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Legislation to Limit Section 232 Presidential Authority Still in the Works as Lawmaker Complains About Exclusion Process

Effective 1 June 2018, the United States implemented additional tariffs of 25 percent and 10 percent on imports of steel and aluminium, respectively, under the national security threat authority of Section 232 of the Trade Expansion Act of 1962. The U.S. Department of Commerce has also submitted to the White House a Section 232 report on autos and auto parts, with tariff action possible after mid-May, while Section 232 probes on uranium and titanium sponge are on-going. Uni-lateral U.S. tariffs under Section 232 have led to retaliatory tariffs from numerous trading partners, as well as vigorous debate both within and outside the United States.

Two bills aimed at limiting presidential powers under Section 232 were introduced earlier this year by Republican members of the Senate Finance Committee, with bi-partisan co-sponsorship. The primary difference between the two legislative efforts is whether Section 232 tariffs already in effect could be removed retroactively. On the one hand, the Congressional Trade Authority Act (introduced by Sen. Toomey) would limit future Section 232 actions to goods with applications in military equipment, energy resources and/or critical infrastructure that constitute a substantial threat to U.S. national security while repealing any existing Section 232 tariffs unless Congress passes an approval resolution within 75 days after enactment. The competing Trade Security Act (introduced by Sen. Portman) is generally seen as less stringent particularly because it would not allow for retroactive tariff removal.

Given that any bill to limit presidential authority under Section 232 could be subject to a veto by President Trump, Senate Finance Committee Chairman Grassley’s staff has indicated that they are seeking to develop legislation with enough congressional support to override a veto. Neither the Senate Finance Committee nor the House Ways and Means Committee, which saw companion bi-partisan bills introduced, has released any further draft legislation.

Meanwhile, Rep. Jackie Walorski (Democrat-Indiana) recently sent a 14-page letter to U.S. Secretary of Commerce Wilbur Ross on the process to exclude certain imports from the Section 232 tariffs. Walorski expressed “increasingly strong concerns” about the process, which she described as “a master class in government inefficiency.” She claimed, for example, that the first tranche of decisions for aluminium based on domestic availability of a particular product had just a 10.93 percent rate of approval. A DOC spokesperson disputed that claim, saying that the agency had “granted those requests at a 67% rate and 87% rate respectively.”

It is also worth mentioning that in late March the U.S. Court of International Trade rejected a constitutional challenge to the Section 232 tariffs on imports of steel and aluminium products, stating that it is bound by a 1976 Supreme Court decision that Section 232 is a valid delegation of authority. The American Institute for International Steel, which had brought the case, said it would appeal the CIT’s ruling. President Trump, for his part, continues to argue that he has saved the U.S. steel industry through the Section 232 process, but many Republican members of Congress still believe the tariffs have had a negative impact overall and on farmers in particular.

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