`UNITED STATES COURT OF INTERNATIONAL TRADE
`MAESTRO FOODS dba TOVALA,
`UNITED STATES OF AMERICA; OFFICE OF THE
`UNITED STATES TRADE REPRESENTATIVE;
`ROBERT E. LIGHTHIZER,
`U.S. TRADE REPRESENTATIVE; U.S. CUSTOMS &
`BORDER PROTECTION; MARK A. MORGAN, U.S.
`CUSTOMS & BORDER PROTECTION ACTING
`Court No. 20-03420
`Plaintiff, MAESTRO FOODS DBA TOVALA, by and through their attorneys, allege and
`state as follows:
`This action concerns Defendants’ unlawful determination to subject over $500 billion in
`imports of goods from the People’s Republic of China to punitive tariffs by the unlawful imposition of a
`third and fourth round of tariffs on products covered by so-called “List 3” (Notice of Modification of Section
`301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
`Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018)), and List 4, Annex A (Notice of Modification of Section
`301 Action: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
`and Innovation, 84 FR 43,304 (Aug. 20, 2019).
`The Trade Act of 1974 (“Trade Act”) did not confer authority on Defendants to
`prosecute a vast trade war for however long, and by whatever means, they choose. The Office of
`the United States Trade Representative (“USTR”) conducted an investigation into China’s unfair
`intellectual property policies and practices pursuant to Section 301 of the Trade Act (19 U.S.C.
`§ 2411). Section 304 of the Trade Act (19 U.S.C. § 2414) required USTR to determine what action
`to take, if any, within 12 months after initiation of that investigation. The USTR failed to issue
`“List 3” (or subsequent List 4) within that window.
`USTR may not fall back on its “modification” authority under Section 307 of the
`Trade Act (19 U.S.C. § 2417) to salvage List 3. Section 307 of the Trade Act does not permit
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 2 of 18
`USTR to expand the imposition of tariffs to other imports from China for reasons untethered to
`the unfair intellectual property policies and practices it originally investigated under Section 301
`of the Trade Act. Yet that is exactly what Defendants did here when they promulgated the List 3
`duties in response to China’s retaliatory duties and other unrelated issues. And even if USTR
`deems the existing tariffs “no longer appropriate,” as it also did here, the Trade Act permits USTR
`only to delay, taper, or terminate—not ratchet up—the actions it has already taken.
`The arbitrary manner in which Defendants implemented the List 3 tariff action
`also violates the Administrative Procedure Act (“APA”). USTR (1) failed to provide sufficient
`opportunity for comment, e.g., requiring interested parties to submit affirmative and rebuttal
`comments on the same day; (2) failed to consider relevant factors when making its decision, e.g.,
`undertaking no analysis of the supposed “increased burden” imposed on U.S. commerce from the
`unfair policies and practices that it originally investigated; and (3) failed to connect the record facts
`to the choices it made. Indeed, despite receiving over 6,000 comments, USTR said absolutely
`nothing about how those comments shaped its final promulgation of List 3. USTR’s preordained
`decision-making bears no resemblance to the standards that the APA demands.
`The Court should set aside Defendants’ actions as ultra vires and otherwise
`contrary to law, as well as order Defendants to refund (with interest) any duties paid by Plaintiffs
`pursuant to List 3 and/or List 4, Annex A.
`The Court possesses subject matter jurisdiction over this action pursuant to 28
`U.S.C. § 1581(i)(1)(B), which confers “exclusive jurisdiction” to the Court over “any civil action
`commenced against the United States, its agencies, or its officers, that arises out of any law of the
`United States providing for . . . tariffs, duties, fees, or other taxes on the importation of merchandise
`for reasons other than the raising of revenue.” 28 U.S.C. § 1581(i)(1)(B).
`Plaintiff MAESTRO FOODS DBA TOVALA is an importer of products
`identified on List 3 and List 4, Annex A, including but not limited to electronic ovens classified
`under HTSUS 8516.60.4086 which is subject to the additional ad valorem duties under List 3,
`HTSUS 9903.88.03. Defendant United States of America received the disputed tariffs and is the
`statutory defendant under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i)(1)(B).
