Two chainsaw chain and blade importers, TriLink Saw Chain and TriLink Global, agreed to pay $525,000 to settle allegations that the companies misclassified their imports, the U.S. Attorney's Office for the Northern District of Iowa said. The U.S. alleged that the importers purposely classified their chain saw chains and blades from September 2018 through June 2019 under the wrong Harmonized Tariff Schedule subheading to avoid paying Section 301 China tariffs -- a violation of the False Claims Act.
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
The following lawsuits were filed at the Court of International Trade during the week of March 7-13:
July 6 marks 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 recent 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.
The following lawsuits were filed at the Court of International Trade during the week of Feb. 28 - March 6:
The National Electrical Manufacturers Association is asking House and Senate leadership to "expeditiously advance" a compromise China package by resolving differences between the U.S. Innovation and Competition Act (USICA) and the America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (America Competes) Act.
International Trade Today is providing readers with the top stories from last week in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
A recent Court of International Trade opinion left prior court precedent on the question of what constitutes a substantial transformation "dead, or on life support," an analysis from law firm Neville Peterson said. The result is that importers who have been told by CBP that the country of origin of their goods is the country of origin of the goods' major inputs or essential components will likely seek reconsideration of those rulings, seeking refunds on Section 301 China tariffs in particular, the firm said.
China's lack of worker rights, weak environmental standards "and anticompetitive subsidies are the hallmarks of China’s artificial comparative advantage. It is an advantage that puts others out of business and violates any notion of fair competition," the annual trade policy agenda from the Office of the U.S. Trade Representative said, and the administration is looking to advance fair competition "through all available avenues," including coordinating with other countries, using existing trade agreements, or new tools, it said.
CBP issued the following releases on commercial trade and related matters:
The following lawsuits were filed at the Court of International Trade during the week of Feb. 21-27: