Trade Court Limits President’s Power to Impose Tariffs for National Security Purposes

A link to the decision can be found here. 

The Decision

In Transpacific Steel LLC v. United States, the Court agreed that the President acted outside that time window and without a proper report, stating that “Section 232 grants the President great, but not unfettered, discretion.”

• The Court also found a breach of equal protection guarantees in the absence of “‘persuasive evidence’ here to support that the President’s proclamation ‘has a legitimate grounding in national security concerns,’” and that the tariff is “arbitrary and irrational.”
• The Court held the proclamation unlawful and void and ordered the Government to refund the 25 percent difference in duties.

“We are, of course, gratified that a three-judge panel has found the president’s proclamation on Turkey to be unlawful and void, and we look forward to the government refunding the duties illegally exacted,” said International Trade Partner Matthew Nolan. “The 232 statute is intended to be narrowly applied to remedy true national security issues. It must be applied consistent with the statute and our constitutional norms. It is not a ‘blank check’ for presidential discretion.”

Background

In March 2018, President Donald Trump issued a proclamation titled “Adjusting Imports of Steel Into the United States,” which imposed 25 percent ad valorem tariffs on US imports of certain steel products, pursuant to Section 232 of the Trade Expansion Act of 1962. Five months later, the administration doubled the Turkish steel tariff to 50 percent, before eventually lowering the tariffs back to 25 percent.

• Arent Fox LLP, on behalf of Transpacific Steel, filed the lawsuit before the CIT in January 2019, arguing that the President’s proclamation of a 50 percent tariff of Turkish steel failed to follow the procedures required by the animating statute and violated the importer’s constitutional rights. The importer sought compensation for the additional duties that were paid.

Section 232 allows the president to adjust tariffs to protect the national security only within a certain time period and following the recommendation of a report from the Department of Commerce finding a threat.

AF Team

International Trade attorneys Matthew Nolan, Nancy A. Noonan, Diana Quaia, Aman Kakar, Russell A. Semmel, and Jason Rotstein are advising the steel importer.