By Kenneth Rapoza, CPA Industry Analyst
A handful of law firms are suing Robert Lighthizer and the US government for China tariffs. One advises Customs & Border Protection. The other is DC's biggest lobbying firm, and working on ZTE lawsuits.
The US put tariffs on China. Some companies were mad. Over 3,500 of them, according to Reuters, have joined lawsuits put forth by a cadre of legal firms looking to recover duties on Made in China goods.
It wasn’t the businesses' idea, necessarily. The equivalent of tariff ambulance chasers found them, and some of them even work as advisors to our Customs & Border Protection Agency (CBP). They’ve convinced thousands of companies to litigate to get their money back on imports tariffed at 25% on the List 3 and List 4a items of Section 301 tariffs. Tesla and Ford are on board.
The tariffs on those last Section 301 lists were imposed outside of a deadline, according to the lawyers. There’s an irony here, because the 3 and 4a list tariffs would have been imposed sooner if the US hadn’t been giving China time to negotiate in good faith. No good deed goes unpunished.
So now those law firms are behind a massive recruiting effort to get those tariffs rolled back, and attack existing 1974 Trade Act rules.
On September 28, the law firm of Sandler, Travis & Rosenberg sent a letter to clients saying it was “not too late to file for China tariff refund on list 3 and 4a” items. The contacts on the letter included Lenny Feldman. Lenny Feldman is the co-chair of the Commercial Customs Operations Advisory Committee, which advises the CBP on trade issues.
The letter from the law firm is an effort to recruit more claimants, saying they are now filing actions in the Court of International Trade.
US law firms are actively undermining President Trump’s tariff policy, the only policy that has brought China to the negotiating table. Enacting trade policy is hard enough. Having to deal with US lawyers working to help Chinese imports is an obstacle we do not need.
The first suit to allege this deadline-claim came from lobby shop and law firm, Akin Gump, on September 10. The suit was on behalf of HMTX Industries for their flooring tile companies, which are apparently reliant on China manufacturers.
Akin Gump is a supporter of the Committee of 100, a group of Chinese-American business leaders that have made press recently for organizing the imports of personal protection equipment from China at the height of the pandemic. They made a huge PR push with their mask importing initiatives at a time when Americans were getting angry at China for the SARS 2 virus sweeping the country, and forcing businesses to close.
Akin Gump is also the legal counsel for ZTE Corporation, the Chinese telecom that has faced on and off sanctions by the US. And they also just registered as lobbyists for the Semiconductor Manufacturing International Corporation, or SIMC, which was recently added to the Entity List.
Akin is the largest lobby shop in Washington. This year they brought in more revenue than their competition.
Attorneys not involved with these cases have said that the HMTX and other lawsuits may be a long shot. Trade attorneys put the odds of success at around 10%, according to Jennifer Diaz, a board-certified international attorney with the firm Diaz Trade Law.
The argument against US trade law is almost always a loser.
The HMTX suit goes after the US Trade Representatives List 3 imports hit with Section 301 tariffs. The lawyers claim that the entire Trade Act of 1974 does not “confer authority on (the US government) to litigate a vast trade war for however long, and by whatever means, they choose.” They said that the US government “exceeded their authority under the Trade Act” in promulgating List 3 and therefore acted “not in accordance with the law” and “in excess of statutory authority.” Because of this, HMTX should not have had to deal with tariffs in the first place.
The 25 page lawsuit says HMTX was harmed by these tariffs, but does not put any dollar amount on that harm.
Instead, it goes on for 24 pages on how the Section 301 tariffs started, and why they are illegal, even calling out president Trump’s Tweets as evidence.
We have also seen the Tesla complaint. It’s 17 pages long and has nothing specific about the financial damages they are looking to recover. Arnold & Porter Kaye Scholer is the law firm representing Tesla. Their request for relief is like Akin Gump’s – remove List 3 and List 4a tariffs. But what about all the money Tesla supposedly lost? Is that not important?
These two suits have less to do with recovering financial losses and everything to do with bombarding the US Trade Representative (Robert Lighthizer is named on the Tesla lawsuit) with frivolous lawsuits that are critiques of Executive Branch trade policy and US trade laws written in legalese.
Household names like Walgreens and Home Depot have all joined in, though. They want money, too. No one knows how much they want back. Maybe not even their lawyers, or their CEOs.
“It's disappointing to see the Customs Bar undermine CBP's ability to do its job,” says Charles Benoit, a trade attorney for the Coalition for a Prosperous America. “Since Akin Gump's complaint, we've seen open-ended solicitations from leading customs attorneys urging businesses to ‘file for China tariff refund’, presenting these baseless suits as a routine business filing."