Supreme Court Shuts Down Challenge to Section 232 Tariffs

The move came after attorneys representing a Turkish mill and consumers of Turkish steel in November filed a request – also known as a “writ of certiorari” – asking the Supreme Court to reconsider a lower court’s decision to uphold an expansive view of presidential powers when it comes to trade issues.

The plaintiffs in the case are Turkish steelmaker Borusan Mannesmann and its U.S. pipe subsidiary, San Francisco-based rebar fabricator TransPacific Steel LLC, and Hamden, Conn.-based steel trader Jordan International Co. The current case stems from a complaint filed by Transpacific at the U.S. Court of International Trade on Jan. 17, 2019.

The plaintiffs had contended that the unilateral doubling of Turkey’s tariff represented a violation of the Constitution – notably of the separation of powers between the president and Congress. They wanted a refund of millions of dollars they claimed were “unlawfully imposed tarrifs.”

Questions of legality aside, those tariffs went into effect after Trump on Friday, Aug. 10, 2018, at 5:47 a.m. tweeted: “I have just 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! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”

The tweet, which caught the market by surprise, went into effect the same day thanks to a presidential proclamation that made it legally binding. And the 50% tariff on Turkish steel remained in effect until May 21, 2019, when Trump issued another proclamation that returned it back to 25% – where it has remained since.

Recall that Section 232 tariffs of 25% on imported steel and 10% on foreign aluminum initially went into effect on March 8, 2018.

The crux of the plaintiffs’ case was that the doubling of Section 232 tariffs on Turkish steel violated various timelines and other requirements spelled out in the laws governing Section 232.

The U.S. Court of International Trade upheld that view. It said a report – one that was never written – on why Turkish steel in particular posed a threat to national security would have been needed to justify doubling Turkey’s tariff to 50%.

But an appeals court – the U.S. Court of Appeals for the Federal Circuit – disagreed and in July said Trump had acted within the bounds of presidential powers. In effect, it declined to place limits on a president’s powers to unilaterally deploy Section 232 national security tariffs and quotas.

The Biden administration has kept the Trump-era tariffs and quotas in place, although it has agreed to ease them on close allies such as the European Union, Japan and the United Kingdom.

Trade experts say that Section 232 is otherwise likely to remain in place as is while discussions shift toward agreeing to a common framework with the EU on how to reduce carbon emissions.

By Michael Cowden, Michael@SteelMarketUpdate.com