The Trump Administration today announced the largest expansion of the Uyghur Forced Labor Prevention Act (UFLPA) Entity List in history, with 43 new additions, bringing the total number of entities to 187. Today’s announcement, through a pre-publication Federal Register notice on that is scheduled for official publication on August 3, 2026, was also the first expansion of the UFLPA Entity List under the Trump administration and the first since January 15, 2025.
The UFLPA Entity List is a compilation of entities determined by the U.S. government’s Forced Labor Enforcement Task Force (FLETF) to violate the UFLPA. Shipments containing inputs or components from any of the 187 Entity Listed companies are deemed by U.S. Customs and Border Protection (CBP) to be produced with forced labor and prohibited from entry into the United States. There is no de minimis exemption for these forced labor inputs; any amount traceable to these entities can warrant CBP detention of an entire shipment. In addition, shipments from non-listed companies that CBP traces to these Entity Listed companies based on supply chain or corporate connections are a likely target for UFLPA detentions. All companies importing into the United States are advised to conduct traceability analyses of their key product supply chains to ensure there is no connection to listed entity.
Kelley Drye’s Forced Labor Trade Practice conducts enhanced due diligence assessments for clients that model the same vectors of risk and connections to UFLPA listed entities that CBP uses in its tracing and detentions under the law. With this information, companies can make sourcing decisions to avoid costly UFLPA detentions before they occur. With these significant updates to the UFLPA Entity List, we also advise companies who have previously undertaken UFLPA enhanced due diligence screenings to conduct updated screenings to ensure the absence of connections to these newly disclosed vectors of risk.
In the four years of the UFLPA’s existence, roughly US $4 billion in shipments have been detained under the law. While the value of shipments has decreased over time, reflecting a diversification in detentions beyond the initial high-value focus on the solar industry, the number of detentions has remained fairly consistent, at about 900 detained shipments per month across fiscal years. A significant number of shipments have been detained from Malaysia, Vietnam, Thailand, India, Mexico, Laos, Ethiopia, and Indonesia, in addition to direct shipments from China, demonstrating that CBP is tracing shipments and supply chains across borders.
Four entities will be added under the list of entities working with the government of Xinjiang to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of Xinjiang:
An additional 41 entities will be added under the list which identifies facilities and entities that source material from the Xinjiang Uyghur Autonomous Region or from persons working with the government of Xinjiang or the Xinjiang Production and Construction Corps for purposes of the “poverty alleviation” program or the “pairing assistance” program or any other government labor scheme that uses forced labor:
The names of two entities appear on both lists (Xinjiang Yianyun Organic Agriculture Co., Ltd. and Xinjiang Nuziline Bio-Pharmaceutical Co., Ltd.), indicating that the FLETF found those entities to fulfill multiple criteria for inclusion on the Entity List.
Of the 43 additions, 19 are located outside of Xinjiang. This is significant because shipments from these 19 entities which have no Xinjiang-origin inputs may now be detained and will have difficulty clearing detention. The addition of these 19 entities is also notable in that it underscores that entities elsewhere in China that source material from Xinjiang or use transferred Uyghur workers are being tracked by CBP for violation of the UFLPA. Kelley Drye uses state of the art technologies to track both labor transfers and sourcing practices, including outside of Xinjiang, in order to help clients stay abreast of these evolving areas of risk.
Today’s additions cut across a variety of pharmaceutical products, food products, textile and apparel products, and metals and minerals products. Nine of the listed entities produce pharmaceutical products, including four that specifically produce conjugated estrogen (used to treat menopause symptoms). Of the seven food-producing entities listed, two produce sugar beet-based products including molasses, one produces salmon products, and one produces frozen foods including frozen dumplings and wontons. Four listed entities impact U.S. textile and apparel importers, and the remaining 23 entities produce raw materials with broader ranges of manufacturing applications such as aluminum, carbon, gold, and titanium.
Today’s announcement continues the Trump Administration’s focus on forced labor trade enforcement as a critical component of its broader trade enforcement agenda. Since January 2025, the U.S. government has detained over 13,000 shipments, valued at nearly $229 million, under the UFLPA. Of these, 63% of detained shipments have ultimately been denied entry by CBP. During this same period, CBP has issued nine Withhold Release Orders (WROs) regarding identification of reasonable but not conclusive indicators of forced labor, unrelated to the UFLPA, under Section 307 of the Tariff Act of 1930. The Biden Administration issued an average of two WROs per year. Today’s announcement also comes on the heels of the Trump Administration’s imposition of 10-12.5% tariffs on 60 economies under Section 301 of the Trade Act of 1974. Thus far, 15 economies subject to this Section 301 investigation and resulting tariffs have passed or implemented their own forced labor import prohibition. As the scale of global forced labor trade enforcement continues to expand, companies are advised to prioritize sourcing and traceability practices that will mitigate the risk of detentions and disruptions. Kelley Drye’s Forced Labor Trade practice can help.
]]>On Thursday, July 23, 2026, the Office of the United States Trade Representative (“USTR”) issued its final action pursuant to its investigation under Section 301 of the Trade Act of 1974, initiated on March 12, related to the failure of 60 economies to impose and effectively enforce a prohibition on the importation of goods produced with forced labor. The final action includes new U.S. import tariffs on all 60 economies investigated, with some differences in country-specific rates and covered product scope from the preliminary rates announced on June 2. The final action also includes Tariff-Rate Quotas for textiles and apparel for certain countries.
These tariffs apply immediately to imports from the 60 economies entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Standard Time on July 24, 2026. There is an in-transit exemption for articles that (1) were loaded onto a vessel at the port of loading and in transit on the final mode of transit prior to entry into the United States before 12:01 a.m. Eastern Time on July 24, 2026; and (2) are entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. Eastern Time on July 28, 2026.
These tariffs replace the global 10% tariffs, issued under Section 122 of the Trade Act of 1974, which expired at 12:01 a.m. Eastern Time on July 24.
USTR announced the following import tariff rates applicable to the 60 economies investigated:
The following country rates changed from the preliminary announcement on June 2:
The above-referenced tariff rates are country-wide, with certain exceptions: all articles and parts of articles that are subject to Section 232 tariffs; USMCA-compliant goods of Canada or Mexico; and textiles and apparel articles that enter duty-free as a good of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under CAFTA-DR; and informational materials, donations, accompanied baggage.
In addition, USTR announced lists of products exempted from the tariffs on a global basis, as well as products exempted on a country-specific basis.
USTR states that global product exemptions were granted based on the following criteria: (a) raw materials that, if subject to these tariffs, could lead to the unavailability of domestic supply; (b) products that could cause economy-wide disruptions if subject to these tariffs; (c) products that cannot be grown or produced in sufficient quantities or at reasonable prices in the United States or obtained from other sources; or (d) products for which these tariffs may not be effective in obtaining the elimination of the acts, policies, and practices of economies found to be actionable in the investigations.
For Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Jordan, Malaysia, Switzerland, Taiwan, or the United Kingdom, USTR states that country-specific exemptions were granted to encourage these economies to fulfill commitments regarding forced labor import prohibitions or to encourage these economies to enact and effectively enforce a forced labor import prohibition.
Scope limitations apply to some of the exemptions, limiting the exemptions to categories such as use in pharmaceutical applications and in civil aircraft.
Overall, USTR’s announcement excludes an additional 471 products from the tariffs beyond those proposed in the June 2 preliminary announcement.
As previewed in the June preliminary announcement, USTR formally announced the creation of a Tariff-Rate Quota (“TRQ”) for certain volumes of textiles and apparel from Bangladesh, Cambodia, Indonesia, and Malaysia. The quota amount for each country will not be subject to these Section 301 tariffs, and will be determined “as soon as feasible” and based on each economy’s importation of U.S. inputs. The TRQs will have an initial duration of three years. Until the TRQs are established, the applicable tariff rates described above apply to imports of textiles and apparel from these economies.
Several countries covered by the Section 122 tariffs, as well as several covered by the invalidated tariffs previously imposed under the International Emergency Economic Powers Act, are not subject to these tariffs. These include many developing economies in Sub-Saharan Africa and the Pacific Islands. Conversely, the 38 economies now subject to the 12.5% + MFN rate have seen their applied tariff rates increase from the global 10% + MFN rate applied under Section 122. As described above, both the applicable exemptions and textile/apparel TRQ differ from Section 122.
Final rates are not-so-final?
While USTR’s announcement was presented as a final action, it will be important to monitor whether these rates are truly final. The purported basis for this investigation was whether economies have implemented and effectively enforced a forced labor import prohibition. Cambodia, Guatemala, Honduras, India, Sri Lanka, and Trinidad and Tobago implemented forced labor import prohibitions during the course of this investigation and saw their tariff rates reduced from 12.5% to 10%. Jordan’s rate was reduced from 12.5% to 10% in recognition of its commitment to implement a forced labor import prohibition under the agreement finalized between the U.S. and Jordan on July 21. USTR may similarly modify the announced rates to account for additional countries’ implementation of forced labor import prohibitions or commitments to implement such prohibitions in future finalized bilateral agreements. Indeed, Vietnam announced its implementation of a forced labor import prohibition on July 22, although that seems to have come too late for inclusion in the July 23 action. If any of the 60 investigated economies move beyond imposing a forced labor import prohibition and effectively enforce their prohibition by detaining shipments believed to contain forced labor inputs, it will be interesting to see if USTR correspondingly reduces their applicable Section 301 tariff rate below the current 10% floor.
Increasing importance of forced labor compliance and traceability
In addition to the tariff implications of this announcement, there are also important forced labor compliance considerations. When this investigation was initiated on March 12, three countries in the world had implemented forced labor import prohibitions: the U.S., Canada, and Mexico. Today, 13 countries have implemented such a prohibition: the U.S., Canada, Mexico, Cambodia, Ecuador, Guatemala, Honduras, India, Indonesia, Pakistan, Sri Lanka, Vietnam, and Trinidad and Tobago. As the number of such countries with such prohibitions is likely to continue to grow, and as economic incentives to enforce these prohibitions are applied in the form of U.S. import tariff reductions, companies should be mindful of the forced labor compliance and traceability expectations applicable to an increasing number of jurisdictions. While forced labor compliance began as a U.S. customs matter, it is increasingly becoming a global compliance matter.
How will these tariffs stack with anticipated tariffs from other Section 301 investigations?
USTR’s announcement does not address other investigations under Section 301 of the Trade Act of 1974, including: the investigation related to structural excess capacity and production in manufacturing sectors of 16 economies initiated on March 11, 2026; the investigation into China’s implementation of commitments under the Phase One Agreement, initiated October 28, 2025; the investigation into Vietnam’s acts, policies, and practices related to intellectual property protection and enforcement announced on May 29, 2026; or the final 25% tariffs imposed in response to Brazil’s unreasonable acts, policies, and practices announced on July 22, 2026. USTR’s findings and recommended remedies related to the excess capacity, China, and Vietnam investigations are still forthcoming. Although stacking with the Brazil Section 301 action now in place is not specifically addressed, the absence of an explicit non-stacking provision indicates that imports from Brazil will be subject to the terms of both 301 measures. Indeed, remedies subsequent to each investigation are expected to stack on top of the remedies announced here for economies subject to multiple investigations.
]]>Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338) authorizes the President to impose additional duties on imports upon finding that “the public interested will be served” by doing so in response to a foreign trading partner’s direct or indirect discrimination “against the commerce of the United States.” Direct or indirect discrimination includes laws, regulations, or practices related to trade or customs that “place the commerce of the United States at a disadvantage compared with the commerce of” that foreign trading partner.
Section 338 further allows the President to block the importation of goods from the foreign country if it has “maintained or increased” its discriminatory practices against U.S. commerce.
There are very few statutory limitations on the tariff authority provided by Section 338. The law requires that the additional duties not exceed 50% ad valorem and that they apply only after 30 days from the date of the proclamation.
The tariffs may remain in place, however, for an indefinite period of time and may be imposed on a country-wide or more limited basis (e.g., state or region). The President may also “suspend, revoke, supplement, or amend” the tariff measure if he determines that modification is required by the public interest. Additional tariffs (in the form of a new proclamation) may be imposed on imports from a third country benefitting from the primary country’s discriminatory activity. While the U.S. International Trade Commission (“ITC”) is charged with ascertaining and “at all times” being informed of a foreign country’s discriminatory actions, the law does not require the ITC to make a finding prior to the President imposing additional tariffs.
The Section 338 Proclamations of July 20, 2026, impose offsetting measures for three U.S. industries disadvantaged by Canada’s discriminatory treatment: motor vehicles, alcoholic beverages, and dairy. Each proclamation identifies the relevant Canadian practices, including tariffs and quotas for autos exported from the United States to Canada (that do not apply to auto exports from other countries); provincial restrictions on the purchase, distribution, and retail sale of alcohol from the United States; and dairy tariff-rate quotas more restrictive than those applied to other economies (e.g., the European Union).
The public interest, as cited in the Section 338 Proclamations, is economic: Canada’s discriminatory behavior suppresses U.S. industrial, manufacturing, and agricultural output, “as well as investment, and thereby undermines employment and economic vitality in American communities.”
The 50% tariffs will apply only to those goods listed in Annex I of each proclamation (by U.S. Harmonized Tariff Schedule (“HTSUS”) code). Notably, the products covered by each proclamation are somewhat related to the affected industry – alcoholic beverage imports from Canada are covered by the alcohol proclamation, dairy imports from Canada are covered by the dairy proclamation – but also include a wide variety of other products ranging from suitcases to plywood boards to clothing accessories and textiles to essential oils to furniture to sports equipment.
The tariffs will apply even to goods qualifying for preferential treatment under the U.S.-Mexico-Canada Agreement (“USMCA”). In other words, the USMCA-qualification exemption that has been a part of other recent tariff actions – including the Section 122 tariff action and the proposed Section 301 tariff action on failure to implement or effectively enforce a ban on forced labor in supply chains – is not available here.
The Section 338 Proclamations, however, do provide for the following exemptions: (1) products subject to tariffs under Section 232 of the Trade Expansion Act of 1962 (e.g., covered steel, aluminum, copper, auto, trucks, wood, semiconductors, and pharmaceutical products); (2) certain civil aircraft or aircraft parts consistent with the WTO Agreement on Trade in Civil Aircraft; and (3) energy products and potash from Canada (as well as all other products of Canada not specifically listed in Annex I).
That is a fair assumption, but this is not just about USMCA. On July 1, 2026, the United States announced that, as part of the required joint review of USMCA, the United States did not agree to renew the agreement “in its current form.” Yet, news outlets and experts have long been reporting on the tense relationship between the United States and Canada in particular since the start of the second Trump term.
The announcement of the Section 338 Proclamations appears to hang on the White House’s broader frustrations with Canada, noting that “President Trump’s tariffs have resulted in 18 deals opening new markets for U.S. exports and bringing reciprocity back to America’s trade relations. Yet Canada has elected to discriminate against the United States rather than address Canadian trade barriers.”
The President also points to Canada’s prior retaliatory measures, akin to only those of our greatest economic rival, China: “Over the past year and a half, only two countries have chosen to retaliate against President Trump’s tariffs rather than negotiate a deal with the United States: the People’s Republic of China and Canada.” Other statements to the press from President Trump following the Section 338 Proclamations signaled his view that the United States has significant leverage in broader talks with Canada over longtime trade irritants.
All that has seemed to strike a chord with Canada. On July 21, 2026, just a day after the Section 338 tariff actions were announced, Canadian Prime Minister Mark Carney reported that he and President Trump have agreed to “intensify” negotiations immediately – as the United States began round of bilateral USMCA talks with Mexico on the same day (not yet scheduled with Canada). A lot can change as a result of more “intense” negotiations in the next 30 days, which the United States is likely counting on.
]]>While no new tariffs are being imposed immediately, USTR also issued its recommended remedies, covering all 60 economies investigated:
USTR is requesting public comments on these recommended remedies by July 6. Comments may be submitted via the designated Public Docket for comments on the USTR Comment Portal. Specifically, USTR requests the following input from the public: (1) The specific products to be subject to increased duties, including whether products should be retained or removed from the scope of the action, or whether products currently listed in Annex A should be added to the scope of the action; (2) Whether products listed in Annex A are appropriately excluded; (3) The level of the increase, if any, in the rate of duty; (4) Whether different tariff rates should be applied to an economy where the economy has made a commitment to the United States to impose and enforce a forced labor import prohibition; has imposed a forced labor import prohibition; or has imposed a partial regime with the effect of preventing the importation of certain forced labor goods; and (5) Features of a textile mechanism, including the U.S. and foreign products to be covered, the relative market opportunities for each side, and the tariff rate (if any) to be applied to products subject to that mechanism, as well as whether a similar mechanism should apply to any other product or sector.
The USTR-led Section 301 Committee will also convene public hearings beginning on July 7. Requests to participate at the hearings, along with a summary of the testimony to be provided, must be submitted to USTR by June 22 via the designated Public Docket for hearing participation on the USTR Comment Portal.
USTR’s announcement does not address other investigations under Section 301 of the Trade Act of 1974, including: the investigation related to structural excess capacity and production in manufacturing sectors of 16 economies initiated on March 11, 2026; the investigation into China’s implementation of commitments under the Phase One Agreement, initiated October 28, 2025; the investigation into Vietnam’s acts, policies, and practices related to intellectual property protection and enforcement announced on May 29, 2026; or the determination and proposed remedies related to Brazil’s unreasonable acts, policies, and practices announced on June 1, 2026. USTR’s findings and recommended remedies the excess capacity, China, and Vietnam investigations are still forthcoming. Remedies subsequent to each investigation are expected to stack on top of the recommended remedies announced here for economies subject to multiple investigations.
The timing of this announcement aligns with the general expectation that USTR plans to have at least some final Section 301 tariffs in force before the current 10% global Section 122 tariffs expire on July 24.
About the Author
Josh Kagan, the former head of the USTR Labor Office, brings firsthand experience overseeing forced labor trade enforcement and negotiations on behalf of the U.S. government. Drawing on that unique perspective, Josh leads Kelley Drye's globally recognized Forced Labor Trade Enforcement practice, helping clients understand these developments and anticipate what is coming next.
If you need assistance navigating the implications of this announcement, submitting public comments, participating in the public hearing, or identifying forced labor enforcement risks in your supply chain amid the growing proliferation of global forced labor import prohibitions, please reach out to Josh or any member of Kelley Drye's Forced Labor Trade Enforcement team.
]]>The Section 122 statute. Section 122 allows the President to impose tariffs up to 15%, not exceeding 150 days, when fundamental international balance of payments issue exist. On February 20, 2026 (the day the Supreme Court struck down the IEEPA tariffs), President Trump announced a 10% tariff on imports, with some exceptions. The tariff went into effect February 24, 2026, and is currently set to expire July 24, 2026. In imposing the tariffs under the law, which requires a “large and serious United States balance-of-payments deficits,” the President identified “deficits in trade, primary income, secondary income, and the current account, and a negative net international-investment position” as support.
The decision. The court reviewed the text of the statute, its legislative history, and historical context to conclude that the President’s February 20 proclamation did not properly rest on the existence of a balance-of-payments deficit. According to the court, “what is relevant is what Congress meant by ‘balance-of-payments deficits’ in 1974, and what Congress meant can be determined based on what it reported at the time of enactment, namely the balance-of-payments deficits as measured by liquidity, official settlements and the basic balance. . . . Accepting as true every factual statement in Proclamation No. 11012 {of February 20, 2026}, the surcharge imposed by the Proclamation rests on the existence of a large trade deficit, a current account deficit, a negative net international investment position, and a deficit on the balance on primary and secondary income (which are part of the current account). . . . Nowhere does Proclamation No. 11012 identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974.” Thus, the court concluded that the February 20th Proclamation is unlawful.
