CIT Invalidates Trump’s Section 232 Tariffs on Steel “Derivatives”

Trade Update • APRIL 9, 2021

The U.S. Court of International Trade ruled in an opinion issued on April 5, that former President Trump’s Proclamation 9980 subjecting steel and aluminum “derivatives” to 25% tariffs under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862) is invalid because of a failure to comply with statutory time limits.

Earlier this year, the CIT dismissed all but one of the claims made by the plaintiff PrimeSource Building Products, Inc., which had argued that the Proclamation was unlawful, unconstitutional, procedurally deficient, etc. At the same time, the court found that a “genuine issue of material fact” existed with respect to the claim arguing that the Proclamation was null and void from the outset owing to it having been issued 533 days after the allowable date provided for in the legislation.

“Action Outside of Delegated Authority”

DOJ had previously argued that the president has the authority to modify Section 232 tariffs at any time to protect national security (including adjusting imports of articles not specifically addressed in Proclamation 9705 that had been designated as “derivatives” of the identified steel articles).

The court rejected DOJ’s “flexible” reading of the statute, favoring instead a “plain meaning” interpretation of 19 U.S.C. § 1862(c)(1), which does not allow the President to adjust, through new tariffs, imports of derivatives of previously-affected articles outside of the time limits imposed by Congress.

In a joint status report filed subsequent to the CIT’s January 27 order, DOJ expressly waived the opportunity to provide further evidence regarding the matter.

Accordingly, the CIT issued a summary judgement, declaring Proclamation 9980 “invalid as contrary to law” and directed that all entries affected by the litigation be: (i) liquidated without the assessment of duties if still pending; and (ii) refunded if such duties have already been collected and liquidated.

Next Steps

The CIT can now be expected to issue similar findings with respect to parallel challenges to the Section 232 derivative tariffs.

However, this could be complicated should the U.S. government appeal the CIT decision to the U.S. Court of Appeals of the Federal Circuit, based on the lengthy dissenting opinion of CIT Judge Miller Baker.