Trade Cases

AIIS Challenges Constitutionality of Section 232

Written by Sandy Williams

The American Institute for International Steel and two companies have challenged the constitutionality of Section 232 of the Trade Expansion Act of 1962.

AIIS, along with Sim-Tex, LP, and Kurt Orban Partners, LLC, have filed a lawsuit in the U.S. Court of International Trade in New York City alleging that the statute violates the constitutional prohibition against Congress delegating its legislative powers to the president. Doing so lacks any “intelligible principle” to limit the discretion of the president, charges the group in its suit.

“In addition to the totally open-ended choice of how to counter any threat that imports may present, Section 232 allows the president to consider virtually any effect on the U.S. economy as part of ‘national security’,” said AIIS President Richard Chriss.

AIIS represents the steel supply chain, which includes railroads, transportation companies, port authorities, union locals, traders and logistics companies, as well as foreign steel producers. Although most of the companies it represents will not directly pay the 25 percent tariff on steel, their businesses will be harmed by significant reductions in the amount of steel imported into the United States. As a result, the supply chain faces reduced revenue and job losses.

In addition, said AIIS, U.S. steel-using manufacturers are encountering product price increases of 50 percent or more and are experiencing difficulties in obtaining the steel they need, domestically or imported.

The lawsuit also asserts that Section 232 violates the “doctrine of separation of powers and the system of checks and balances that the Constitution protects.” There is no judicial review of the president’s response to perceived threats to national security from imports of steel.

Said AIIS, “Moreover, recent Supreme Court cases have precluded judicial review of discretionary decisions by the president under similar statutes, and the Justice Department in a recent case involving this very tariff has stated that the courts cannot rule on whether the president has complied with the law.”

“Unlike most cases brought against actions of the Trump administration, it is Congress—through its delegation of unfettered discretion to the president in this statute—and not the president that is the violator of the Constitution,” noted Alan Morrison, lead counsel for the plaintiffs. “The president simply took advantage of the opportunity to impose his views on international trade on the American people, with nothing in the law to stop him.”

Morrison also pointed out that the lack of judicial review, on top of the completely unmoored powers of the president, “represents a far more dangerous threat to our democracy than any steel imports ever could.”

The plaintiffs have requested the Chief Judge of the Court of International Trade to appoint three judges, instead of a single judge, to hear this case. That request is supported by a specific federal statute and a rule of the Court that authorize such an appointment when a case presents a constitutional challenge or has “significant implications” for the administration of the law; as a result, there will be no trial.

“The facts are very simple and not in dispute,” AIIS says. “To the extent we rely on facts relating to problems from these tariffs that Congress failed to address in the statute, those problems were identified in numerous submissions to the Commerce Secretary, but disregarded by the president.”

If the case is decided by a three-judge court, there is a direct appeal to the Supreme Court, without having to go to the Federal Circuit, which is the normal review court for the Court of International Trade.

“That route would provide a speedier means of resolving this case,” said AIIS, “which is in the interest of all concerned.”

AIIS notes that the lawsuit is not directed at the president or the Secretary of Commerce, but at the statute itself and the failing of Congress in 1962 to provide the necessary guidelines and controls over the use of Section 232. Because Section 232 is unconstitutional, asserts AIIS, the president’s trade actions are as well.

If the court should find in favor of the plaintiffs, the Section 232 tariffs and quotas would be terminated and businesses that paid excess tariffs would be entitled to refunds. A positive ruling would prevent further use of Section 232 on the imports of automobiles and auto parts.

The lawsuit and supporting documents may be read on the AIIS website.

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