The remedy. As a threshold matter, the court concluded that only the private importers and the State of Washington had standing to seek permanent injunctive relief on the basis that they face imminent injury due to Section 122 duty payments made or impending. The other 23 state plaintiffs, however, did not have standing because they did not demonstrate duty-related injury (neither they nor their public instrumentalities were shown to be importers of record liable for such duties).
For the private plaintiffs and the State of Washington, the court issued permanent injunctive relief. The court did not issue a universal (i.e., nationwide) injunction. In other words, the court’s order applies only to the three prevailing plaintiff parties. The court declined to issue a universal injunction because (1) the private importers did not argue for a universal injunction, and (2) the state plaintiffs that urged a universal injunction did not have standing, except for the State of Washington, and the circumstances of Washington’s injury did not warrant universal relief.
How does this case differ from the IEEPA decision? This decision differs in several notable ways from the legal and remedial issues presented in the IEEPA tariff litigation. First, in the IEEPA litigation, the Supreme Court found that the IEEPA statute never allows the imposition of tariffs. In contrast, here, the court found that while Section 122 does allow for tariffs, the stated basis for the specific presidential action at issue did not meet the standard for the imposition of tariffs under that law.
Second, unlike the initial IEEPA tariff decision, the court here did not issue a universal injunction. To the extent the state plaintiffs – who had argued in favor of that form of relief – decide to appeal the remedy, they will also have to appeal and first prevail on the question of standing.
Third, the scale of the tariff programs in terms of the duties at stake differ, and perhaps significantly. The IEEPA tariffs, while initially held at 10%, eventually increased on a country-specific basis to as high as 50%. Moreover, the IEEPA tariffs had no expiration date, whereas the Section 122 tariff – currently at 10% and which cannot exceed 15% – will terminate by operation of law on July 24, 2026. The exemptions provided from the Section 122 tariff, however, largely track those provided under the IEEPA tariff program.
What next? As was the case during the early stages of the IEEPA tariff litigation, there are still many unknowns ahead.
As always, the attorneys in our International Trade practice are available to discuss how this may apply to your specific situation.
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In his April 7 Order, Judge Eaton directed U.S. Customs and Border Protection to refund all IEEPA duties, regardless of whether the entry has been liquidated and whether the liquidation was final. This was the exact language the court used in the March 27 order in Atmus, discussed in our March 30 advisory, indicating the intent that Euro-Notions pick up right where Atmus left off.
The deadline for the U.S. Government to appeal this order has been pushed back to June 8, 2026. This has shifted from the prior date because the deadline is calculated from the CIT’s April 7 Order in the Euro-Notions case. Like the last order issued in Atmus, the April 7 Order in Euro-Notions makes clear that it does not address whether there was statutory authority to use the IEEPA to remove de minimis treatment for small value entries.
Prior to dismissal of the Atmus case, the CIT had ordered CBP to provide another status update by noon on April 14, in advance of a closed conference that afternoon. A similar order in Euro-Notions was entered on April 8, signaling that CBP’s development of the IEEPA refund mechanism will continue on track.
]]>According to USTR's Federal Register Notice, the lack of effectively enforced forced labor import prohibitions threatens domestic producers who must compete with foreign goods produced with an artificial cost advantage and may harm U.S. workers and citizens through distorting competition and the purchase of goods produced under exploitative conditions.
The agency's announcement - which came less than three weeks after the U.S. Supreme Court struck down President Trump's IEEPA tariffs - was widely-anticipated, as the Administration has said it would use Section 301 investigations, and potential remedies, as part of its effort to quickly rebuild the President's tariff regime.
Section 301 of the Trade Act of 1974 provides a statutory means for the U.S. to impose trade sanctions against foreign countries that violate a U.S. trade agreement or engage in acts, policies, or practices that are "unjustifiable," "unreasonable," or "discriminatory," and burden or restrict U.S. commerce.
The statute defines "unreasonable" acts, policies, and practices to include "a persistent pattern of conduct that…permits any form of forced or compulsory labor."
USTR may initiate a case based on a petition from any interested person or, alternatively, can "self-initiate," as it did in this instance.
The Section 301 process is led by USTR, in coordination with an interagency "Section 301 Committee." The Committee will solicit and review public comments, conduct public hearings, and make recommendations that will inform the final decision(s) by the USTR.
If USTR makes an affirmative determination to take action "to obtain the elimination of such act, policy, or practice," such action must be implemented within 30 days, unless USTR exercises its discretion to delay implementation (by no more than 180 days) under certain specified circumstances. The action(s) taken can affect any goods, services, or other aspects of the trade relationship with the target country, subject to any "specific direction" of the President.
Once an action is in place, Section 301 allows USTR to modify or terminate the action if, for example, the foreign conduct that is the subject of the action "has increased or decreased" or "is no longer appropriate." Section 301 action may continue indefinitely but is subject to termination at the end of four years if the domestic industry benefitting from the action does not request continuation of the action. If a continuation request is submitted before the end of the four-year period, USTR will conduct a review of the efficacy and economic effects of the action before deciding on continuation.
Section 301 authorizes the USTR to: (1) impose duties or other import restrictions (with a preference for duties), (2) withdraw or suspend trade agreement concessions, or (3) enter into a binding agreement with the foreign government to either eliminate the conduct in question (or the burden to U.S. commerce) or compensate the United States with satisfactory trade benefits. Should tariffs be imposed, the statute allows for, but does not require, an exclusion process.
President Trump used Section 301 during his first term to impose sweeping tariffs on Chinese-origin imports after USTR's affirmative determination regarding discriminatory intellectual property rights-related trade and economic practices on the part of the People's Republic of China (PRC). Those tariffs, covering $370 billion in Chinese imports, remain in place today.
Generally, USTR must finish an investigation within 12 months of initiation. In this case, Ambassador Greer has pledged to move on a much quicker timeline. The investigations may be concluded by July 24, 2026, when the temporary Section 122 tariffs are set to expire (see our blog post on those tariffs here).
In its May 12 Federal Register Notice, USTR focuses on the absence of enforced forced labor import prohibitions in the 60 economies included within the scope of the investigation. While the notice references the existence of forced labor in various industries - including cotton used to produce garments, textiles, thread and yarn; critical minerals used to produce solar products or auto-parts; fish used to produce fish oil and fish meal; and palm fruit used to produce kernel or palm oil used in various cooking oils and biofuels - the investigation centers on the failure of countries to implement and enforce forced labor import prohibitions to stop the entry of such goods into their markets. The investigation does not focus on the presence of forced labor in any particular industry.
Trading partners subject to the investigations are: Algeria, Angola, Argentina, Australia, The Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, El Salvador, the European Union, Guatemala, Guyana, Honduras, Hong Kong/China, India, Indonesia, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Türkiye, United Arab Emirates, United Kingdom, Uruguay, Venezuela, and Vietnam.
