On July 6, 2021, the U.S. Court of International Trade (CIT) issued an opinion granting the Plaintiffs’ motion for a preliminary injunction in the ongoing China Section 301 tariff litigation. The preliminary injunction suspends liquidation of unliquidated entries subject to List 3 and List 4A Section 301 duties, which, the Plaintiffs allege, are not authorized under the original investigation of the U.S. Trade Representative (USTR) into China’s actions adversely affecting U.S. intellectual property rights, innovation, or technology development.

The two-judge majority opinion states that the Plaintiffs “demonstrated they will likely suffer irreparable harm because their entries of subject merchandise will liquidate absent an injunction.” In addition to the potential unavailability of reliquidation or receiving any refund, the majority opinion notes that the group of U.S. government defendants failed “to meaningfully dispute that liquidation will cause harm that cannot be undone and instead argues that any unlawfully collected duties would be forever unrecoverable.” While stating that the CIT is granted broad authority to order appropriate relief, the opinion notes that several U.S. Court of Appeals decisions have “cast sufficient doubt as to the scope of that authority” and, until the higher court makes the scope of that authority clear, the CIT “must conclude that liquidation will result in irreparable economic harm.” As a result, the “Plaintiffs’ interpretation of the statute raises serious and substantial questions about the scope of the USTR’s statutory authority to act, which should be resolved via full litigation of the merits of these claims.”

In ordering the suspension of liquidation, the CIT found that such an action “maintains the status quo: the Government will still collect the duties pending the merits determination, but as liquidation is the final computation of duties, their finality is delayed.” Thus, if “Plaintiffs are unsuccessful in their challenge, the Government will not lose any revenue.” The CIT’s order requires the Plaintiffs to take the following steps in order to obtain suspension of liquidation of their unliquidated entries:

  • the government must meet with the Plaintiffs’ steering committee within seven days of the order to discuss the establishment of the repository for any unliquidated entries,
  • the government must establish such a repository within 14 days of the order,
  • any plaintiff requesting suspension of liquidation must provide (i) its full Importer of Record (IOR) number(s), including any suffix(es); (ii) the case/court number and filing date of the Section 301 complaint as well as the CBP Center and team assignment (if known); and (iii) the entry number and date of entry for any entries where suspension of liquidation is to be requested,
  • the government is enjoined during the remainder of this litigation from liquidating any entries for which they received a request for suspension of liquidation, unless within 14 days of receiving such a request, and at their option, the government stipulates to refund any duties found to have been illegally collected and notifies the Plaintiffs of such stipulation,
  • the government is temporarily restrained for 28 days from July 6, 2021 from liquidating any entries, and that should any subject entry be inadvertently liquidated during this 28-day period, such entry must be returned to unliquidated status,
  • any entry for which liquidation is suspended under the July 6, 2021 order will be liquidated in accordance with any final court decision, and
  • any entry inadvertently liquidated by CBP in contravention of the order must be returned to unliquidated status.

The parties will next appear before the CIT for a status conference on July 15, 2021.

Chief Judge Mark Barnett dissented from the opinion, arguing that, while he agreed with much of the analysis, the Plaintiffs failed to establish a likelihood of irreparable harm because the CIT has the authority to order refunds. Much of Chief Judge Barnett’s dissent is based on precedent that there is “no more than a remote chance that the appellate court would find that the [CIT] is not empowered to provide relief with respect to any liquidated entries.”