluation of comments submitted in response to the initial proposal to levy the third and fourth rounds of tariffs.
In a 90-page response in August, the USTR said it was unable to exclude a wide range of products mentioned by public commenters because Trump had asked it to identify US$300 billion in annual trade to punish China.
It also said that comments on the rate at which tariffs were to be imposed were deliberated in light of presidential instructions.
Experts following the case say that 2023 could set the stage for a final ruling, but that neither party will settle without an appeal to a higher federal court.
The proceedings have also brought into focus the long-standing question of whether the Trade Act of 1974 gives too much power to the executive.
Nicole Bivens Collinson, who leads the international trade and government relations practice at Sandler, Travis and Rosenberg, a Washington-based law firm serving as lead counsel for more than 1,000 plaintiffs in the case, reckoned that the judges could either tell the USTR to justify the decision again, or could “vacate the decision and say it’s contrary to the law”.
“In other words, they violated the law,” she said. “And so they could say that the USTR did not follow the [Administrative Procedure Act] and that they violated the trade communities’ rights and therefore they could be entitled to getting those refunds of all the duties.”
US-China trade set a record at US$690 billion in 2022. Photo: Xinhua
Harlan Stone, the chief executive of HMTX, stressed that it was American importers who are paying these tariffs, not the Chinese, since the duties are collected by the US customs agency when goods enter the country.
He added that these taxes have ultimately been passed on to American consumers.
Data from US Customs and Border Protection shows that as of September 2022, more than US$150 billion has been collected under Section 301 tariffs in the previous four years.
Stone said that HMTX alone has paid around $100 million in “excess” duties since 2018, “less the amount that was refunded to us for the brief period from November 2019 to September 2020 in which we were excluded”.
Stone called the imposition of tariffs “bad policy” affecting both American importers and consumers by drastically escalating costs – construction of new houses and renovations in his company’s case. He said
China possesses the most advanced technology to process polyvinyl chloride, or PVC, a type of plastic that is a key ingredient in vinyl flooring.The firm has been making efforts to reduce reliance on China but not without what Stone called “unintended consequences” of the tariffs.
He said HMTX was constructing a factory in Pennsylvania, “but the tariffs also included all the machinery that I needed to import from China”
to build it, he said. “So we think that the policy is flawed in that it didn’t achieve its goal.”The Biden administration, however, views the tariffs as a “significant piece of leverage” in dealing with Beijing. US Trade Representative Katherine Tai told Congress last year that lifting tariffs could “undermine the need to make ourselves more competitive” against China.
During a recent trip to an optical supply factory in Chicago, Tai faced requests to alleviate the tariffs. Scott Shapiro, chief executive of Europa, a company that owns America’s AO eyewear brand, told her that even though he would like to rely solely on domestic supplies, many key ingredients used in making frames come from China.
A company spokesman called Tai’s visit “extremely productive” and “confirmed the importance of continuing to find ways to support manufacturers in the US”.
The Office of the US Trade Representative, led by Katherine Tai, is reviewing some of the tariffs imposed during president Donald Trump’s administration. Photo: Reuters
Tai’s office, which is reviewing some tariffs imposed during the Trump administration, did not respond to a request for comment on the case.
According to a report by the conservative American Action Forum, a Washington-based think tank, tariffs have made US firms and manufacturers “less competitive
by increasing the cost of doing business, and therefore reducing economic output and growth”.But there are those supporting Biden’s decision to maintain Trump’s tariffs. Scott Paul, president of the Alliance of American Manufacturers, said that the duties have helped broaden supply chains and boost manufacturing jobs, though he acknowledged that it will “take a while to scale up industries or industrial ecosystems”.
“The discernible shifts that we’ve seen in a number of industries were that there’s a more diversified set of imports coming into the United States,” he said.
US-China trade set a record in 2022 at US$690 billion, but the US also witnessed a surge in trade with other partners, according to figures released by the US Commerce Department this month. The US had record imports from 90 countries in 2022, led by Mexico, Canada and Japan.
As the Biden administration weighs continuing the tariffs, the US Congress has shown renewed interest in reviewing the powers of the executive to make way for greater consultation before new trade actions are enacted. Last year, Congress directed the US International Trade Commission to investigate the effect of Section 301 tariffs on American industries. The report’s release is expected soon.
A Congressional Research Survey published in January said that federal lawmakers “may review and use” the results to inform “potential legislative changes to Section 301”.
Gary Hufbauer of the Peterson Institute for International Economics said that both Republican and Democratic lawmakers now realise that too much of their Constitutional authority over trade has been delegated to the president, but that Congress does not agree on a remedy.
“The laws written in decades past give the president tremendous power to restrict trade,” he said.