Yes. Canada and Mexico implemented forced labor import prohibitions pursuant to commitments to the United States to do so in the United States-Mexico-Canada Agreement. The European Union adopted a forced labor regulation prohibiting imports, exports, and domestic sales of forced labor goods that is scheduled to be fully applied in December 2027. Several listed countries also committed to implement forced labor prohibitions in their recent Agreements on Reciprocal Trade with the United States, including Malaysia, Cambodia, El Salvador, Guatemala, Argentina, Bangladesh, Taiwan, and Indonesia.
USTR's inclusion of these countries within the scope of this Section 301 investigation indicates that USTR expects countries not only to commit to adopt forced labor import prohibitions or to adopt them, but to effectively enforce those measures as well.
USTR is specifically seeking feedback regarding:
- The level and scope, if any, of duties on products of any economy subject to these investigations.
- The level and scope, if any, of import restrictions on products of any economy subject to these investigations. The appropriate aggregate level of trade to be covered by any additional duties on products of any economy subject to these investigations.
USTR is soliciting written comments and will hold public hearings beginning April 28, 2026. Given the breadth of the investigation, we anticipate the hearings may last multiple days. USTR has said they will continue, as necessary, until May 1, 2026.
The agency opened a formal docket for public comments on March 12, 2026. Written comments and requests to testify at the public hearing are due April 15 and must be submitted via the agency's docket. Further instructions are included in the Federal Register Notice. Rebuttal comments will be accepted for seven days following the last public hearing day.
Yes. In a February 20 public statement, Ambassador Greer announced that the Trump Administration would be initiating several Section 301 investigations that it expected "to cover most major trading partners and to address areas of concern such as industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products."
The two Section 301 investigations initiated by USTR this week relate to the first two subjects referenced by Ambassador Greer. See our post on USTR's Section 301 investigations regarding industrial excess capacity and production here.
]]>According to USTR, this excess capacity and over-production leads to persistent trade imbalances and poses serious challenges to the U.S. economy, undermining investments in domestic manufacturing and threatening American jobs.
The agency’s announcement — which came less than three weeks after the U.S. Supreme Court struck down President Trump’s IEEPA tariffs — was widely-anticipated, as the Administration has said it would use Section 301 investigations, and potential remedies, as part of its effort to quickly rebuild the President’s tariff regime.
Section 301 of the Trade Act of 1974 provides a statutory means for the U.S. to impose trade sanctions against foreign countries that violate a U.S. trade agreement or engage in acts, policies, or practices that are “unjustifiable,” “unreasonable,” or “discriminatory,” and burden or restrict U.S. commerce.
USTR may initiate a case based on a petition from any interested person or, alternatively, can “self-initiate,” as it did in this instance.
The Section 301 process is led by USTR, in coordination with an interagency “Section 301 Committee.” The Committee will solicit and review public comments, conduct public hearings, and make recommendations that will inform the final decision(s) by the USTR.
If USTR makes an affirmative determination to take action “to obtain the elimination of such act, policy, or practice,” such action must be implemented within 30 days, unless USTR exercises its discretion to delay implementation (by no more than 180 days) under certain specified circumstances. The action(s) taken can affect any goods, services, or other aspects of the trade relationship with the target country, subject to any “specific direction” of the President.
Once an action is in place, Section 301 allows USTR to modify or terminate the action if, for example, the foreign conduct that is the subject of the action “has increased or decreased” or “is no longer appropriate.” Section 301 action may continue indefinitely but is subject to termination at the end of four years if the domestic industry benefitting from the action does not request continuation of the action. If a continuation request is submitted before the end of the four-year period, USTR will conduct a review of the efficacy and economic effects of the action before deciding on continuation.
Section 301 authorizes the USTR to: (1) impose duties or other import restrictions (with a preference for duties), (2) withdraw or suspend trade agreement concessions, or (3) enter into a binding agreement with the foreign government to either eliminate the conduct in question (or the burden to U.S. commerce) or compensate the United States with satisfactory trade benefits. Should tariffs be imposed, the statute allows for, but does not require, an exclusion process.
President Trump used Section 301 during his first term to impose sweeping tariffs on Chinese-origin imports after USTR’s affirmative determination regarding discriminatory intellectual property rights-related trade and economic practices on the part of the People’s Republic of China (PRC). Those tariffs, covering $370 billion in Chinese imports, remain in place today.
Generally, USTR must finish an investigation within 12 months of initiation. In this case, Ambassador Greer has pledged to move on a much quicker timeline. The investigations may be concluded by July 24, 2026, when the temporary Section 122 tariffs are set to expire (see our blog post on those tariffs here).
In its May 11 Federal Register Notice, USTR highlighted industries “plagued by excess capacity and production,” including: aluminum, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment.
This “illustrative list” does not preclude stakeholders from commenting on other manufacturing sectors, nor does it preclude USTR from making findings related to other sectors.
Trading partners subject to the investigations include: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.
USTR states that these economies “appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through large or persistent trade surpluses or underutilized or unused capacity.” For each economy, USTR provides illustrative examples of manufacturing sectors where it believes these conditions exist.
USTR is specifically seeking feedback regarding:
USTR is soliciting written comments and will hold public hearings beginning May 5, 2026. Given the breadth of the investigation, we anticipate the hearings will last several days. USTR has said they will continue, as necessary, until May 8, 2026.
The agency will open a formal docket on March 17, 2026. Written comments and requests to testify at the public hearing are due April 15 and must be submitted via the agency’s docket. Further instructions are included in the Federal Register Notice. Rebuttal comments will be accepted for seven days following the last public hearing day.
Yes. In fact, Ambassador Greer also announced on March 11 that a separate investigation concerning forced labor may be announced as soon as March 12. The investigation will cover “about 60” countries that have not adopted or enforced forced labor import prohibitions.
]]>They will walk through:
This session will help companies understand the emerging refund framework and position themselves to act quickly as the process develops.
Register here.
]]>The Administration has also announced the following actions to be taken:
Initiate several investigations under Section 301 to deal with “unjustifiable, unreasonable, discriminatory, and burdensome acts, policies, and practices by many trading partners.” At their conclusion, these investigations are likely to result in the imposition of more-enduring tariffs to replace the time-limited Section 122 tariffs discussed below.
Here are the key takeaways from the Presidential orders:
| Taiwan | Indonesia |
| Text | Text |
| Tariff Schedule | Tariff Schedule |
| Fact Sheet | Fact Sheet |
The two agreements share some common features.