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 3 of 18
`The Office of the USTR is an executive agency of the United States charged with
`investigating a foreign country’s trade practices under Section 301 of the Trade Act and
`implementing “appropriate” responses, subject to the direction of the President. USTR conducted
`the Section 301 investigation at issue and made numerous decisions regarding List 3, and List 4,
`Ambassador Robert Lighthizer currently holds the position of USTR and serves
`as the director of the Office of the USTR. In these capacities, he made numerous decisions
`regarding List 3 and List 4, Annex A.
`Defendant U.S. Customs & Border Protection (“CBP”) is the agency that collects
`duties on imports. CBP collected payments made by Plaintiffs to account for the tariffs imposed
`by USTR under List 3 and List 4, Annex A.
`Defendant Mark A. Morgan is the Acting Commissioner of CBP. In this capacity,
`he oversees CBP’s collection of duties paid by Plaintiffs under List 3 and List 4, Annex A.
`Plaintiff MAESTRO FOODS DBA TOVALA has standing to sue because it is
`“adversely affected or aggrieved by agency action within the meaning of” the APA. 5 U.S.C. §
`702; see 28 U.S.C. § 2631(i) (“Any civil action of which the Court of International Trade has
`jurisdiction . . . may be commenced in the court by any person adversely affected or aggrieved by
`agency action within the meaning of Section 702 of title 5.”). Tariffs imposed by Defendants
`pursuant to List 3 and List 4, Annex A adversely affected and aggrieved MAESTRO FOODS DBA
`TOVALA because they were required to pay these unlawful duties.
`TIMELINESS OF THE ACTION
`A plaintiff must commence an action under 28 U.S.C. § 1581(i)(1)(B) “within
`two years after the cause of action first accrues.” 28 U.S.C. § 2636(i).
`The instant action contests action taken by Defendants that resulted in List 3.
`Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
`Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018).
`Plaintiffs’ claims accrued at the earliest on September 21, 2018, when USTR published notice of
`List 3 in the Federal Register. Id. Plaintiffs’ claims accrued at the earliest on September 21, 2018,
`when USTR published notice of List 3 in the Federal Register. Id. The instant action also contests
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 4 of 18
`action taken by Defendants that resulted in List 4 , A n n e x A . Notice of Modification of
`Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer,
`Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (Aug. 20, 2019). Plaintiffs’ claims
`accrued at the earliest on August 20, 2019, when the USTR published notice of List 4 in the
`Federal Register. Id. Plaintiffs have therefore timely filed this action.
`Section 301 of the Trade Act authorizes USTR to investigate a foreign country’s
`trade practices. 19 U.S.C. § 2411(b). If the investigation reveals an “unreasonable or
`discriminatory” practice, USTR may take “appropriate” action, such as imposing tariffs on imports
`from the country that administered the unfair practice. Id. § 2411(b), (c)(1)(B).
`Section 304 of the Trade Act requires USTR to determine what action to take, if
`any, within 12 months after the initiation of the underlying investigation. Id. § 2414(a)(1)(B),
`Section 307 of the Trade Act (in pertinent part) allows USTR to “modify or
`terminate” an action taken pursuant to Section 301 of the Trade Act either when the “burden or
`restriction on United States commerce” imposed by the investigated foreign country’s practice has
`“increased or decreased” or when the action “is no longer appropriate.” Id. § 2417(a)(1)(B), (C).
`The current U.S.-China trade war grew from a narrow dispute. On August 14,
`2017, President Trump directed Ambassador Lighthizer to consider initiating a targeted
`investigation pursuant to Section 301(b) of the Trade Act concerning China’s laws, policies,
`practices, and actions related to intellectual property, innovation, and technology. Addressing
`China’s Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and
`Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017). According to the President, certain Chinese
`“laws, policies, practices, and actions” on intellectual property, innovation, and technology “may
`inhibit United States exports, deprive United States citizens of fair remuneration for their
`innovations, divert American jobs to workers in China, contribute to our trade deficit with China,
`and otherwise undermine American manufacturing, services, and innovation.” Id.
`Four days later, on August 18, 2017, USTR formally initiated an investigation
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 5 of 18
`into “whether acts, policies, and practices of the Government of China related to technology
`transfer, intellectual property, and innovation are actionable under [Section 301(b) of] the Trade
`Act.” Initiation of Section 301 Investigation; Hearing; and Request for Public Comments: China’s
`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation,
`82 Fed. Reg. 40,213 (Aug. 24, 2017).
