ANNOUNCEMENT 14 Jul 2020

The Court of International Trade rendered a decision overturning one specific action that President Trump took under the national security statute (section 232 of the Trade Expansion Act of 1962); the ruling may also have the effect of limiting some future actions under this law.

 

NUMBER OF INTERVENTIONS

1

  • 0 harmful
  • 0 neutral
  • 1 liberalising
Inception date: 14 Jul 2020 | Removal date: open ended

Import tariff

On July 14, 2020 the Court of International Trade (CIT) rendered a decision overturning one specific action that President Trump took under the national security statute (section 232 of the Trade Expansion Act of 1962). The ruling may also have the effect of limiting future actions under this law. Section 232 provides broad authority for the imposition of restrictions on imports that are found to impair national security, typically in cases where those imports are alleged to suppress domestic production and/or lead to dependence on foreign sources for items that are considered vital to national security. The Trump administration has invoked this law for steel and aluminum products, and also initiated investigations against many other products.

The specific matter giving rise to this case concerned the use of section 232 to restrict steel imports. On March 8, 2018 President Trump signed an order providing for the imposition of 25% tariffs on imports of steel from countries other than Canada and Mexico. This action was followed by a presidential tweet of August 10, 2018 declaring a doubling of tariffs on steel and aluminum with respect to Turkey, largely in response to a foreign policy dispute over that country’s treatment of a U.S. citizen. President Trump later removed these tariffs, replacing them on May 6, 2019 with a 25% tariff on steel imports from Turkey.

In the case of Transpacific Steel LLC versus United States, the CIT focused on procedural errors made by the president in his use of the law. Section 232 provides that the president has 90 days after receiving a report from the Department of Commerce that imports of a particular product are threatening national security to determine if he concurs with this conclusion. The president then has 15 days to act. While the actions taken against imports in general conformed to these deadlines, the subsequent action against Turkey did not. The court instead found that the proclamation against Turkey “was issued far beyond” the time limit. The court also found that the president acted without a proper report and recommendation from the Department of Commerce on the national security threat posed by Turkish steel, as well as violations of the equal protection guarantees under the Fifth Amendment to the Constitution.

The immediate consequence of this decision is that the importer in question may seek refunds on the excess tariffs it had been obliged to pay on steel imported from Turkey. The broader consequence is that the precedent has now been set to challenge and undo any use of section 232 that does not adhere to the precise deadlines set in law, including the president's demonstrated propensity to threaten use of the law when engaged in disputes with other countries over trade or other matters. One such example is the president's later decision on August 6, 2020 to reimpose tariffs under section 232 on certain aluminum imported from Canada; the procedures followed in that decision appears prima facie to run afoul of the court's insistence that presidential actions under this statute come only after receiving formal advice from the Department of Commerce.

AFFECTED SECTORS