Importer 3BTech launched a second, identical classification battle over its electric scooters, known as hoverboards, in a Dec. 10 complaint in which it alleges the hoverboards were assessed duties under the wrong Harmonized Tariff Schedule subheading at entry into the U.S. 3BTech argues for a different HTS subheading than the one given to it by CBP, and, failing that, argues for an exclusion from the Section 301 China tariffs granted by the Office of the U.S. Trade Representative (3BTech, Inc. v. United States, CIT #21-00026).
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.
Importer MTD Products Inc. argued in its Dec. 8 complaint at the Court of International Trade that its lawn mower engines qualify for duty-free treatment and, in the alternative, an exclusion to the Section 301 China tariffs, and that CBP improperly denied its protest claiming as much. The importer brought in spark-ignition reciprocating or rotary internal combustion piston engines from China, each valued at less than $180, that are used in walk-behind, riding and zero-turn riding lawn mowers (MTD Products Inc. v. United States, CIT #21-00036).
The following are short summaries of recent CBP NY rulings issued by the agency's National Commodity Specialist Division in New York:
The Customs Rulings Online Search System (CROSS) was updated Dec. 8 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
CBP unfairly denied importer Compressed Air Systems' protest showing that it overpaid duties and fees for its air compressor and vacuum pump part entries, CAS argued in its Dec. 7 complaint at the Court of International Trade. Due to a clerical error committed by the customs broker, the entries were overvalued, CAS said. CBP then refused to fix the error after the importer protested CBP's liquidation of the entries, leading the company to file suit with the trade court (Compressed Air Systems, LLC v. CBP, CIT #21-00615).
The following lawsuits were recently filed at the Court of International Trade:
The following lawsuits were recently filed at the Court of International Trade:
The U.S. Chamber of Commerce objects to legislation meant to update antidumping and countervailing duty laws, it said in a letter to leadership of House Ways and Means Committee and its Trade Subcommittee. Soon after the Chamber sent its letter, lawmakers introduced the House version of the Eliminating Global Market Distortions to Protect American Jobs Act, the legislation that the Chamber has concerns about. "The Chamber opposes this bill, which has not been subject to the scrutiny and deliberation required for a complex, far-reaching measure amending U.S. AD/CVD laws," the Chamber said. "This major overhaul of U.S. trade laws could add to inflationary pressures by raising costs for a wide variety of goods, including many products sourced from U.S. allies and partners."
The following lawsuits were recently filed at the Court of International Trade:
The following lawsuits were recently filed at the Court of International Trade: