Background

U.S. Trade Representative Katherine Tai told the Senate Finance Committee May 12 that the law used to impose national security-based tariffs on imports of steel and aluminum products needs to be modernized. A Washington think tank called for reform of the law the same day.

Section 232 of the Trade Expansion Act of 1962 gives the president broad authority to adjust imports of specific goods, including through the use of tariffs, if excessive imports are found to be a threat to U.S. national security. This law was used by President Trump to impose additional tariffs of 25 percent on steel and 10 percent on aluminum from almost all countries (click here for more information).

During a hearing on the Biden administration’s trade policy, Tai highlighted the “discordance” between the authority provided in Section 232 and “the nature of the problem we’re dealing with;” i.e., excess production capacity “driven largely but not solely by China.” Tai said the previous administration “did the best that they could” in using the existing law to address this problem but added that “we need 2021 tools for addressing the 2021 challenges we have, rather than relying on 1962 tools and retrofitting them for the challenges we have now.”

A recent paper from the Cato Institute echoed Tai’s call for Section 232 reform, although neither made any specific proposals for change. The paper said reform should be included in a package of China-related measures that Congress could take up this year due to the harm that recent utilization of the law has caused, including retaliatory measures from major trading partners and price increases, job losses, and reduced investment for U.S. manufacturers. The paper added that reforming Section 232 would not amount to “unilateral disarmament against China or other alleged trade scofflaws” because the U.S. already has a number of other ways to address trade concerns that “would almost certainly produce better results.”

For more information on seeking reforms to Section 232 or other trade laws, please contact Nicole Bivens Collinson at (202) 730-4956 or via email.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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