MLex Insight: Trump’s metal tariffs, justified by national security, probed by US Federal Circuit

The constitutionality of a Cold War-era US tariff power — actively invoked by President Donald Trump to impose national security duties — was examined today by a federal appeals court.

The constitutionality of a Cold War-era US tariff power — actively invoked by President Donald Trump to impose national security duties — was examined today by a federal appeals court.

The case is significant because it involves the president's actions under Section 232 of the Trade Act of 1962 — including the steel and aluminum tariffs that were first imposed in 2018. A subsequent appeal from either party would likely be taken to the Supreme Court.

The American Institute of International Steel, or AIIS, brought the challenge in July 2018. The trade association for steel importers argued that Congress improperly gave the president unchecked trade powers in Section 232, making the existing metal tariffs and other future remedies under this statute illegal.

But the Court of International Trade rejected the challenge last year, saying that a 1976 Supreme Court decision found that the White House has broad discretion under Section 232.

The AIIS suit, however, is about Congress and not the president, AIIS counsel Alan Morrison told a three-judge panel on the US Court of Appeals for the Federal Circuit today. US Circuit Judges Richard Taranto, Kara Stoll and Alvin Schall heard the arguments of the AIIS and the Justice Department.

"We're complaining about what Congress did, or more importantly, what it didn't do by not putting any boundaries," said Morrison, a constitutional law professor who cited the separation of powers in the Constitution between the branches of the federal government.

Boundaries

The CIT's decision to affirm the president's ability to take action under Section 232 last year means the CIT wouldn't be able to review a challenge on, for example, an order that would require current tariff payments on the steel imports to become non-tax deductible — a move that would "really put teeth in the statute" and overpower Congress's responsibilities, according to Morrison.

"The government's position is clear … that nothing the president does [that] exercises his discretion under the statute is judicially reviewable," Morrison said.

The Justice Department disagreed. The trade court would be able to address challenges such as the non-tax-deductible issue in the first instance because it's an "example of an argument that the president has exceeded statutory authority," federal government attorney Tara Hogan said.

Hogan said based on the Federal Circuit's recent decisions, the lower court may "review presidential action — and set it aside — if the president … clearly misconstrues the governing statute where there's a significant procedural violation."

AIIS also took issue with what it views as the federal government's insufficient answers to address the restrictions in Section 232. "How could we say that it's beyond the statutory mandate when there's nothing limiting the statute?" Morrison said.

The president, Hogan said, can "only adjust the imports in the article and its derivatives that have been subject to the investigation" conducted by the Commerce Department.

When Taranto asked the government whether there are other statutes that would help define national security and provide limitations in the trade authority, Hogan said she didn't have an answer. Because national security is "such a broad and judgment-filled" term, Congress didn't want to define it for Section 232, Hogan said.

The arguments come as other steel companies have become emboldened to lodge their own challenges against the Trump administration's Section 232 steel tariffs.

Importer Transpacific Steel recently won a motion to get a judicial review on the merits of its constitutional challenge against the White House for raising the steel tariff on only Turkish steel products. Another group of steel importers last month targeted the legality of the Section 232 steel report that the president used to justify the steel duties.

And in July, Indian company JSW Steel, which has operations in the US, filed a complaint against the Commerce Department's process to get a product exclusion from the steel tariffs.

Author: Kat Lucero

This article does not necessarily reflect the opinion of the AJOT editorial board or Fleur de lis Publishing, Inc. and its owners.