`Seven months later, on March 22, 2018, USTR released a report announcing the
`results of its investigation. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,
`Findings of the Investigation Into China’s Acts, Policies, And Practices Related to Technology
`Transfer, Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar.
`22, 2018), available at https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF. USTR
`found that certain “acts, policies, and practices of the Chinese government related to technology
`transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or
`restrict U.S. commerce.” Id. at 17. USTR based its findings on (1) China’s use of foreign ownership
`restrictions, foreign investment restrictions, and administrative licensing and approval processes
`to pressure technology transfers from U.S. to Chinese companies, id. at 45; (2) China’s use of
`licensing processes to transfer technologies from U.S. to Chinese companies on terms that favor
`Chinese recipients, id. at 48; (3) China’s facilitation of systematic investment in, and acquisition
`of, U.S. companies and assets by Chinese entities to obtain technologies and intellectual property
`for purposes of large-scale technology transfer, id. at 147; and (4) China’s cyber intrusions into
`U.S. computer networks to gain access to valuable business information, id. at 171. In its report,
`USTR did not quantify the burden or restriction imposed on U.S. commerce by the investigated
`On the same date, USTR published a “Fact Sheet” stating that “[a]n interagency
`team of subject matter experts and economists estimates that China’s policies result in harm to the
`U.S. economy of at least $50 billion per year.” OFFICE OF THE UNITED STATES TRADE
`REPRESENTATIVE, Section 301 Fact Sheet (Mar. 22, 2018), available at https://ustr.gov/about-
`indicated that, consistent with a directive from President Trump, it would “propose additional
`tariffs” of 25% ad valorem “on certain products of China, with an annual trade value commensurate
`with the harm caused to the U.S. economy resulting from China’s unfair policies.” Id.; see Actions
`by the United States Related to the Section 301 Investigation of China’s Laws, Policies, Practices,
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 6 of 18
`or Actions Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg.
`13,099 (Mar. 27, 2018) (President Trump’s directive).
`Lists 1 & 2
`Between April and August 2018 (i.e., within the 12-month statutory deadline
`from the initiation of the investigation in August 2017, see 19 U.S.C. § 2414(a)(2)(B)), Defendants
`undertook a series of actions to remedy the estimated harm to the U.S. economy caused by the
`investigated unfair practices, ultimately imposing duties on imports from China covered by the so-
`called Lists 1 and 2.
`On April 6, 2018, USTR published notice of its intent to impose “an additional
`duty of 25 percent on a list of products of Chinese origin.” Notice of Determination and Request
`for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301:
`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
`Innovation, 83 Fed. Reg. 14,906, 14,907 (Apr. 6, 2018). The products on the proposed list covered
`1,333 tariff subheadings with a total value of “approximately $50 billion in terms of estimated
`annual trade value for calendar year 2018.” Id. at 14,907. USTR explained that it chose $50 billion
`because that amount was “commensurate with an economic analysis of the harm caused by China’s
`unreasonable technology transfer policies to the U.S. economy, as covered by USTR’s Section 301
`investigation.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Under Section 301 Action,
`USTR Releases Proposed Tariff List on Chinese Products (Apr. 3, 2018), available at
`On June 20, 2018, USTR published notice of its final list of products subject to
`an additional duty of 25% ad valorem, a list commonly known as “List 1.” Notice of Action and
`Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section
`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
`and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018). USTR explained that it had “narrow[ed] the
`proposed list in the April 6, 2018 notice to 818 tariff subheadings, with an approximate annual
`trade value of $34 billion.” Id. at 28,711.
`At the same time that it finalized List 1, USTR announced that it intended to
`impose a 25% ad valorem duty on a second proposed list of Chinese products in order to “maintain
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 7 of 18
`the effectiveness of [the] $50 billion trade action” grounded in its Section 301 investigation. Id. at
`28,712. USTR announced a proposed “List 2” covering 284 tariff subheadings with “an
`approximate annual trade value of $16 billion.” Id. at 28,711-12.
`On August 16, 2018, USTR published notice of the final list of products subject
`to an additional duty of 25% ad valorem in List 2, comprising “279 tariff subheadings” whose
`“annual trade value . . . remains approximately $16 billion.” Notice of Action Pursuant to Section
`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
`and Innovation, 83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018).