Beyond tariff reductions, these ARTs cover many topics seen in more traditional free trade agreements, including – on the part of Taiwan and Indonesia – the elimination of non-tariff barriers affecting U.S. exports. Additionally, both Taiwan and Indonesia committed to a number of policy changes to better align with existing U.S. policy, such as implementation of a forced labor import ban and enhanced intellectual property protections. But that also means the “internal procedures” to approve the agreements, triggering their entry into force, may be long and complex (particularly in Taiwan and Indonesia as those countries’ commitments are somewhat more substantial). In the United States, the internal or legal procedures required also remain undefined; while the Administration contends the ARTs do not require Congressional approval, many Members of Congress disagree.
Finally, the tariffs that the United States has agreed to modify in Schedule 2 of each of these ARTs inherently rely on IEEPA authority. The Supreme Court just issued an opinion finding that law does not provide the President with the necessary authority (more on that soon). Thus, the concessions the United States has made to reduce or eliminate those tariffs are likely rendered moot to the extent the tariffs themselves evaporate in whole or in part. This also raises a question about the survival of the other terms reached by the United States and its trading partners in exchange for those Reciprocal Tariff rate reductions (e.g., auto quotas, purchase and investment commitments, import licensing, regulatory acceptance, agricultural barriers to trade, intellectual property, labor, taxes, environment, etc.). Taiwan or Indonesia may seek to abrogate their respective agreements under those circumstances, but we should expect the United States to use other points of leverage, both tariff-related and otherwise, to ensure the rest of the deal stays in place.
]]>On February 10, 2026, to supplement an earlier General License (“GL”) authorizing certain activities involving Venezuelan-origin oil (see our previous blog post on Venezuela GL No. 46), OFAC issued GL No. 48, which permits “all transactions prohibited by the Venezuela Sanctions Regulations, 31 CFR part 591… that are ordinarily incident and necessary to the provision from the United States or by a U.S. person of goods, technology, software, or services for the exploration, development, or production of oil or gas in Venezuela.” The new GL specifically permits activities involving the Government of Venezuela, sanctioned energy company Petróleos de Venezuela (PdVSA), and entities in which PdVSA holds, directly or indirectly, a 50% or more interest. As described in GL No. 48, certain conditions apply and companies relying on this OFAC authorization must be very careful to ensure that they adhere to those conditions because penalties for non-compliance can be significant.
This GL will be especially important to U.S. companies that supply equipment for oil production and related activities - and it has wide-ranging implications for a wide variety of other U.S. companies and industries that support oil and gas production. An example of transactions authorized under GL No. 48 include transactions for the maintenance of oil or gas operations in Venezuela, including the refurbishment or repair of items used for oil or gas exploration, development, or production activities. The new GL also authorizes transactions related to the processing of payments, arranging shipping and logistics services, including chartering vessels, obtaining marine insurance and protection and indemnity coverage, and arranging port and terminal services.
On the same day, OFAC also amended GL No. 46 to clarify that payments for local taxes, permits, and fees do not need to be made into the Foreign Government Deposit Funds (see GL No. 46A, which replaces GL No. 46). In addition, OFAC issued GL No. 30B to update a long-standing license authorizing certain transactions involving Venezuelan ports and airports, to remove previous language that discussed a restriction on diluents to Venezuela. This change was necessary as a result of GL No. 47 issued on February 3, 2026, which permits the sale of U.S.-origin diluents to Venezuela.
On February 13, 2026, OFAC issued GL No. 49 and GL No. 50. GL No. 49 authorizes negotiations and entry into “contingent contracts” for new investment in oil or gas operations in Venezuela. These contingent contracts subsequently require a separate authorization from OFAC for the performance of such contracts, to ensure that the proposed contracts advance the interests of the American and Venezuelan people. GL No. 50 permits certain companies (BP PLC, Chevron Corporation, Eni S.p.A., Repsol S.A., and Shell PLC) and their subsidiaries that already have oil or gas operations in Venezuela to engage in transactions involving the Government of Venezuela, PdVSA, and entities in which PdVSA holds, directly or indirectly, a 50% or more interest. On February 18, 2026, OFAC amended GL No. 50 with GL No. 50A to add Établissements Maurel & Prom SA to the list of companies covered by the general license.
The Licenses include many restrictions and reporting requirements, similar to the ones outlined in our previous blog post on Venezuela GL No. 46.
Please contact our Export Controls and Economic Sanctions team if you need assistance navigating these latest developments.
*Legal Assistant Sean Church contributed to this blog post.
]]>The License states “all transactions prohibited by the Venezuela Sanctions Regulations, 31 CFR part 591…that are ordinarily incident and necessary to the lifting, exportation, reexportation, sale, resale, supply, storage, marketing, purchase, delivery, or transportation of Venezuelan-origin oil, including the refining of such oil, by an established U.S. entity” are now authorized by OFAC, provided that new contracts are governed by the laws of the United States and any monetary payment to a blocked person is made into the Foreign Government Deposit Funds. The purpose of the License is to authorize transactions involving the Venezuelan government, state-owned energy company Petroleos de Venezuela (PdVSA), or any entity majority-owned by PdVSA, which were previously blocked by U.S. sanctions.
The most notable limitations of these transactions are below and not authorized by OFAC:
Additionally, any person that exports, reexports, sells, resells, or supplies Venezuelan-origin oil to countries other than the United States pursuant to this general license must provide a detailed report to OFAC. These reports are due ten days after the execution of the first of such transactions and every 90 days thereafter while such transactions are ongoing.
Finally, on Monday, February 2, 2026, OFAC also authorized all transactions related to, the provision of financing for, and other dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond that would be prohibited by subsection l(a)(iii) of Executive Order (E.O.) 13835 of May 21, 2018.
With so many conditions attached to doing business related to Venezuelan oil, we recommend any clients doing so to contact our Export Controls and Economic Sanctions team to ensure transactions are within the scope of what is now authorized by OFAC.
Filed in November 2025, after the Supreme Court heard oral argument in the VOS Selections case, AGS – and the many cases consolidated under that caption – involves claims by multiple U.S. importers similarly challenging the lawfulness of the IEEPA tariffs. Notably, AGS is pending before the same three-judge panel (Judges Katzmann, Reif, and Restani) that initially decided VOS Selections.
On January 14, 2026, the CIT denied the Government’s motion in AGS to adopt certain case management procedures. As the Government explained in its motion, “From October 2025 to the present, over 900 cases have been commenced challenging the IEEPA tariffs,” indicating that case management procedures such as automatic stays, a plaintiffs’ steering committee, a consolidated filing and service mechanism, and a universal stipulation on reliquidation would ease the burden of mass litigation. The requested procedures largely reflected the CIT’s and parties’ experience in the mass China Section 301 tariff litigation, In Re Section 301 Cases, Ct. No. 21-00052-3JP. The CIT panel in AGS declined to adopt the Government’s proposal, although it did so “without prejudice,” meaning that parties may file a similar request in the future should circumstances change.
