Landmark Court Decision Limits Presidential Trade Restrictions

On 14 July 2020, the U.S. Court of International Trade (USCIT) issued a landmark decision voiding US tariffs on steel from Turkey imposed by President Trump in August 2018.

1. Judicial annulments of presidential trade actions are almost unknown.

 

What makes the Transpacific Steel ruling especially important is that the USCIT ruled against the president not only on statutory grounds, but also on Constitutional grounds. We are unaware of a similar court decision in US trade law jurisprudence.

The steel tariffs at issue were invoked under Section 232 of the Trade Expansion Act of 1962. Presidential authority under Section 232 allows restrictions following an investigation by the US Secretary of Commerce finding that an article is “being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security". Following such a finding, the law directs the president to decide within 90 days whether he “concurs with the findings of the Secretary", and if so, to “determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security". The president is not required to formulate any action, but should he do so, the law directs him to “implement that action" within 15 days.

The path to the Transpacific Steel judgement can be quickly summarized. At the conclusion of an investigation of steel imports in April 2017, Secretary of Commerce Wilbur Ross issued an affirmative report in January 2018 finding a threat to national security. In March 2018, President Trump issued Proclamation 9705 concurring in the Commerce Department’s finding and imposing an ad valorem tariff of 25% on steel imports from all countries except Canada and Mexico. In August 2018, following political tensions between Turkey and the United States, President Trump issued new Proclamation 9772 raising the tariff on steel from Turkey to 50%.

2. Several months later, Transpacific Steel, an importer of steel from Turkey, lodged a case against the United States asking the tariffs to be declared illegal and refunds paid.

After the USCIT denied the government’s motion to dismiss, additional plaintiffs intervened to join the case. To the surprise of many observers, the steel importers prevailed and won their case before a three-judge USCIT panel. The court’s decision only refers to the 50% tariff on Turkey; the underlying Section 232 tariff of 25% on steel on Turkey and other countries was not at issue.

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