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Steel and Aluminium Tariffs Upheld as Court Affirms Constitutionality of Section 232

The U.S. Court of International Trade has rejected a constitutional challenge to the Section 232 tariffs on imports of steel and aluminium products. This decision (i) highlights the importance for importers of affected goods to use the existing process for seeking exclusions from these tariffs, which to date has yielded a high percentage of approvals, and (ii) could increase the likelihood of additional Section 232 tariffs on automobiles and auto parts and other products. The American Institute for International Steel, which brought the case, said it would immediately appeal the CIT’s ruling.

Additional tariffs of 25 percent on steel and 10 percent on aluminium have been in place since 1 June 2018 for almost all countries following a Section 232 determination that imports of these products pose a threat to U.S. national security. The AIIS filed suit against the tariffs, challenging the constitutionality of Section 232’s delegation to the president of Congress’ authority to impose tariffs and regulate foreign commerce. Among other things, the AIIS expressed concern about the “essentially unlimited definition of national security” in this statute and its “limitless grant of discretionary remedial powers.”

However, the CIT said it is bound by a 1976 Supreme Court decision that Section 232 is a valid delegation of authority. The court added that actions taken pursuant to the discretion afforded to the president by this law (e.g., determining whether to concur with a U.S. Department of Commerce finding that imports are threating national security and what, if any, measures to take in response) are not subject to judicial review for rationality, findings of fact, or abuse of discretion.

The CIT acknowledged that Section 232 gives the president substantial flexibility and seems to invite the president to “regulate commerce by way of means reserved for Congress, leaving very few tools beyond his reach.” However, the court said that “identifying the line between regulation of trade in furtherance of national security and an impermissible encroachment into the role of Congress could be elusive in some cases because judicial review would allow neither an inquiry into the president’s motives nor a review of his fact-finding.”

On the other hand, a separate opinion by one of the three CIT judges hearing the case expressed “grave doubts” about the majority’s conclusion. Given the “virtually unbridled discretion” Section 232 gives the president and the way that authority has been used in the steel and aluminium cases, the opinion said, it is perhaps time for the courts to “revisit assumptions” and consider anew what would constitute excessive delegation of congressional authority.

The DOC recently submitted to President Trump a report on whether imports of automobiles and auto parts are jeopardising U.S. national security. The contents and recommendations of that report remain unknown, but the president has until mid-May to decide whether and what action to take. Reports indicate that possible measures include new tariffs or quotas. While there has been substantial opposition to any such measures from lawmakers and the auto industry, the CIT’s decision could embolden the president to impose them. There are also on-going Section 232 investigations of uranium and titanium sponge.

Meanwhile, the DOC is actively managing a process whereby importers can request exclusions from the Section 232 tariffs for specific steel and aluminium products. At last report the DOC had received more than 45,000 such requests for steel and more than 6,000 for aluminium. About 75 percent of the DOC’s nearly 20,000 decisions on steel to date have been approvals, as have more than 80 percent of the more than 3,000 decisions on aluminium. Exclusions are retroactive to the date the request was submitted, meaning importers can obtain refunds of tariffs paid on excluded products.

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