CIT Upholds Section 232, Vast POTUS Trade Powers

The CIT’s decision also reinforces the vast trade powers invested in the president of the United States.

The plaintiffs, represented by Lewis E. Leibowitz, of the Law Office of Lewis E. Leibowitz, had argued that certain presidential proclamations violated Section 232 of the Trade Expansion Act of 1962, a Cold War-era law that allows the president to “adjust imports that pose a threat to the national security of United States.”

The CIT disagreed. “We conclude that Proclamation 9705 and its subsequent modifications do not violate the statute,” CIT Judges Gary S. Katzmann, M. Miller Baker, and Leo M. Gordon wrote in an opinion and order on Thursday, Feb. 4.

At least one domestic steel industry trade association applauded the move.

“The CIT has affirmed that the 232 tariffs are a legitimate tool that gives U.S. presidents the necessary latitude to deal with unfair trade that threatens our national security,” Steel Manufacturers Association President Philip K. Bell said. “Until we begin to see the structural problems of global excess steel capacity, subsidies and state sponsored capacity expansion dealt with, the 232 tariffs should continue to be an important piece of America’s trade policy.”

The plaintiffs, in a case filed on Dec. 11, 2019, contended that the president’s proclamations–9705 was the first of several–had violated various procedural requirements of Section 232.

Namely, they argued that a report by former Commerce Secretary Wilbur Ross on the matter–a prerequisite to the tariffs being imposed–was “procedurally deficient.” They also contended that former President Donald Trump and Secretary Ross misinterpreted Section 232 in designating steel imports as an “impending threat” to national security.

The plaintiffs in addition posited that the president had overstepped his bounds in failing to specify the duration of the tariffs as well as in the timing of the imposition of tariffs on Canada, Mexico and the European Union.

Trump issued a series of proclamations, starting with Proclamation 9705, on March 8, 2018, which established a 25% tariff on steel imported from all countries except for Canada and Mexico effective on March 23, 2018.

A temporary exemption on imports from Canada, Mexico and the EU expired on June 1, 2018. The president on May 19, 2019, permanently excluded Canada and Mexico from Section 232 after the U.S.-Mexico-Canada Agreement (USMCA) was successfully concluded as a replacement to the North American Free Trade Agreement (Nafta).

The EU remains subject to Section 232 tariffs.

The CIT found that Ross followed all procedural requirements in his report to the president, that the secretary and the president were not required by law to specifically identify an impending threat, that the president is not required to determine an end date for Section 232, and that “no timing provisions of Section 232 were contravened.”

“But even if they were, the President has the discretion to do so,” the court added.

Section 232 sent steel prices in 2018 to their highest point since before the 2008 financial crisis. They have achieved even loftier heights this year.

Case in point: Steel Market Update’s average hot-rolled coil price stands at $1,150 per ton ($57.50/cwt), an all-time high and more than double a 2020 low of $440 per ton recorded in August.

By Michael Cowden, Michael@SteelMarketUpdate.com