Federal Circuit Reverses CIT on President’s Authority to Increase Sec. 232 Tariffs

Trade Update • JULY 14, 2021

The U.S. Court of Appeals for the Federal Circuit yesterday issued a precedential opinion reversing a 2020 decision of the U.S. Court of International Trade that ruled former President Trump had violated the provisions of Section 232 of the Trade Expansion Act of 1962 by hiking tariffs on steel imports from Turkey beyond those previously implemented under an earlier proclamation.

Background

Following a decision in March 2018 to impose a 25% tariff on steel imports from a number of countries, several months later President Trump doubled the duty rate on Turkish steel because, he said, imports had not declined “as much as anticipated.”

Transpacific Steel LLC, a U.S. importer of steel products from various countries, including Turkey, claimed Trump’s decision to increase the tariff was illegal because it occurred outside a “temporal window” (the statutory 105-day time limit) and furthermore argued that the former administration should have completed a separate investigation prior to imposing the increased duty.

Rejecting what it described as President Trump’s “expansive view” of Sec. 232 authority, the CIT agreed with Transpacific, maintaining that “there is nothing in the statute to support the continuing authority to modify Proclamations outside of the stated timelines.”

Federal Circuit Decision

In its 2-1 decision, the Federal Circuit ruled that former President Trump had not departed from the finding of the Commerce Secretary of a national security threat and did not violate the process and timing standards involved.

Regarding the statutory time limit, the Federal Circuit concluded that Congress had granted the president the authority to “adopt and carry out a plan of action that allows adjustments of specific measures, including by increasing import restrictions, in carrying out the plan over time.” According to the appeals court, the time limit was intended to spur presidential action without limiting the scope of the authority to act.

Moreover, the Federal Circuit said that contrary to the CIT’s narrow interpretation of “action” and “take action” in Sec. 232, the terms are better understood as referring to “a process or launch of a series of steps over time.” This follows, in part, from the statute, which authorizes the president to determine the nature and duration of the action. That plan of action can include increasing the remedy, not simply terminating or reducing the remedy.

Dissenting View

In his lengthy dissent, Judge Jimmie Reyna, said the majority opinion was “untethered from the U.S. trade law context.” Given that Sec. 232 is a delegation of the Congress’ legislative power to set tariffs and regulate trade to the Executive Branch, when the president takes action pursuant to Sec. 232, he is bound by the limitations Congress imposed on him. In other words, the president has no more authority under Sec. 232 than Congress provided. In this case, Judge Reyna concurred with the CIT’s opinion that if the president fails to act within the specified time limit, he forfeits the right to do so until Commerce issues a new report on which he can act.

Future Litigation Possible

After remand to the CIT, the plaintiffs have the option of challenging the decision by either seeking a rehearing by the full Federal Circuit or an immediate petition for review by the U.S. Supreme Court. Given the radically different interpretations of the president’s authority to take action under Sec. 232, further litigation remains a likely possibility.