News
Print PDF

Practice Areas

Court Limits President’s Section 232 Power, Overrules Tariff Increase on Turkish Steel

Thursday, July 16, 2020
Sandler, Travis & Rosenberg Trade Report

Reaffirming that the president’s authority to impose national security-related tariffs has limits, the Court of International Trade has overturned President Trump’s decision to double Section 232 tariffs on steel imports from Turkey. This decision not only will likely allow importers of such steel to obtain refunds of the excess duties paid (if it stands following the expected appeal) but may also effectively preclude the imposition of potential Section 232 tariffs on imports of automobiles and auto parts.

Under the law, 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/she concurs. If so, the president must act within 15 days of that determination to adjust those imports (e.g., by imposing import tariffs) so they will no longer pose such a threat.

In March 2018 President Trump issued (within 90 days of receiving a DOC report) proclamation 9705 imposing an additional 25 percent tariff on imports of steel articles from all countries, including Turkey. However, the president then issued in August 2018 (outside the statutory time limit) proclamation 9772 increasing this tariff to 50 percent for steel from Turkey. An importer of such goods filed suit, alleging that the latter proclamation was illegal because it lacks a nexus to national security, did not follow mandated statutory procedures, and singled out importers of Turkish steel products in violation of the equal protection guarantee under the Fifth Amendment.

In a July 14 decision in Transpacific Steel LLC v. U.S., the CIT agreed that proclamation 9772 “was issued far beyond” the time limit allowed by law. The government argued that this proclamation was merely a modification of the previous one and that the president has authority to revisit and modify previous Section 232 actions. However, the CIT reiterated that this “expansive view” of the president’s authority “is mistaken” and that the law’s temporal limits on presidential action are “not a mere directory guideline but a restriction that requires strict adherence.”

Further, the CIT said, the president acted without a proper report and recommendation from the DOC on the national security threat posed by steel imports from Turkey. The original report assessed the national security impact of steel imports in the aggregate but made no finding regarding Turkey specifically. Instead, proclamation 9772 referenced informal discussions between the president and the secretary of commerce about Turkish steel products, and the CIT said presidential action under Section 232 cannot be “based on any off-handed suggestion by the secretary.” The court emphasized that it was not saying there was no national security threat from Turkish steel that merited new duties but rather that there was no procedurally proper finding of that threat.

Finally, the CIT found that proclamation 9772 violated the equal protection guarantees under the Fifth Amendment. The proclamation discriminated between importers based on the origin of their imports, but the court said such disparate treatment may be allowed if there is a rational purpose behind it, such as national security. However, the CIT said that “singling out steel products from Turkey is not a rational means” of remedying the national security concerns raised in the DOC’s original report, which focused on aggregate imports of steel and not Turkey specifically, and was therefore “arbitrary and irrational.”

In February 2019 the DOC reportedly found that imports of automobiles and auto parts are threatening U.S. national security, and the White House subsequently said it would take advantage of the 180 days allowed by the law to negotiate agreements with exporting countries. That period expired in November 2019, prompting some observers to say the president has missed his opportunity to impose the threatened tariffs under the DOC’s 2019 report, and the CIT’s decision in this case could bolster that argument. However, that decision also notes that the president is free to return to the DOC and obtain an updated report in any Section 232 matter, which could then be used to justify tariff increases or other import restrictions.

In related news, the Supreme Court recently announced that it will not review a separate decision upholding the constitutionality of Section 232’s delegation of tariff authority from Congress to the president, which is therefore now final.

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines