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24 July 2020
On 14 July 2020 the US Court of International Trade granted judgment in favour of an importer of steel from Turkey, ruling that there are limits on the president's power to impose tariffs for national security purposes.(1)
In March 2018 President Donald Trump issued a proclamation titled "Adjusting Imports of Steel Into the United States", which imposed 25% ad valorem tariffs on US imports of certain steel products, pursuant to Section 232 of the Trade Expansion Act 1962. Five months later, the administration doubled the Turkish steel tariff to 50% before eventually lowering the tariffs back to 25%.
In January 2019 Transpacific Steel filed a lawsuit before the US Court of International Trade, arguing that the president's proclamation of a 50% tariff on Turkish steel failed to follow the procedures required by the animating statute and violated the importer's constitutional rights. The importer sought compensation for the additional duties that had been paid.
Section 232 allows the president to adjust tariffs to protect national security only within a certain period and following the recommendation of a report from the Department of Commerce finding a threat.
The court agreed that the president had acted outside the prescribed period and without a proper report, stating that "Section 232 grants the President great, but not unfettered, discretion".
The court also found a breach of equal protection guarantees in the absence of persuasive evidence to support the argument that the president's proclamation had "a legitimate grounding in national security concerns" and found that the tariff was "arbitrary and irrational".
The court held the proclamation to be unlawful and void and ordered the government to refund the 25% difference in duties.
This decision is welcome as Section 232 is intended to be narrowly applied to remedy true national security issues. It must be applied consistent with the statute and US constitutional norms and is not a 'blank check' for presidential discretion.
For further information on this topic please contact Matthew Nolan, Nancy A Noonan, Diana Quaia or Aman Kakar at Arent Fox LLP by telephone (+1 202 857 6000) or email (firstname.lastname@example.org, email@example.com, firstname.lastname@example.org or email@example.com). The Arent Fox LLP website can be accessed at www.arentfox.com.
(1) Transpacific Steel LLC v United States, decision available here.
Russell A Semmel, attorney, and Jason Rotstein, associate, assisted in the preparation of this article.
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