`III. List 3 and List 4
`As soon as USTR announced the results of its investigation in March 2018,
`tensions between the governments of China and the United States escalated dramatically. In the
`months that followed, Defendants wildly expanded the scope of the tariffs imposed under Section
`301 of the Trade Act to cover imports worth more than $500 billion—ten times the amount it had
`deemed “commensurate” with the findings of USTR’s original investigation. Defendants did so for
`reasons untethered to the unfair practices that USTR had investigated, namely China’s tit-for-tat
`countermeasures and a hodgepodge of grievances related to China’s role on the world stage.
`Shortly after President Trump directed USTR in April 2018 to consider imposing
`duties on $50 billion in Chinese products, China promptly threatened to impose retaliatory duties
`on the same value of imports from the United States. In response, President Trump “instructed the
`USTR to consider whether $100 billion of additional tariffs would be appropriate under Section
`301” due to “China’s unfair retaliation.” THE WHITE HOUSE, Statement from Donald J. Trump on
`When USTR finalized List 1 in mid-June 2018, President Trump warned China
`that he would consider imposing additional tariffs on Chinese goods if China retaliated against the
`United States. E.g., Vicki Needham & Max Greenwood, Trump Announces Tariffs on $50 Billion
`in Chinese Goods, THE HILL (June 15, 2018), available at http://thehill.com/homenews/
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 8 of 18
`administration/392421-trump-announces-tariffs-on-50-billion-in-chinese-goods (“The president
`said the United States will pursue additional tariffs if China retaliates ‘such as imposing new tariffs
`on United States goods, services or agricultural products; raising non-tariff barriers; or taking
`punitive actions against American exporters or American companies operating in China.’”).
`Following through on his warning, on June 18, 2018, President Trump formally
`directed USTR to consider whether the United States should impose additional duties on products
`from China with an estimated trade value of $200 billion—despite USTR having not yet
`implemented List 1 and List 2. President Trump acknowledged that China’s threatened retaliatory
`“tariffs on $50 billion worth of United States exports” motivated his decision. THE WHITE HOUSE,
`Statement from the President Regarding Trade with China (June 18, 2018), available at
`(“This latest action by China clearly indicates its determination to keep the United States at a
`permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance
`in goods. This is unacceptable.”).
`Acknowledging the purpose of the President’s directive, USTR stated that it
`would design the newly proposed duties to address China’s threatened retaliatory measures, rather
`than any of the harms identified in its Section 301 investigation. OFFICE OF THE UNITED
`STATES TRADE REPRESENTATIVE, USTR Robert Lighthizer Statement on the President’s
`Additional China Trade Action (June 18, 2018), available at https://ustr.gov/about-us/policy-
`offices/press-office/press- releases/2018/june/ustr-robert-lighthizer-statement-0 (explaining that,
`although Lists 1 and 2 “were proportionate and responsive to forced technology transfer and
`intellectual property theft by the Chinese” identified in the Section 301 investigation, the proposed
`duties for a third list of products were necessary to respond to the retaliatory and “unjustified
`tariffs” that China may impose to target “U.S. workers, farmers, ranchers, and businesses”).
`Despite these warnings from Defendants, China retaliated by imposing 25% ad
`valorem tariffs on $50 billion in U.S. goods implemented in two stages of $34 billion and $16
`billion on the same dates the United States began collecting its own 25% tariffs under List 1 (July
`6, 2018) and List 2 (August 23, 2018).
`About a week after China imposed its first round of retaliatory duties, USTR
`published notice of its proposal to “modify the action in this investigation by maintaining the
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 9 of 18
`original $34 billion action and the proposed $16 billion action, and by taking a further,
`supplemental action” in the form of “an additional 10 percent ad valorem duty on [a list of]
`products [from] China with an annual trade value of approximately $200 billion.” Request for
`Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts,
`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83
`Fed. Reg. 33,608, 33,608 (July 17, 2018). USTR invoked Section 307(a)(1)(C) of the Trade Act,
`pursuant to which USTR “may modify or terminate any action, subject to the specific direction, if
`any, of the President with respect to such action, . . . if . . . such action is being taken under [Section
`301(b)] of this title and is no longer appropriate.” Id. at 33,609 (citing 19 U.S.C. § 2417(a)(1)(c)).