In its paperless order denying the motion, the CIT made two critical statements:
Key Takeaway: Setting aside whether non-litigants (i.e., U.S. importers affected by the IEEPA tariffs that do not currently have cases pending before the CIT) will have to file lawsuits in the future to preserve refund rights, the CIT is reiterating that is has the legal authority, acknowledged by the Government, to order reliquidation of entries for purposes of issuing appropriate refunds.
Notably, the CIT’s reference to “future similarly situated plaintiffs” indicates that the court will hold the Government’s stipulation to apply to non-litigants that may be plaintiffs in the future – meaning that companies do not need to be current plaintiffs, already having filed a legal action invoking the court’s 1581(i) jurisdiction, to be eligible for an order of reliquidation if appropriate following the Supreme Court’s decision.
Key Takeaway: There has been wide speculation as to exactly what the mechanism will look like for affected importers to obtain refunds should the Supreme Court hold any aspect of the IEEPA tariffs to be unlawful. That could vary widely, from an administrative application process designed and driven by Customs and Border Protection (CBP), to a court-ordered application process, to an automatic refund mechanism, to litigation by individual importers. The path forward will likely depend on the nuances of the outcome in VOS Selections and how the Government (including CBP), current litigants, and CIT approach a solution, and if it is one that is universally applicable.
The language in the AGS court’s order is highly relevant because with it, the CIT panel is signaling its intent to craft and implement structured case management procedures at a future date, after the SCOTUS decision. While there is still significant uncertainty as to exactly what that will look like, it is now reasonable to expect the court will offer guidance and rules to thoughtfully address and manage litigation to the extent it is necessary – it will not be a “free for all” if the court can avoid it.
]]>The Federal Circuit’s September 25 judgment triggered two options for the plaintiffs/appellants to litigate further: either file with the Federal Circuit a petition for rehearing or rehearing en banc (by the full court) within 45 days of judgment (by November 10, 2025) or file with the U.S. Supreme Court a petition for writ of certiorari (“cert petition”) within 90 days of judgment (by December 24, 2025). The plaintiffs/appellants did not request rehearing by the Federal Circuit and the Federal Circuit mandate (i.e., certified judgment and opinion representing the final notification of the court’s decision) issued to the CIT on November 17, 2025. The plaintiffs, however, still have time and the option to appeal the case to the Supreme Court.
Following a videoconference status hearing before the CIT including the lead plaintiffs (importer HMTX Industries LLC and its co-plaintiffs), the U.S. Government, and the Plaintiffs’ Steering Committee (on behalf of other parties with an interest in the master litigation), the CIT panel overseeing the case (Chief Judge Barnett and Judges Kelly and Choe-Groves) issued a procedural order outlining the path forward for the litigation. According to the December 3 order:
If your company filed a complaint at the CIT challenging the legality of the China Section 301 tariffs that is currently stayed, you have two near-term options:
You may choose to do nothing. Your case will remain stayed pending the lead plaintiffs’ decision regarding an appeal to the Supreme Court. If the plaintiffs file a cert petition, your case will remain stayed pending further instruction from the CIT – presumably depending on the course and outcome of litigation at the high court.
Or you may choose to voluntarily dismiss your CIT case according to standard court procedures, prior to any other process established by the CIT to govern all the related cases in the future. Specifically:
Please let us know if you would like more information or assistance in managing your company’s participation in this litigation as it continues.
]]>The orderModifying Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China reduces from 20% to 10% the fentanyl-related IEEPA tariffs first imposed on Chinese imports into the United States in February 2025 (the tariffs were initially imposed at a rate of 10% before President Trump doubled them a month later). The reduced rate of 10% is effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EST on November 10, 2025.
The orderModifying Reciprocal Tariff Rates Consistent with the Economic and Trade Arrangement Between the United States and the People’s Republic of China further suspends for one year the scheduled increase in China’s Reciprocal Tariff rate from 10% to 34%. The United States will maintain the current 10% Reciprocal Tariff rate until 12:01 a.m. EST on November 10, 2026.
Both orders direct the President’s trade and economic team to monitor conditions and developments and provide that the President may modify the orders – and, thus, the tariff rates – as necessary should the PRC fail to implement its commitments.
Under the bilateral arrangement, the United States has also agreed to: extend until November 10, 2026, certain Section 301 tariff exclusions previously set to expire on November 29, 2025; suspend until November 10, 2026, the implementation of the U.S. Commerce Department Bureau of Industry and Security’s interim final rule titled Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities (the so-called “Affiliates Rule,” which we have previously written about here); and suspend until November 10, 2026, the implementation of its remedy in response to the Section 301 investigation on China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance. We are awaiting formal notice and implementation of these commitments.
For its part, the PRC has committed to a number of actions including, but not limited to: stopping the flow of fentanyl precursors into the United States; eliminating global export controls on rare earth elements and other critical minerals; suspending or removing many retaliatory tariffs and non-tariff countermeasures taken against the United States; removing measures imposed in retaliation for the U.S. Section 301 shipbuilding remedy; and purchasing U.S. soybeans and other agricultural exports.
Additional details can be found in the Fact Sheet published by the White House on November 1, 2025.
Kelley Drye’s International Trade and Government Relations teams continue to monitor the Trump Administration’s trade actions. Please reach out if you have questions about the impact to your company from these or other announcements.
]]>The 232 Wood tariffs will take effect at 12:01 a.m. EDT on October 14, 2025, with certain rates set to increase on January 1, 2026. The covered products and tariff rates are as follows:
Reduced tariff rates will apply to covered imports from countries with whom the United States has already reached trade and tariff agreements. Specifically:
The 232 Wood tariff will apply to the full entered value of the product. This is unlike the implementation of the Section 232 Steel and Aluminum tariffs as applied to derivative products. In that case, the Section 232 tariff is only applied to the value of the steel and/or aluminum content and the IEEPA Reciprocal tariffs are applied to the balance of the product’s value.
If imports are already subject to the Auto 232 tariffs, then the Wood 232 tariffs do not apply.
For products covered by the 232 Wood tariffs, the IEEPA Reciprocal tariffs, Brazil Corruption tariffs, and India Russian Oil tariffs do not apply. Similarly, the Canada and Mexico Fentanyl tariffs only apply if the Wood 232 tariffs do not apply.
The 232 Wood tariffs will “stack” on top of Section 301 (China) tariffs and any existing AD/CVD orders.
Duty drawback will be available.
No Exception for Products Made with U.S.-Origin Wood: The Proclamation does not provide an exception for derivative products produced outside of the United States using U.S.-origin timber / lumber.
