Turkey Section 232 Tariff Case Could Head to Supreme Court

They contend that the unilateral doubling of Turkey’s tariff represented a violation of the Constitution – notably of the separation of powers between the president and Congress.

Congress makes laws, and the executive branch enforces them, according to the Constitution. But Section 232 as currently interpreted hands the president “virtually unbounded power to tax and otherwise regulate imports,” the plaintiffs said in their petition.

“Section 232 gives the President carte blanche to increase the tariff rates in any amount he chooses,” they said. “These additional measures could be announced tomorrow, or in ten years, at the President’s sole discretion and without undertaking any of the procedural steps Congress mandated.”

The case won’t immediately go to the high court because the U.S. government, the defendant in the case, has until Jan. 18, 2021, to file its response to the plaintiffs petition.

The Dispute

The plaintiffs in the case are Turkish steelmaker Borusan Mannesmann and its U.S. pipe subsidiary, San Francisco-based rebar fabricator TransPacific Steel LLC, and Hamden, Conn.-based steel trader Jordan International Co. The current case stems from a complaint filed by Transpacific at the CIT on Jan. 17, 2019.

The plaintiffs want a refund for “the millions of dollars that they paid in unlawfully imposed tarrifs.” Questions of legality aside, those tariffs went into effect after Trump on Friday, Aug. 10, 2018, at 5:47 a.m. tweeted: “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”

The tweet, which caught the market by surprise, went into effect the same day thanks to a presidential proclamation that made it legally binding. And the 50% tariff on Turkish steel remained in effect until May 21, 2019, when Trump issued another proclamation that returned it back to 25% – where it has remained since.

Recall that Section 232 tariffs of 25% on imported steel and 10% on foreign aluminum initially went into effect on March 8, 2018. That move alone was a huge shock to the market. And the doubling of Turkey’s steel tariff to 50% only underscored that a U.S. president appeared to have the power to make big changes to domestic trade policy at a whim – and even via a dawn tweet.

The crux of the plaintiffs’ case is that the doubling of Section 232 tariffs on Turkish steel violated the timeline spelled out in the laws governing Section 232.

The Law

According to the text of Section 232, the president has 90 days after receiving a key report from the Commerce Secretary to decide whether imports pose a risk to U.S. national security. If the president decides that imports do pose a risk, he or she has another 15 days to act.

Former Commerce Secretary Wilbur Ross delivered his Section 232 report to Trump on Jan. 11, 2018 – meaning Trump had 105 days, or until late April 2018, to act. Trump’s action in August was well beyond that deadline, and so the doubling of Turkey’s tariff had no legal basis, the plaintiffs contend.

The U.S. Court of International Trade upheld that view. It said a second report – one that was never written – on why Turkish steel in particular posed a threat to national security would have been needed to justify doubling Turkey’s tariff to 50% in August.

But an appeals court – the U.S. Court of Appeals for the Federal Circuit – disagreed and in July said Trump had acted within the bounds of presidential powers. In effect, it declined to place limits on a president’s powers to unilaterally deploy Section 232 national security tariffs and quotas.

By Michael Cowden, Michael@SteelMarketUpdate.com