`USTR initially set a deadline of August 17, 2018 for initial comments; August 20-23, 2018 for a
`public hearing; and August 30, 2018 for rebuttal comments. Id. at 33,608.
`In its notice, USTR confirmed that it had relied on China’s decision to impose
`“retaliatory duties” as the primary basis for its proposed action. Id. at 33,609 (asserting as
`justification “China’s response to the $50 billion action announced in the investigation and its
`refusal to change its acts, policies, and practices”). USTR explicitly tied the $200 billion in its
`proposed action to the level of retaliatory duties imposed by China on U.S. imports, noting that
`“action at this level is appropriate in light of the level of China’s announced retaliatory action ($50
`billion) and the level of Chinese goods imported into the United States ($505 billion in 2017).”
`Id.; see also id. (Because “China’s retaliatory action covers a substantial percentage of U.S. goods
`exported to China ($130 billion in 2017),” “the level of the U.S. supplemental action must cover a
`substantial percentage of Chinese imports.”). Although it pointed to China’s retaliatory measures,
`USTR did not identify any increased burdens or restrictions on U.S. commerce resulting from the
`unfair practices that USTR had investigated. See id.
`USTR’s contemporaneous press statements corroborated the contents of its
`notice: China’s retaliatory duties motivated its proposed action. Ambassador Lighthizer stated that
`the proposed action came “[a]s a result of China’s retaliation and failure to change its practice.”
`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S. Trade Representative
`Robert Lighthizer on Section 301 Action (July 10, 2018), available at https://ustr.gov/about-
`That same day, President Trump suggested that the United States’ trade imbalance
`with China supported the decision. @realDonaldTrump, TWITTER (July 10, 2018, 9:17 PM
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 10 of 18
`EDT), https://twitter.com/realDonaldTrump/status/1005982266496094209. Over the following
`weeks, President Trump also expressed his frustration over China’s purported manipulation of its
`currency and national monetary policy, as well as his continued displeasure over China’s
`retaliatory tariffs and the trade imbalance between the two nations. See, e.g., @realDonaldTrump,
` 8:51 AM
` EDT), https://twitter.com/realDonald
`Trump/status/1020290163933630464; @realDonaldTrump, TWITTER (July 25, 2018, 7:20 AM
`EDT), https://twitter.com/realDonaldTrump/status/1022079127799701504; @realDonaldTrump,
`Twitter (July 25, 2018, 7:01 AM EDT), https://twitter.com/realDonaldTrump/status/1022074
`Within days of these statements, Ambassador Lighthizer announced that, in light
`of China’s retaliatory duties, USTR would propose to increase the additional duty from 10% to
`25% ad valorem. Rather than addressing the practices that USTR investigated pursuant to Section
`301 of the Trade Act, he stated that China “[r]egrettably . . . has illegally retaliated against U.S.
`workers, farmers, ranchers and businesses.” OFFICE OF THE UNITED STATES TRADE
`REPRESENTATIVE, Statement by U.S. Trade Representative Robert Lighthizer on Section 301 Action
`(Aug. 1, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
`Shortly thereafter, USTR, at the direction of President Trump, formally proposed
`“raising the level of the additional duty in the proposed supplemental action from 10 percent to 25
`percent.” Extension of Public Comment Period Concerning Proposed Modification of Action
`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
`Intellectual Property, and Innovation, 83 Fed. Reg. 38,760, 38,760 (Aug. 7, 2018). USTR also set
`new dates for a public hearing over six days ending on August 27, 2018. See id.; see also OFFICE
`OF THE UNITED STATES TRADE REPRESENTATIVE, Public Hearings on Proposed Section
`301 Tariff List (Aug. 17, 2018) (modifying hearing schedule), available at https://ustr.gov/about-
`At the same time, USTR adjusted the deadlines for the submission of written
`comments, setting September 6, 2018—less than a month later—as the new deadline for both
`initial and rebuttal comments from the public. 83 Fed. Reg. at 38,761. That adjustment, deviating
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 11 of 18
`from its past practices, prevented both USTR and the public from considering initial comments at
`the hearing, and left insufficient time for interested parties to review and respond to the initial
`comments filed by other parties. USTR also limited each hearing participant to five minutes.
`Docket No. USTR-2018-0026, https://beta.regulations.gov/document/USTR-2018-0026-0001.
