Recent decisions from the U.S. Court of International Trade (“CIT”) have clarified the basis for legal challenges to the tariffs imposed by the Trump Administration on imports of steel and aluminum products on the grounds of national security. While the court has generally rejected wholesale challenges to these duties, other cases suggest that parties appealing the denial of specific exclusions to these duties might have some ability to obtain relief.
In Universal Steel Products, Inc. et al. v. the United States et al., a three-judge panel held that the duties did not violate obligations under Section 232 of the Trade Expansion Act of 1962 (“Section 232”) or the Administrative Procedure Act (“APA”). See Universal Steel Products Inc. et al. v. The United States et al., 2021 WL 401283 (C.I.T. 2021). Plaintiffs in Universal Steel Products claimed that the report issued by the Department of Commerce (“Commerce”) on steel and aluminum imports, and the subsequent presidential proclamations imposing tariffs on these products, contravened various procedural requirements. In its decision, the CIT found that the report was not reviewable under the APA as it was not a final agency decision. The court also concluded that the decision whether imports pose a national security threat under Section 232 is made at the president’s discretion and cannot be reviewed by a court. Finally, the CIT rejected arguments that the duration and timing of the tariffs imposed by the president did not comply with Section 232’s statutory provisions. This follows a decision by the CIT in 2019, where the court rejected a challenge to Section 232 as an impermissible delegation of statutory authority to the President by Congress. See American Institute for Int’l Steel, Inc. et al v. United States, 376 F.Supp.3d 1335 (C.I.T. 2019), aff’d, 806 Fed.Appx. 982 (Fed. Cir.), cert. denied, 141 S.Ct. 133 (2020).
While the court is unlikely to support broad challenges to presidential authority in this area, it has shown a willingness to review clear procedural violations. Last month, the CIT dismissed all but one of the claims in Primesource Building Products Inc. v. U.S. et al., 2021 WL 276338 (C.I.T. 2021), a case that contested the expansion of Section 232 tariffs to derivative steel products like fasteners. The CIT dismissed the plaintiff’s arguments that the proclamation broadening the tariffs was unconstitutional and unlawful under the Section 232 statute. The one claim that the CIT did not dismiss relates to whether the imposition of tariffs on downstream products after the 105-day statutory deadline triggered by the receipt of Commerce’s 232 report was lawful under Section 232. The CIT stated that it would examine whether later “assessments” made by Commerce that led to the expansion of the tariffs could be considered another report under the statute, thus extending the deadline. The court’s decision to consider limitations on the timing of any Section 232 action recalls a prior case in 2019 where the CIT struck down an increase in the duty rate from 25 percent to 50 percent specifically as to Turkish imports. In Transpacific Steel LLC v. United States, 474 F.Supp.3d 1332 (C.I.T. 2020), not only did the court find that this action violated the timeframe set forth by the Section 232 statute, it also concluded that there was no national security basis for an action that only increased tariffs with regard to Turkish imports. The CIT also held that the increase in this duty rate constituted a violation of the plaintiff’s equal protection rights under the U.S. Constitution.
The Section 232 exclusion process has also generated legal challenge, and in this area, plaintiffs have been more successful in obtaining relief, as the U.S. government appears to be more willing to settle cases where Commerce’s denial of Section 232 exclusions is tested. In JSW Steel (USA) Inc. v. United States, Ct. No. 19-00133, JSW Steel argued that Commerce had improperly denied certain exclusion requests where the requester provided evidence that domestic producers could not produce the relevant articles within the required time period. After the CIT remanded to Commerce to explain why it denied those exclusions, the U.S. government settled and while not admitting liability, agreed to refund Section 232 duties paid on entries that would have been subject to this denied exclusion. The government similarly settled Boruman Mannesmann Pipe U.S., Inc. v. United States, Ct. No. 20-00012, which involved the denial of Section 232 exclusion requests where objectors were not able to provide the merchandise at issue “immediately” as required under the regulations. And in a third case, yet to be resolved, plaintiff provided rebuttal evidence showing that objectors could not make product of the same quality or provide a satisfactory substitute within the needed time period, yet the government still denied the exclusion request. Evraz Inc. NA v. United States, Ct. No. 20-03869. All these cases challenging the denial of Section 232 exclusions point to the boiler-plate language used by Commerce in its decision memos as evidence that the exclusions were not properly considered.
Although cases challenging the Section 232 duties have not been universally successful, challenges to more specific aspects of these duties, or to the exclusion process, appear to have a greater chance of success. In particular, companies whose exclusions have been denied may wish to consider filing complaints if they feel that the objectors have not sufficiently shown that they can produce the merchandise in the necessary time period, and challenges to other grounds for denial may also be possible.