USTR’s court-mandated explanation of former President Donald Trump’s latest round of Section 301 tariffs “raises more questions than answers,” said Steve Lamar, President and CEO. of the American Apparel & Footwear Association (AAFA).
The U.S. Trade Representative’s office responded until Monday to an April order from the U.S. Court of International Trade asking it to provide additional explanations regarding the third and fourth rounds of Section 301 duties that Trump imposed. to China in 2018 and 2019.
The 90-page “Removal Determination,” officially authored by Juan Millan, the USTR’s Assistant for Supervision and Enforcement, details the USTR’s decision to remove and not remove certain products from the series of List 3 and List 4 fares; evaluates comments received by the office regarding the rate of duty; and outlines comments related to the potential impact of tariffs on the economy, their legality and effectiveness, and potential alternatives.
Since 2020, thousands of importers, including Ralph Lauren and Target, have sued the U.S. government at the CIT challenging the USTR’s third and fourth rounds of Section 301 duties. The plaintiffs allege the government imposed the tariffs beyond the time permitted by law and without meeting the change requirements of the first and second tariff cycles.
The CIT rejected those arguments in April, but ruled that the USTR violated the Administrative Procedure Act by failing to explain its assessment of comments in response to the bureau’s initial proposals for the third and fourth tariff rounds. She ordered the USTR to provide those explanations without identifying any new reasoning. The order permitted the USTR to make tariff changes, but did not require it to do so.
“The court didn’t say, ‘Go recreate your job, go do a new job, or give us new justifications,'” Lamar said. “They basically said, actually, ‘Show us your homework or show us your grades from four years ago,’ and I think it’s an open question whether that’s been done.”
As head of the American Apparel & Footwear Association, Lamar has long opposed the tariffs Trump implemented four years ago. In his view, Monday’s referral decision does not answer the questions the companies had at the start of the duties. “A classic,” he said, is how the last administration placed goods in list 4a or 4b depending on whether China’s share of U.S. imports was above or below 75%. “There was no explanation as to why the number they picked had to be the number they picked,” Lamar said.
“They’re saying ‘These people made some points, these people made some points, these people made some points, but there was no way we could get to President Trump’s X number of trade that was supposed to be covered by customs duties, so we must have contempt,” he continued. “You had the public providing a lot of evidence, but because there was no way to satisfy the evidence and respond to President Trump’s arbitrary number, the end result was President Trump’s arbitrary number won, rather than public need, public evidence.”
In providing further explanation as to why it did or did not remove certain products from the Schedule 3 Tariff Series, the Remand Determination described the overall level of trade that the USTR had been instructed to cover as “a consideration additional”.
“Based on 2017 import values, the proposed tariff subheadings were worth approximately $209 billion,” Millan wrote. “As a result, to maintain the $250 billion aggregate level of trade (i.e. aggregated with the approximately $50 billion level of Lists 1 and 2) covered by additional duties imposed by the President , only a limited number of subheadings could be deleted.”
Later, Millan said that although the USTR had removed certain textile inputs, certain chemicals, and rare earth elements and minerals, “to maintain the overall level of trade directed by the President, it was not possible for l ‘USTR to remove all entries’. The USTR aide also noted, however, that “additionally, most of the comments requesting the removal of additional inputs did not demonstrate” how the tariff would not be effective in achieving the tariffs’ goals.
“The overall document, it doesn’t shed new light on why or if, probably more importantly, whether the USTR really looked at the information that came in,” Lamar said. “For example, if the president says you have to reach $200 billion in trade, regardless of what the evidence says – which is, in fact, what they admit – but we’re going to invite the public to come and speak to this topic, it just seems like an exercise in futility… I think what this document does is it shows that, to a large extent, their decision was already made.
Though reports suggest President Joe Biden is considering removing some Section 301 tariffs — Lamar said a month ago action could take days — the USTR ultimately declined to use the decision of dismissal as an opportunity to adjust the four-year-old. functions.
As the tariffs are due to expire after four years, the USTR is currently considering a possible renewal. Organizations including the National Council of Textile Organizations (NCTO) are currently pushing Biden to continue the policies of his predecessor.
“We have long advocated for 301 penalty tariffs to remain on finished textile and apparel products from China,” NCTO President and CEO Kim Glas said in a May statement. “Not only do they increase the government’s bargaining power to combat serious predatory Chinese government trade practices that have harmed our domestic manufacturing sector and that of our free trade agreement partners for decades; they also send a strong message to China that the United States is committed to addressing systemic predatory business practices that have undermined domestic industries and their workers.
In June, the NCTO, along with the Narrow Fabrics Institute and the Industrial Fabrics Institute, two divisions of the Advanced Textiles Association, filed a formal statement expressing support for maintaining “penalty tariffs” on imports from from China.
“For decades, China’s illegal actions have undermined virtually every domestic manufacturing sector and contributed to the direct loss of millions of jobs in the United States. These devastating state-sponsored practices include intellectual property theft as well as pervasive state ownership of manufacturing, industrial subsidies, and heinous violations of labor and human rights in the Xinjiang region,” they wrote. “Cancelling these tariffs would create an additional unhealthy dependency on Chinese supply chains and encourage future systematic trade abuses, because bad actors know the United States will not hold them accountable.”
Lamar and other tariff critics, however, have long argued that the policy has largely failed to achieve its goals.
“The administration says, ‘We put these tariffs in place to effect change in China,’ right?” said Lamar. “Obviously the change in China was unaffected. So, were they the wrong tariffs? Were they the wrong tool? The answer to all of that is ‘yes’. So the question then is what are they doing now and maintaining that, staying the course is not the answer.