Trade Cases

Trade Act Would Take Section 232 Authority Out of President's Hands

Written by Tim Triplett

Steel industry trade associations and other supporters of the Section 232 tariffs are strongly opposed to a bill introduced in Congress this week by U.S. Senators Pat Toomey (R-Pa.) and Mark Warner (D-Va.) called the Bicameral Congressional Trade Authority Act. Sponsors of the measure say it is designed to prevent potential presidential abuse of “national security” tariffs by reinstating congressional authority over trade. Opponents say it is a back-door way to end the Section 232 tariffs.

“This bill is really designed to gut Section 232 as a trade tool for any president,” Kevin Dempsey, president of the American Iron and Steel Institute, told Steel Market Update today.

Ever since 2018 when President Trump invoked Section 232 as the grounds for tariffs on steel and aluminum imports, there’s been a debate about whether this was an abuse of presidential authority. Do low-priced imports represent a true existential threat to the U.S. steel industry – and by extension to the nation’s security – or was this just a political maneuver to curry favor with domestic steel producers?

The measure was first introduced back in 2019, but never made it out of committee. In its current form, the act would make any presidentially-proposed tariffs or quotas applied for national security purposes (via Section 232 authority) subject to review and approval by Congress before taking effect. Congressional review would be retroactive for the prior four years. The bill is backed by an impressive list of co-sponsors from both sides of the political aisle, as well as numerous consumer trade groups.

“For too long, Congress has allowed presidents to unilaterally impose tariffs by invoking spurious claims of ‘national security’ – regardless of whether or not the import in question poses any genuine threat to national defense. These wrongfully-imposed tariffs have increased costs for American consumers, substantially burdened domestic manufacturers, and have undermined our relationships with our allies. Through [the act], we can restore Congress’ authority by once again requiring tariffs imposed for so-called ‘national security’ purposes to be approved by Congress, including those previously enacted on steel and aluminum in 2018,” said Senator Toomey.

“As our economy continues to recover from the economic crisis, we must ensure that Congress has a say in any future actions that could restrict trade or impose consequential changes,” added Senator Warner. “This legislation, which we introduced under the last administration, will help prevent any future president from abusing national security authorities to impose unilateral tariffs. It will also help guarantee that any efforts to crack down on unfair or illegal trade practices are strategic, and done in concert with our allies.”

The Trump administration was widely criticized for imposing the Section 232 tariffs on the United States’ “friends,” including Canada, Mexico and the European Union. The measures have since been waived on the U.S. trading partners in North America, now subject to the USMCA trade pact. Other nations have negotiated quotas. But talks are ongoing with the European Union, with a deadline later this year for the U.S. to rescind or amend the Section 232 tariffs and avoid retaliation by the EU nations.

Under Section 232 of the Trade Expansion Act of 1962, Congress conditionally delegated certain tariff and quota authority to the executive branch in the event an import is a threat to national security, note the bill’s sponsors. Historically, Section 232 investigations have been rare and have infrequently resulted in imposition of tariffs – prior to 2018, a president last took action under Section 232 in 1986. However, the Trump administration used Section 232 widely, unilaterally imposing 25% tariffs on steel and 10% on aluminum and conducting investigations into six additional products. Since then steel prices – and industry profits – have risen to record highs.

To prevent future misuse of Section 232 authority, the bill would require Congressional approval in the event the executive branch chooses to adjust import levels. It would also restore the national security intent to the statute, by defining the term “national security” to include articles specifically related to military equipment, energy resources, and critical infrastructure, states the bill.

AISI strongly opposed the measure when it was first introduced in 2019 and feels the same way today. “The bill is designed to fundamentally change the Section 232 statute in a way that would make it largely unworkable,” said Dempsey. “It would terminate the existing steel Section 232 tariffs unless Congress – both the House and Senate – pass an approval resolution within 75 days of the bill becoming law. It narrows the scope of national defense down to just defense goods. It could force an end to Section 232 just by a procedural hang-up. All future Section 232 decisions by the president could not take effect until Congress votes its approval. Anything that requires Congress to act is not a bet you want to put a lot of money on,” Dempsey added.

Dempsey is doubtful this iteration of the bill will get any further than the last one. Even if Congress passes a bill narrowing the reach of Section 232, he asked, would any president sign it and compromise their ability to act in a timely manner to address a national security threat?

Indeed, the Biden administration recently announced its own Section 232 investigation into imports of neodymium-iron-boron rare earth magnets used in the production of electric vehicles, wind turbines and other devices.

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