Trade Cases

Leibowitz on Trade: Q&A on Turkey Tariffs, AIIS Suit

Written by Tim Triplett

Lewis Leibowitz, trade attorney and contributor to Steel Market Update, offers the following commentary on the latest developments in Washington:

Turkey Tariffs– President Trump tweeted on Friday that he “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!” There was press speculation that the doubling of tariffs was related to continuing diplomatic tensions over the detention of an American pastor. Later in the day, the White House attempted to clarify the reason for the doubling of tariffs on Turkish steel and aluminum imports into the U.S.: “Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter,” White House spokeswoman Lindsay Walters said in a statement.

Some questions have come up, which I will do my best to answer:

Q.: Can the president do this?

A.: Until someone blocks him, yes. The tweet on Friday morning does not impose the tariffs; that will be done by a new proclamation imposing the new level of tariffs.

Q.: What are the limits to the president’s power?

A: At this point, a court would need to rule on that (see below). If he has the power to increase tariffs on Turkey, whether because of the devaluation of the Turkish currency or other reasons, he could in theory increase tariffs on imports from other countries, as well. The “clarification” from the White House on Friday does not establish that the reason for increasing the tariffs was actually national security; the statement simply declares it. I would not be surprised if the national security justification is elaborated on in connection with an amended proclamation formally imposing the new levels of tariffs on Turkey.

Q.: When will the new tariffs be effective?

A.: The new doubled tariffs took effect at 12:01 a.m. Monday, Aug. 13. The president issued his Turkey proclamation on Friday.  

AIIS Litigation– The court action filed by the American Institute for International Steel (AIIS) and two of its members against the Section 232 tariffs turned a corner last week. As you will note, AIIS filed the suit on June 27, claiming that Section 232 is unconstitutional because it delegates excessive legislative power to the president. On July 19, the plaintiffs filed a motion for summary judgment, requiring a response from the government by late August. The government requested an additional month to respond, by Sept. 26. Plaintiffs balked, agreeing to a two-week extension; they claimed that the Section 232 tariffs were causing continuing damage to importers and U.S. manufacturers and the 30-day extension the government sought was excessive. On Friday, Aug. 10, the Court of International Trade agreed (to some extent) with the plaintiffs and gave the government an additional 18 days, to Sept. 14, to file a response to the motion for summary judgment.

Again, some questions have come my way:

Q.: What are the chances that plaintiffs will prevail?

A.: This is a challenge. The last time the Supreme Court ruled that Congress delegated too much legislative power to the Executive was the Schechter Poultry case in 1935, which struck down the National Industrial Recovery Act. This is not an easy point to make. Plaintiffs have raised serious points, though. They also point out that the Supreme Court will hear a case raising the excessive delegation point this fall (Gundy v. United States, scheduled for argument on Oct. 2). I won’t call this shot definitively. Either one or three judges of the Court of International Trade will rule on this question.

Q.: Is it true that a Section 232 determination is unreviewable by the courts?

A.: There are a number of cases that sharply limit the role of courts in reviewing a presidential determination, such as a proclamation or Executive Order. However, the issue is not free from doubt—in the last year, several courts issued injunctions against Executive actions in the area of immigration, in which the motivation of the president was an issue. One thing is sure—if there is a statutory basis for resolving this case, the Court of International Trade will resolve it first before reaching the constitutional issue. That is a well-known doctrine of “constitutional avoidance” that the Supreme Court has invoked often. This doctrine has been seriously questioned recently; however, it is most unlikely that the Court of International Trade would question, let alone contradict, a Supreme Court pronouncement on constitutional avoidance.  

Q.: When will the Court of International Trade reach a decision?

A.: Most probably after oral argument, which is expected as early as December of this year, but perhaps in the first quarter of 2019. As noted above, the plaintiffs have raised the point that serious commercial losses are continuing every day. These losses are not limited to the tariffs that must be paid—orders have been cancelled or delayed.

Lewis Leibowitz

The Law Office of Lewis E. Leibowitz
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