An appeals court recently reversed a lower court decision and upheld a White House decision to extend Section 232 tariffs to steel derivatives.

Since June 2018 the U.S. has assessed Section 232 additional duties of 25 percent on steel articles classified under HTSUS subheadings 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90. In February 2020 these tariffs were extended to derivatives of covered steel products, including nails, staples, and tacks.

In an April 2021 decision the Court of International Trade granted an importer’s claim that the presidential proclamation extending the Section 232 tariffs to steel derivatives was unlawful. The CIT said that proclamation was issued beyond the time limit set forth in the Section 232 law and was therefore outside the executive branch’s congressionally-delegated authority. Accordingly, the court declared the proclamation “invalid as contrary to law” and directed that the entries at issue in the case be liquidated without such duties or, if the entries had already liquidated, refunded with interest.

However, on Feb. 7 the Court of Appeals for the Federal Circuit reversed the CIT decision and upheld the proclamation (and therefore the Section 232 tariffs on steel derivatives). The CAFC cited its reasoning in a related 2021 case that the president’s Section 232 authority “includes authority to adopt and carry out a plan of action that allows adjustments of specific measures, including by increasing import restrictions, in carrying out the plan over time.” The court said extending the tariffs to steel derivatives constituted such an adjustment because a surge in imports of such goods had effectively prevented the original tariffs from achieving their goal of enhancing and stabilizing domestic steelmaking capacity utilization.

The court added that “there is no textual basis [in the law] for a specific time limit on adjustments under a timely adopted plan,” noting that Section 232 measures “have on numerous occasions been modified many years after they were first adopted.”

The Trump administration levied the Section 232 tariffs but they have been defended by the Biden administration as well, which has argued that they were imposed on national security grounds and are therefore not subject to challenge at the World Trade Organization. With the White House increasingly equating economic security with national security, there has been speculation that more Section 232 tariffs could be levied in the future.

For more information on the impact of the CAFC’s decision, or on strategies to mitigate the impact of the Section 232 tariffs, please contact Mark Segrist or Mark Tallo.

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