Leibowitz on Trade: The Lawsuits Keep Coming—Steel Cases to Watch

1. AIIS—challenging the constitutionality of Section 232. Plaintiffs argue that the statute gives the president absolute authority to raise tariffs, a legislative function that Congress cannot give away without objective standards and restrictions. The case is currently in the Court of Appeals for the Federal Circuit. Oral argument in the Court of Appeals took place on Jan. 10.
2. Transpacific Steel—challenging the increase in tariffs on Turkish steel imports to 50 percent. The tariffs returned to 25 percent in May 2019, but the case is asking for a refund of all the increased duties from August 2018 to May 2019. The Court of International Trade ruled in November 2019 that the president’s proclamation was unlawful under the terms of Section 232, and additional plaintiffs have intervened to request refunds also.
3. JSW Steel (USA)—In July 2019, JSW Steel (USA) filed suit in the Court of International Trade, challenging the procedures and rulings against the requests for exclusion of steel products by JSW Steel (USA). The government answered the complaint in the case in September. A motion for relief was filed by the plaintiff in December 2019. A decision is expected later this year.
4. Universal Steel—In December 2019, Universal Steel Products and other plaintiffs filed suit in the CIT against the government, contending that the steel tariffs were legally unsupported because of substantial defects in the investigation and report of the Department of Commerce in January 2018, which has not been challenged before. The plaintiffs requested assignment of the case to a three-judge panel, highlighting the important issues in the case. Last Friday, that request was granted by the Court.
5. Borusan Mannesmann (class action)—Last week, Borusan Mannesmann filed a class action lawsuit against the U.S., alleging that Section 232 is unconstitutional—following the AIIS legal theory—and claiming that all importers that paid the allegedly illegal tariffs are entitled to refunds.

All these cases are ongoing; any one of them, if finally successful, could end the steel tariffs, with the exception of the JSW case, which does not threaten the legality of the import restrictions themselves but would substantially change the rules for product exclusions.

Congress has also been looking at Section 232. Two Senate and two House bills substantially changing the rules under Section 232 were introduced last year, but the legislative process has not advanced. Perhaps for this reason, the White House has been emboldened to modify Section 232 import restrictions without seeking additional legislative authority or executive branch investigations by the Commerce Department. The Court of International Trade may decide that some of these modifications, or perhaps the original restrictions themselves, are not consistent with the legislation and must be undone (or redone). It is far too early to gauge what the resulting restrictions would look like. But steel producers, importers and purchasers in the United States are likely to be affected by the expanding litigation.

Also affecting steel buying is the Phase One agreement between the U.S. and China signed last week in Washington and the USMCA agreement, which was approved by the Senate on Thursday and will be signed by President Trump in the coming week.

By election day, the steel trade landscape could look substantially different than it does today.

Lewis Leibowitz

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