The Great Power Competition: Federal Circuit Reinforces Commerce’s Anti-China Trade Arsenal

by Dennis Crouch

The Federal Circuit's recent decision in Jilin v. US underscores how US courts are fortifying legal foundations for aggressive trade enforcement against China as part of the ongoing global power competition between the two great nations.  In a unanimous ruling reversing the Court of International Trade (CIT), the Federal Circuit validated Commerce's decades-old presumption that all Chinese exporters are government-controlled unless they can prove otherwise. See Jilin Forest Industry Jinqiao Flooring Group Co. v. United States, No. 2023-2245 (Fed. Cir. July 28, 2025).  Some presumptions are easy to overcome, but this burden that has proven nearly insurmountable in practice.

China's designation as a "non-market economy" (NME) lies at the heart of the case. Under WTO antidumping rules, investigating authorities typically compare export prices to domestic prices in the exporting country to determine if "dumping" has occurred. However, NME status allows the US to disregard Chinese domestic prices entirely, instead using "surrogate country" methodology that substitutes prices from third countries deemed more "market-oriented." The US Tariff Act defines an NME country as "any foreign country that the administering authority determines does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise." 19 U.S.C. § 1677(18)(A).  This use of surrogate markets produces systematically higher dumping margins, with Chinese companies face antidumping duties that are substantially higher than other countries.  China has (unsuccessfully thus far) argued that this discriminatory treatment should have ended in 2016 when certain provisions of its WTO accession protocol expired.

In its decision, the CIT sided with Jilin on multiple grounds that challenged the fundamental legal basis of Commerce's NME presumption that all Chinese exporters are government-controlled. The court found that Commerce had failed to identify any statutory authority for its policy of presuming all Chinese exporters are government-controlled, noting that "Commerce makes no claim to Chevron deference and . . . identify[ies] no statutory source for the NME presumption." More importantly, the CIT determined that Commerce's presumption directly conflicts with the Anti-Dumping Act's explicit statutory requirement to calculate "individual weighted average dumping margins" for each "known" exporter, including mandatory respondents like Jilin. The court emphasized that while Commerce may apply adverse facts available in certain circumstances, "the statute does not indicate that Commerce can simply assign a rate to a mandatory respondent based on its relationship to an NME government." As Jilin argued in its CAFC brief: "An agency policy is not tantamount to a statute or regulation and is not entitled to deference under Chevron or any other framework."