29 Jan 2019
Bi-partisan Legislation to Limit Section 232 Tariffs to Be Introduced in Congress
Senators Pat Toomey (Republican-Pennsylvania) and Mark Warner (Democrat-Virginia), along with Wisconsin Representatives Mike Gallagher (Republican) and Ron Kind (Democrat), have announced their intention to introduce this week the Bicameral Congressional Trade Authority Act of 2019 to limit the president’s authority under Section 232 of the Trade Expansion Act of 1962.
The legislation would only allow new tariffs to go into effect under the national security justification of Section 232 if both chambers of Congress pass approval resolutions. These resolutions would receive special “privileged” consideration to move swiftly through the committee level and could not be filibustered, so a simple majority of 51 of the 100 members of the U.S. Senate would be sufficient for passage. Tariff approval resolutions would have to pass the House and Senate to take effect and tariff proposals could only be brought to Congress for approval if deemed necessary by the U.S. Defense Department, followed by a trade remedy proposal from the U.S. Department of Commerce.
Even though the rationale for Section 232 tariff actions is national security, the Defense Department currently only has an advisory role in the process, with the DOC having sole authority to conduct studies and make remedy recommendations. In fact, the Defense Department expressed concern about the imposition of the current steel and aluminium tariffs, including their potentially negative impact on U.S. allies.
The bill specifies that covered articles under Section 232 would now only be those articles “related to the development, maintenance, or protection of military equipment, energy resources, or critical infrastructure essential to national security,” and that national security means the protection of the United States from “hostile actions of foreign countries; and does not otherwise include the protection of the general welfare of the United States.’’ The proposal provides that any Section 232 tariffs or quotas established in the last four years, such as those on steel and aluminium, be repealed unless Congress passes an approval resolution for those actions within 75 days of enactment of the law.
Moreover, the process to exclude specific products from Section 232 tariff coverage would be moved from the DOC to the independent U.S. International Trade Commission. The USITC would also be instructed to submit a report analysing the economic effects of existing Section 232 tariffs as well as any tariffs that go into effect in the future.
In proposing this legislation, the senators note that Section 232 dates back to the fearful time of the Cold War and that prior to this administration 34 years had passed since Section 232 had been used to justify new tariffs. In addition to imposing tariffs on foreign steel and aluminium, the Trump administration is currently considering similar restrictions on imports of automobiles and auto parts. Other bills to limit Section 232 were introduced in the last Congress and are expected to be re-introduced in this Congress.
The new Republican chairman of the Senate Finance Committee announced in his committee agenda on 9 January that he did not believe the United States should alienate its allies with “tariffs disguised as national security protections” and “certainly not when it comes to trade in automobiles and auto parts.” The Section 232 tariffs are being challenged at the World Trade Organisation and in the U.S. Court of International Trade and are opposed by numerous trade associations and the U.S. Chamber of Commerce. They have led to retaliatory tariffs from major U.S. trading partners and to higher costs for U.S. manufacturers of products made from steel and aluminium.