What the Supreme Court didn’t answer about Trump’s Section 301 tariffs

The views expressed by contributors are their own and not the view of The Hill

When the Supreme Court declined to hear HMTX Industries v. U.S. last month, it appeared to close the book on the legality of President Trump’s first-term Section 301 tariffs against China. But it did not. The court simply declined to answer the question the petition presented. Whether that question was the right one is another matter.

The challenge centered on a single word in the Trade Act of 1974. Section 307 of the Trade Act authorizes the U.S. Trade Representative to “modify” an existing trade action when circumstances change. HMTX Industries argued that expanding tariffs from approximately $50 billion of Chinese imports to nearly $370 billion was not a mere modification but a transformation.

It was a thoughtful argument. It was also a sound appellate strategy. A certiorari petition fares better when it raises one clean legal issue than when it attacks an entire statutory scheme.

But sometimes a narrow question leaves the broader issue untouched. By framing the dispute around the meaning of “modify,” the litigation implicitly accepted the government’s characterization of certain listed imports as modifications of the original Section 301 action.

Once that premise was accepted, the case became one of degree. How large may a modification become before it ceases to be a modification? If $370 billion is too much, why not $200 billion, or $100 billion? Neither the statute nor ordinary principles of statutory interpretation provide a principled stopping point.

The Department of Justice had an answer. China retaliated. Negotiations evolved, and the original tariffs had proven inadequate. Section 307, it argued, exists precisely so that the U.S. Trade Representative can adjust an existing remedy as circumstances change.

Whether one agrees with that interpretation is almost beside the point. It was an answer to the question HMTX chose to ask. The more consequential question lies one step earlier. Were the listed imports in question actually modifications of the original remedy?

The 2017 Section 301 investigation was not an open-ended inquiry into U.S.-China trade relations. It examined a defined set of Chinese practices, including forced technology transfer, discriminatory licensing requirements and intellectual property theft. The initial tariff lists purported to remedy those specific practices.

The administration’s objectives later evolved. As the dispute escalated, tariffs increasingly became instruments of economic pressure, designed to respond to Chinese retaliation, strengthen the United States’ bargaining position and compel broader changes in Chinese trade policy.

Those are familiar features of a trade war. They are not necessarily the same statutory objective that justified the original investigation.

That distinction matters because Congress designed Section 301 as a remedial statute. Before imposing trade sanctions, USTR must investigate specific foreign acts, policies or practices, solicit public comment, conduct hearings and make formal findings. Congress deliberately required those procedures because major trade sanctions have profound economic consequences.

Section 307 serves a different purpose. It permits USTR to adjust an existing remedy when circumstances warrant. Adjusting a remedy is not the same as changing the objective it serves.

The statutory question is not simply whether Section 307 authorizes a sufficiently large modification. It is whether Congress intended one Section 301 investigation to become continuing legal authority for progressively broader trade measures serving materially different policy objectives.

That question shifts the analysis away from the dictionary definition of a single verb and toward the architecture of the statute Congress enacted.

Read in that light, Sections 301 and 307 perform different functions. One authorizes investigations into identified foreign trade practices and prescribes extensive procedural safeguards before sanctions may be imposed. The other preserves flexibility by allowing adjustments to an existing remedy.

If Section 307 instead permits the executive branch to pursue new strategic objectives without initiating a new Section 301 investigation, the distinction Congress created between the two provisions begins to disappear. The Supreme Court never had occasion to consider that issue because it was never squarely presented. It almost certainly will be again.

The cost of blurring that line is procedural. Each new objective layered onto the original action skips the investigation, comment and findings Congress required before sanctions of this scale. One inquiry from 2017 ends up carrying weight its record cannot bear.

Future presidents of either party will keep using tariffs to do more than remedy unfair trade practices. They will reach for them to advance geopolitical aims, and to lock in deals. When that happens, litigants should ask less whether the executive stretched the word “modify” and more whether it stretched the statutory purpose that justified the authority in the first place.

That is the harder question, and the more important one. It is also the one the Supreme Court has yet to answer.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University. Barry Appleton is co-director of the Center for International Law at New York Law School and interim director of the Balsillie Legal Advisory Centre at the Balsillie School of International Affairs.

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What the Supreme Court didn’t answer about Trump’s Section 301 tariffs

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