CIT Says President Can't Modify Section 232 Tariffs After 90-Day Deadline
The president must strictly adhere to statutory timelines when setting Section 232 tariffs, and can’t subsequently modify or adjust those tariffs beyond those legal deadlines without conducting another formal investigation, the Court of International Trade said in a July 14 decision. The court found that President Donald Trump acted outside of these deadlines when he raised tariffs on Turkish steel from 25% to 50% in August 2018 (see 1808100003), granting two importers refunds of duties collected as a result of the tariff increase.
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Under 19 USC 1862, the legal basis for Section 232 tariffs, the president must decide within 90 days of a required Commerce Department report whether to issue tariffs and what form they should take. The president must also implement those tariffs within 15 days of that decision. The government has argued that the president has the ability to modify already issued tariffs (see 2003260056). “Contrary to the government’s contention, there is nothing in the statute to support the continuing authority to modify Proclamations outside of the stated timelines,” CIT said.
The challenge was brought by Transpacific Steel and subsequently joined by Borusan Mannesmann. The two importers will now receive a refund of “the difference between any tariffs collected on its imports of steel products pursuant to Proclamation No. 9772 and the 25% ad valorem tariff that would otherwise apply on these imports together with such costs and interest as provided by law,” according to the judgment issued shortly following the court’s opinion.
The August 2019 Section 232 tariff increase for Turkish steel products came by way of a presidential proclamation issued well beyond 90 days after Commerce issued its Section 232 report on steel in January of that year, CIT said. The trade court had already hinted at its end result in this case when it denied a government motion to dismiss in November 2019, finding Transpacific’s arguments had merit enough to continue the case (see 1911180013).
“National security is dependent on sensitive and ever-changing dynamics; the temporal restrictions on the President’s power to take action pursuant to a report and recommendation by the Secretary is not a mere directory guideline, but a restriction that requires strict adherence,” CIT said. “To require adherence to the statutory scheme does not amount to a sanction, but simply ensures that the deadlines are given meaning and that the President is acting on up-to-date national security guidance. The President is, of course, free to return to the Secretary and obtain an updated report pursuant to the statute.”
CIT also found that the tariff increase on Turkey violated the constitutional equal protection rights of Transpacific and Borusan Mannesmann. The increase discriminated against importers of Turkish steel without providing any justification in Commerce’s report or elsewhere that Turkish steel threatened national security more than steel from other countries, CIT said.
“We are, of course gratified that a 3 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 Matthew Nolan of Arent Fox, Transpacific’s lawyer in the case, in an email. “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.”
Nolan on July 13 filed a second challenge of the Turkish tariffs at CIT on behalf of eight other importers. He says he filed that second case to preserve their right to refunds in light of the upcoming expiration of the statute of limitations for challenging the tariffs. “We do not want to fight about whether other importers should be able to get refunds because they did not file their own challenge in time.”
Transpacific’s lawsuit is only one of several lawsuits on Section 232 tariffs wherein importers argue the president violated Section 232’s deadlines for taking action. Others involve Section 232 tariffs on Canadian and Mexican aluminum (see 2003310047), as well as tariffs imposed on steel and aluminum “derivatives,” including nails and automotive body parts (see 2002060075), and the application of Section 232 tariffs on goods returned of Chapter 98 (see 2007080055).
The trade court’s ruling in the Transpacific case is “encouraging,” said a lawyer involved in one of the derivatives challenges. “While the challenges to the Nails Proclamations are being considered by a different three-judge panel, the Transpacific decision certainly bodes well for the Nails challenges. In particular, the panel’s ruling that the President exceeded his authority in issuing the Proclamation outside the time limits required under Section 232 should also condemn the expansion of the steel and aluminum duties to nails,” the lawyer said. “Indeed, the Nails Proclamations were issued even later in time than the Proclamation at issue in Transpacific.”
“The same result also should follow for the conclusion that the President’s action was ultra vires because he acted without a proper report and recommendation by the Secretary regarding nails,” the lawyer said.