`Despite those obstacles, approximately 350 witnesses appeared at the six-day hearing, and the
`public submitted over 6,000 comments. Id.
`Just eleven days after receiving final comments from the public, President Trump
`announced that he had directed USTR “to proceed with placing additional tariffs on roughly $200
`billion of imports from China.” THE WHITE HOUSE, Statement from the President (Sep. 17,
`2018). https://www.whitehouse.gov/briefings-statements/statement-from-the-president-4/. Once
`again, the President made clear that China’s response to the $50 billion tariff action (i.e., List 1
`and List 2 duties) motived his decision, and he immediately promised to proceed with “phase
`three” of the plan—an additional $267 billion tariff action—“if China takes retaliatory action
`against our farmers or other industries.” Id.
`Following the President’s announcement, USTR published notice of the final list
`of products subject to an additional duty, a list commonly known as “List 3.” 83 Fed. Reg. at
`47,974. USTR imposed a 10% ad valorem tariff that was set to rise automatically to 25% on
`January 1, 2019. Id. USTR determined that the List 3 duties would apply to all listed products that
`enter the United States from China on or after September 24, 2018. Id. USTR did not respond to
`any of the over 6,000 comments that it received or any of the testimony provided by roughly 350
`As legal support for its action, USTR for the first time cited Section 307(a)(1)(B)
`of the Trade Act, which provides that USTR “may modify or terminate any action, subject to the
`specific direction . . . of the President . . . taken under Section 301 if . . . the burden or restriction
`on United States commerce of the denial of rights, or of the acts, policies, or practices, that are the
`subject of such action has increased or decreased.” Id. (brackets omitted). USTR stated that the
`relevant burden “continues to increase, including following the one-year investigation period,”
`adding that “China’s unfair acts, policies, and practices include not just its specific technology
`transfer and IP polices referenced in the notice of initiation in the investigation, but also China’s
`subsequent defensive actions taken to maintain those policies.” Id. USTR also cited Section
`307(a)(1)(C) of the Trade Act, arguing that China’s response to the $50 billion tariff action “has
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 12 of 18
`shown that the current action no longer is appropriate” because “China openly has responded to
`the current action by choosing to cause further harm to the U.S. economy, by increasing duties on U.S.
`exports to China.” Id. at 47,975.
`In the months that followed, China and the United States attempted to resolve
`their differences through trade negotiations. Based on the progress made with China in those
`negotiations, the Trump Administration announced in December 2018, and again in February
`2019, that it would delay the scheduled increase in the List 3 duty rate from 10 to 25%. Notice of
`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 65,198 (Dec. 19, 2018); Notice of
`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 7,966 (Mar. 5, 2019).
`The trade negotiations ultimately fell apart. In May 2019, USTR announced its
`intent to raise the tariff rate on List 3 goods to 25%, effective either May 10, 2019 or June 1, 2019,
`depending on the day of export. See Notice of Modification of Section 301 Action: China's Acts,
`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84
`Fed. Reg. 20,459 (May 9, 2019) (“List 3 Rate Increase Notice”); see also Implementing
`Modification to Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 21,892 (May 15, 2019). The notice
`cited China’s decision to “retreat from specific commitments agreed to in earlier rounds” of
`negotiations as the basis for the increase in the duty rate. List 3 Rate Increase Notice, 84 Fed. Reg.
`at 20,459. Unlike with past imposition of new tariffs, USTR did not seek public comment but
`rather simply announced that the increase would occur. Id.
`Recognizing that List 3 would cause substantial harm to U.S. companies and
`consumers, as well as the U.S. economy, USTR in June 2019 invited the public to seek exclusions
`from List 3 duties on a product-specific basis. Procedures for Requests to Exclude Particular
`Products From the September 2018 Action Pursuant to Section 301: China’s Acts, Policies, and
`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg.
`29,576 (June 24, 2019).
`On May 17, 2019, a mere eight days after it published notice of its decision to
`Case 1:20-cv-03450-N/A Document 2 Filed 09/21/20 Page 13 of 18
`increase the duty rate on imports covered by List 3, USTR announced its intent to proceed with
`yet another list—List 4—covering even more products subject to additional duties. Under USTR’s
`proposal, List 4 would impose an additional duty of 25% ad valorem on products worth $300
`billion. Request f