On June 27, 2018, a coalition of U.S. steel users, the American Institute for International Steel (“AIIS”), and two steel trading companies filed a complaint in the United States Court of International Trade (“CIT”) challenging the Trump Administration’s imposition of a 25% tariff increase for steel products. AIIS’ challenge, however, is not made to the scope of the tariff or the countries effected, but to the constitutionality of the tariff itself.
The tariff increase is was enacted in March 2018 under Presidential Proclamation 9705. The President has authority to make such proclamations pursuant to Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862). Section 232 directs the Secretary of Commerce, upon the application of any department, agency or interested party, to undertake an investigation of the effect of the importation of a product on national security. The President then has 90 days to determine whether to concur with the finding of the Secretary with respect to the potential national security implications of a product.
AIIS alleges that Section 232 is an unconstitutional delegation of Congress’s exclusive authority to lay duties and regulate commerce with foreign nations under Article I of the U.S. Constitution. Specifically, AIIS asserts that the broad definition of “national security” under Section 232 lacks an “intelligible principle” to circumscribe the President’s authority under the statute. Under Section 232, the President may consider the “close relation” of economic warfare and our national security, including the effect on domestic industries and the “weakening of our internal economy” in making a determination regarding the imposition of tariffs in the name of national security.
As evidence of the alleged lack of an intelligible principle, AIIS points to the fact that the President is not required consider, for example, the source of products (i.e., whether the products are imported from close allies), the specifications and use of the products as they relate to national security concerns (i.e., the fact that some steel imports are used to manufacture weapons or other products that aid national security), or the possible negative economic ramifications of protectionism on national security grounds (i.e., economic retaliation). In addition, Section 232 does not contain any provision for judicial review of the President’s determination.
The government has not yet filed a response to the Complaint and whether the Court will entertain these constitutional challenges remains to be seen. Nevertheless, as protectionist policies and threats of trade wars continue to mount, all industries must continually evaluate not only the effect of changes in relevant tariffs, but consider whether novel challenges such as those raised by AIIS may be necessary to protect the rights of industry members.
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