Trade Cases

Leibowitz on Trade: How AIIS Lawsuit May Play Out

Written by Tim Triplett

July 22, 2018

Lewis Leibowitz, trade attorney and contributor to Steel Market Update, offers the following commentary on the latest developments in Washington:

The tariff story is getting broader and more complex. I will focus today on the lawsuit filed by the American Institute for International Steel (AIIS) and two of its members challenging the constitutionality of Section 232 of the Trade Expansion Act of 1962, as amended.  Last Thursday, the plaintiffs filed a motion for “summary judgment” in the case. In legal speak, summary judgment means that the material facts (the facts that matter) are not in dispute and the party filing the motion is entitled to win the case on the law. 

Plaintiffs argue that Section 232 is an unconstitutional delegation of legislative power to the Executive Branch because it does not articulate meaningful standards for deciding whether imports threaten to impair national security or what remedies are appropriate. This promises to be an interesting argument. The government has not responded to these arguments. However, the government did file a response to plaintiffs’ request to assign three judges to hear the constitutional arguments in the case. It appears that the decision whether to assign the case to a three-judge court is in the discretion of the Chief Judge of the court. He should decide soon whether the case warrants assignment to a three-judge court. If he does, that could be a signal that the constitutional arguments are relatively serious, or at least that they demand an unusual degree of attention. 

Suppose that the Court of International Trade were to decide, either on constitutional grounds or narrower grounds, against the presidential proclamation imposing steel tariffs (I limit this to steel because the aluminum proclamation is not a subject of this case). Could the court enjoin the imposition of tariffs? It could, but a lot has to happen before that is anything like probable. If the tariffs were enjoined, what might the president do? 

  1. He could appeal the decision to the United States Supreme Court. As the plaintiffs acknowledge, the Court has not struck down a statute on delegation grounds since 1935 (the cases striking down the New Deal National Recovery Act). An injunction against the steel tariffs would be controversial, to be sure. However, unlike the antidumping and countervailing duty laws, the Court of International Trade could, in theory, enjoin the tariffs if the Court concluded that it was unlawful. A remand of the determination of the president or of the secretary of commerce that supports it would not be required. 
  2. He could comply with the injunction and remove the tariffs. 
  3. If so, it is likely that something else will be considered to take its place. Perhaps a safeguard action would be instituted to replace it; but that investigation would have very different criteria and provide less discretion than Section 232. He also could ask the U.S. Trade Representative to initiate a Section 301 investigation; this is the statute under which the China tariffs have been imposed. The USTR has not announced any Section 301 tariffs on countries other than China, but he could. 

In short, this case could make a major change in trade policy possible. Let’s see what happens. 

Lewis Leibowitz

The Law Office of Lewis E. Leibowitz
1400 16th Street, N.W.
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Washington, D.C. 20036

Phone: (202) 776-1142
Fax: (202) 861-2924
Cell: (202) 250-1551

www.lellawoffice.com

Tim Triplett

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Do we want the benefits of the Section 232 tariffs to flow to the bottom lines of foreign steel and aluminum producers or to the US government and, ultimately, domestic manufacturers and their workers? In our view, the answer is simple. Section 232 exceptions do nothing more than lead to underserved profits for foreign manufacturers who are harming the US industrial base. That revenue could be used to pursue the Trump administration’s other policy priorities - such as deficit reduction or expanded tax cuts.