Possible Increase in Tariff Rate for Lumber: The Proclamation directs the Commerce Department to provide a report to the President by October 1, 2026, with an update on relevant import and economic conditions. At that time, the President may determine to impose additional duties on imports of timber / lumber and derivative products.
Possible Coverage of Additional Products: The Proclamation includes a clause directing the Commerce Department to establish a process for including additional wood products within the scope of the tariffs. Additions would be based upon national security and other considerations.
Threat of Undervaluation: The Proclamation includes a clause directing the Commerce Department to establish a process for determining whether there is a threat of undervaluation of wood product imports subject to the tariffs. If the Secretary finds that there is a risk of undervaluation of any particular class of imports of wood products subject to tariffs, additional tariff actions are authorized.
Possible Future Adjustments: All HTSUS Chapter 44 tariff codes are removed from Annex II of the Reciprocal tariff order (meaning they are now subject to the Reciprocal tariffs unless the Wood 232 tariffs apply). But a Chapter 44 code can remain on Annex II if two conditions are met: (1) it is on the "potential negotiation" list (Annex III to Executive Order 14346 of Sept. 5, 2025) and (2) it is not a tariff code inclusive of products subject to AD/CVD duties. In other words, certain HTSUS tariff codes will remain exempted from the Reciprocal tariffs as long as they are currently covered (at least to some extent) by AD and/or CVD orders and they continue to be the subject of bilateral negotiations (e.g., implementation of the U.S.-EU Framework Agreement issued last week).
Kelley Drye is continuing to monitor changes to tariffs as they occur. Should you have any questions regarding how tariffs may impact your business, please reach out to our International Trade or Government Relations teams
]]>The tariffs stemmed from the Office of the United States Trade Representative’s (USTR) investigation and determination in April 2018 under Section 301 of the Trade Act of 1974 that China had engaged in unreasonable and discriminatory conduct burdening or restricting U.S. intellectual property rights, innovation, or technology development. In response to China’s unlawful conduct, and after a public comment period and hearing, USTR determined in June 2018 to impose 25 percent tariffs on a list (“List 1”) of U.S. imports from China that enter under specific subheadings of the Harmonized Tariff Schedule of the United States (HTSUS). That prompted retaliatory tariffs imposed by China on U.S. goods, which in turn prompted USTR to issue various additional lists – including Lists 3 and 4 – of modified, higher tariff rates for specified HTSUS subheadings.
Companies that imported affected products from China challenged the legality of these Lists 3 4A tariffs imposed and modified between September 2018 and January 2020 (List 4B tariffs were indefinitely suspended in December 2019). The CIT consolidated the more than 3,500 lawsuits from parties who contended, among other things, that the tariffs were unsupported by statutory authority and imposed in violation of procedural requirements mandated by the Administrative Procedure Act (APA). The main issue was whether the statute could be correctly interpreted to permit USTR to impose the higher tariff rates via Lists 3 and 4A.
In a unanimous decision, the three-judge CAFC panel affirmed the CIT’s decision issued in March 2023 upholding the Lists 3 and 4A tariffs. The CAFC agreed with the CIT that the authorizing language of Section 307 of the Trade Act of 1974 permitting USTR to “modify” Section 301 action also allowed the agency to increase the tariffs, and that USTR had complied with the CIT’s earlier decision to demonstrate USTR’s compliance with the APA’s requirements.
While the CAFC agreed with the CIT that Section 307 allowed the modification of the tariffs, the appeals court found that an increase in the tariff rate was authorized by a provision within the law other than that relied on by the lower court and the Government. The CAFC reasoned that the statutory use of “modify” in this instance is open-ended and does not “exclude” any particular action, meaning the law is “indifferent” as to both the degree and direction of change. In other words, Section 307 authorizes USTR to alter initial action taken under Section 301 in either a trade-restricting or trade-liberalizing manner, and that USTR has wide leeway and “substantial discretion” to adjust in either direction its discretionary measures imposed. Nonetheless, the CAFC observed that modifications of initial Section 301 measures must still “be tailored to achieve Section 301’s statutory goal of eliminating the investigated conduct” and that the law does not permit USTR “to raise tariffs for any reason or by an amount that exceeds what USTR believes to be appropriate” to achieve the ends of its discretionary action under Section 301. Ultimately, the CAFC concluded that the Lists 3 and 4A tariffs were, therefore, lawful because USTR adequately demonstrated that the tariffs were related to USTR’s initial action and were intended to influence China’s offending behavior.
In addition, the CAFC held that Congress did not unconstitutionally delegate to USTR the authority to decide whether and to what extent to modify certain Section 301 measures. The appeals court also concluded that unlike in its recent decision addressing IEEPA tariffs, the major questions doctrine articulated by the Supreme Court did not apply in this instance. As explained, the “Lists 3 and 4A tariffs may, at best, be a new use of USTR’s regulatory authority, but they do not involve a transformation of USTR’s regulatory authority,” in contrast to the unprecedented IEEPA tariffs imposed by President Trump in 2025. Lastly, the CAFC also agreed with the CIT’s holding that USTR was not excused from complying with APA requirements under the “foreign affairs exception,” and that USTR’s elaboration, upon remand, of the procedures followed in making the modifications at issue satisfied the APA’s requirements.
The litigants in this case, HMTX Industries LLC v. United States, may still appeal the CAFC’s decision either to the full CAFC (by filing a petition for rehearing or rehearing en banc) within 45 days after the entry of judgment, or to the Supreme Court within 90 days after the entry of judgment. In the meantime, the Section 301 tariffs remain in effect, as they have throughout the pendency of this litigation. Kelley Drye’s International Trade team will continue to monitor this case and other litigation over tariffs.
]]>Read the full client advisory here and subscribe here to receive advisories like this in the future.
]]>The most notable amendments to the EAR by this rule include (but are not limited to) authorizing exports and reexports to Syria of all items designated EAR99 – the lowest level of classification, adopting a presumption of approval licensing policy for certain end uses, and the removal of now obsolete provisions in the EAR related to Syria. Consumer communications devices and certain items related to civil aviation may also generally go to Syria without an export license. BIS announced they will continue to restrict exports when the end-users of items are malign actors, including certain Syrian individuals and entities that remain subject to sanctions, noted below.
These changes to BIS’s policy toward Syria follow similar changes announced by the U.S. the Department of the Treasury’s Office of Foreign Assets Control (OFAC) earlier this summer, which implemented the President’s Executive Order “Providing for the Revocation of Syria Sanctions,” (Syria EO) which removed certain U.S. sanctions on Syria, effective July 1, 2025, while maintaining sanctions on former president Bashar Al-Assad, his associates, and other destabilizing regional actors under the Syria EO. Our blog post covering the OFAC Syria changes can be found here.
Please contact our sanctions and export control team if you need assistance navigating these latest developments.
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