A recent decision of the United States Court of International Trade appears to have drawn limits on the President’s authority to impose “national security” tariffs on steel and aluminum products under authority of Section 232 of the Trade Promotion Act of 1962. While the President has claimed authority to adjust Section 232 measures on a continuing basis, the decision by a three-judge panel of the CIT indicates that Section 232 actions are unlawful, unless taken within the time limits provided by statute.

In Transpacific Steel Inc. v. United States, Slip Op. 19-142 (November 15, 2019), an importer of steel from Turkey challenged the President’s August, 2018 decision to increase tariffs on Turkish steel from 25% to 50% ad valorem. The plaintiff claimed that the increase was not motivated by “national security” considerations, but was arbitrary. The plaintiff also asserted that the tariffs were invalid because they were proclaimed beyond the statutory time period for the President to take action under Section 232.

Section 232 gives the Secretary of Commerce 270 days to conduct an investigation and advise the President whether imports are increasing in such a way as to threaten national security. The President must announce his determination within 90 days after receiving the Secretary’s report, and must implement any actions to adjust imports within 15 days thereafter.

Denying a government Motion to Dismiss the case, the CIT indicated that it was not interested in determining whether the increase on tariffs on Turkish steel was motivated by proper considerations of national security. However, the Court noted that, for the President’s actions to be valid, they must follow the guidelines issued by Congress in delegating its tariff-setting authority, including those regarding the timing of decisions:

Although the statute grants the President great discretion in deciding what action to take, it cabins the President’s power both substantively, by requiring the action to eliminate threats to national security caused by imports, and procedurally, by setting the time in which to act.

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The procedural safeguards in section 232 do not merely roadmap action; they are constraints on power. The Supreme Court has made clear that section 232 avoids running afoul of the non-delegation doctrine because it establishes “clear preconditions to Presidential action.” Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 559 (1976). The time limits, in particular, compel the President to do all that he can do immediately, and tie presidential action to the investigative and consultative safeguards.14 If the President could act beyond the prescribed time limits, the investigative and consultative provisions would become mere formalities detached from Presidential action. However, Congress affirmatively linked the investigative and consultative safeguards to Presidential action, and Congress strengthened that link when it imposed time limits on the President’s discretion to take action. Congress embedded these limits within its broad delegation of power to the President.

The Transpacific decision has a number of possible significant implications. First, it suggests that the additional tariffs imposed on Turkish steel, having been improperly promulgated, will be struck down. Second, it creates the possibility that other actions which occurred after statutory deadlines, including the imposition of tariffs on imports of steel and aluminum from Canada and Mexico, might be challenged. Third, it suggests that the President’s recent failure to take timely action on a Section 232 report asserting that imports of European automobiles threatened national security have now precluded him from taking any action on that report.

We have previously opined that President Trump, in imposing tariffs on steel and aluminum articles under Section 232 of the Trade Expansion Act of 1962, lacked power to proclaim that such tariffs were not eligible for duty drawback. While we provided several reasons for our view, one of the reasons was that the President’s proclamation regarding drawback was not made within the time prescribed by statute. The President’s drawback ban now appears also to be subject to challenge on timeliness grounds.

Our firm is happy to discuss the implications of the Transpacific Steel decision in further detail at your convenience.