Trade Cases

Trade Court: Trump Blew Deadline on Section 232 Expansion

Written by Michael Cowden

Former President Donald Trump overstepped his powers when he extended Section 232 tariffs to downstream products such as steel nails, a trade court ruled.

The U.S. Court of International Trade made the decision on Monday, April 5, in favor of the plaintiff in the case, PrimeSource Building Products Inc., and against the defendant, the United States government.

balanceThe decision made some waves because U.S. courts have to date declined to place many limits on a president’s powers to use the national security trade measure.

But the narrow scope of the ruling probably means it won’t have a significant impact on the broader steel market, industry experts said.

“This is a notable ruling, but a limited one. It is notable because it again shows that the court is prepared to constrain governmental action related to procedural deadlines under this statute,” said Richard Chriss, president of the American Metal Supply Chain Institute (AMSCI).

“However, the scope of the ruling is limited to the procedural issue. It doesn’t address the matter of excessive delegation of congressional authority. I believe the court was being circumspect in this regard,” he said.

AMSCI is a lobbying group for steel and metals consumers, distributors, traders, and logistics companies. It is the successor organization to the American Institute for International Steel (AIIS).

AIIS had mounted a legal challenge to Section 232 that went all the way to the Supreme Court, but ultimately was unsuccessful. That case hinged on the idea that Congress is responsible for taxes and tariffs, and that the executive branch had therefore overstepped its bounds by imposing Section 232 without legislative approval. 

The scope of the PrimeSource Building Products case was narrower.

PrimeSource, a U.S. importer of steel nails, contested Proclamation 9980 made in January 2020 by former President Trump. The action was intended to expand Section 232 tariffs, 25% in the case of steel, to certain downstream goods made of steel, including nails.

The CIT brushed aside most of the reasons PrimeSource put forward to challenge Proclamation 9980. But one stuck: The president had missed the deadline for making changes to Section 232.

The reason: Former President Trump on Jan. 11, 2018, confirmed that he had received a report from former Commerce Secretary Wilbur Ross about the impact of steel imports on national security. That document, referred to in court papers as the “Steel Report,” started a countdown for presidential action.

The president by law has 90 days to decide what to do to limit imports that pose a threat to national security and another 15 days to act. Trump, in March 2018, issued Proclamation 9705, which imposed 25% tariffs on imported steel and which was well within the 105-day window stipulated by law.

The proclamation expanding the tariffs to steel nails, however, came long after that 105-day window had shut, the CIT noted.

“We find in the untimeliness of Proclamation 9980 a significant procedural violation,” judges Timothy C. Stanceu and Jennifer Choe-Groves wrote in an opinion. It is therefore “invalid as contrary to law.”

One industry source said the ruling might be overturned on appeal. But even if it stands, it probably won’t alter trade flows of most steel products, including steel sheet and plate, covered by Section 232 tariffs rolled out in March 2018.

“There were nails and some other derivative products. That’s really all that it affects. It does not affect any of the basic steel mill products that were subject to the 232 action taken in 2018,” he said. “So I don’t see it having a major impact on the steel industry.”

By Michael Cowden,

Michael Cowden

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