ITI Council Weighing 'Litigation' to Block Tariffs, Says No 'Final Decision' Made

The Information Technology Industry Council, like CTA, questions whether President Donald Trump's "action" proposing a third tranche of 25 percent Section 301 tariffs on $200 billion worth of Chinese imports "is legal" under the 1974 Trade Act, emailed spokesman Jose Castaneda Monday. ITI has made no “final decision” whether to pursue “litigation” against the administration to block the tariffs from taking effect, he said.

Castaneda didn’t confirm, when we asked, whether ITI is collaborating on a joint complaint with CTA, which Friday said it was “reviewing all options” legally because it was "skeptical" the tariffs could survive a court challenge (see 1809070034 or 1809070032). CTA didn’t comment Monday.

There’s precedent for CTA and ITI joining to seek a federal injunction blocking what they view as egregious government programs from taking effect. CTA (then called CEA) and ITI sued (in Pacer) in July 2009 in Manhattan to stop implementation of a New York e-waste program that included mandates that manufacturers provide free, door-to-door electronics collection from residents of the city’s five boroughs (see 0907270107). The lawsuit was settled a year later, and what exists today is a contractor-run e-waste collection program for private homes and apartment buildings that manufacturers pay for, but without the door-to-door mandates.

The National Retail Federation, which has coordinated its tariffs opposition with CTA through joint surveys and filings, appears not ready just yet to join in on a legal challenge if CTA mounts one. Though NRF "has been very active" on the tariffs issue, the legal "angle is one we haven’t weighed in on yet," emailed spokeswoman Bethany Aronhalt Monday.

Timing will be critical for a complaint seeking injunctive relief to be filed before the new tariffs take effect. CTA commented its member companies worry an administration order imposing the tariffs would be released soon after the comments period expired Thursday. The administration in the first two rounds of tariffs gave no consistent clues when a third might be implemented. It took the administration 24 days after comments were closed on the first tranche to release its order putting the tariffs into effect three weeks later on July 6. Only a week passed for release of the order on the second round of tariffs, which took effect 16 days later on Aug. 23

The Trade Act authorizes the administration to impose tariffs only after conducting a specific, fact-based investigation into whether a foreign country is engaging in unfair trade practices that harm the U.S. economy, as U.S. Trade Representative Robert Lighthizer did when he completed his Section 301 investigation in late March, said sources familiar with CTA’s legal arguments. The law doesn't permit the administration to use its original investigation as a pretense to engage in an open-ended trade war, which is what CTA thinks the White House is doing, said the sources.

Section 301 authorizes the USTR to take “appropriate” action when a country’s trade practices cause quantifiable harm to the U.S. economy, said the sources. By the administration’s own admission, they said, the third tranche of proposed tariffs is its response to Chinese retaliatory actions that post-date the appropriate action Lighthizer already took under his Section 301 investigation. There’s no precedent for that in the four-decade history of the Trade Act, they said.

Though CTA concedes that the Trade Act gives the president authority to modify tariff actions already imposed, there are limits to that authority, and the administration exceeded them when it proposed raising the tariffs to 25 percent from 10 percent without conducting a new investigation, CTA argues, according to the sources. CTA thinks Lighthizer’s office also may have violated the Administrative Procedure Act on grounds that the manner in which it solicited public comment lacked transparency and contained unworkably tight deadlines, said the sources.

Comments filed by Thursday's deadline kept pouring in to docket USTR-2018-0026 Monday from various tech interests, virtually all opposing the tariffs. LG Display America runs a repair center in Carlsbad, California, for defective TV parts and LCD and OLED panels, said the subsidiary. The goods it can’t repair “are replaced with buffer products imported from South Korea and China,” including parts and components that would be subject to new tariffs under two classifications of imports, it said. It fears that the tariffs will increase its repair services fees, hurt sales and threaten jobs.

Apple, which previously was silent through three rounds of tariffs, worries the proposed duties will “increase the cost of our U.S. operations, divert our resources, and disadvantage Apple compared to foreign competitors,” commented the company. Tariffs would harm the Apple Watch, it said. The device maker finds it “difficult to see how tariffs that hurt U.S. companies and U.S. consumers will advance the Government’s objectives with respect to China’s technology policies.”

Next-generation technologies “are critically important to maintain U.S. industrial competitiveness for years to come,” commented Intel. To implement 5G, America’s public and private sectors “will need to make major investments in modernizing their digital infrastructure,” it said. “Taxing the network equipment composed of many computing and communication devices needed to deliver the 5G benefits,” as the tariffs will do, “will slow down the pace of technology adoption across the U.S. economy, causing American firms and institutions to fall behind foreign competitors outside of China that are not subject to the same tariffs,” it said.