Section 232 Tariff Expansion Likely to Survive Judicial Scrutiny, Lawyers Speculate

President Donald Trump's recent expansion of Section 232 steel and aluminum tariffs likely would survive a judicial challenge, particularly in light of the string of cases challenging the Section 232 duties imposed during his first term, trade lawyers told us. Thomas Beline, partner at Cassidy Levy, said Trump's move to eliminate the country-specific arrangements and product exclusions is "likely defensible," since the statute lets the president take any action he deems necessary where an agreement is "not being carried out or is ineffective."

The recent proclamations, among other things, axed all exclusions from Section 232 tariffs on steel and aluminum products and said that the duties are being widened to apply to various derivative products (see 2502110004).

An initial question posed by the move is whether Trump has the authority to modify the existing Section 232 tariffs without ordering or considering a new investigation by the commerce secretary -- the precise question posed across multiple lawsuits from Trump's first administration (see 2107130059 and 2302070030).

In two key cases, Transpacific Steel v. U.S. and PrimeSource Building Products v. U.S., the U.S. Court of Appeals for the Federal Circuit said the president can expand Section 232 duties beyond procedural deadlines established in the statute if the expansion relates to the original plan of action laid out in the initial Section 232 tariff action. Trump's most recent Section 232 action premises the need for the duties on the desire to achieve 80% capacity utilization for the U.S. steel industry, which is precisely the aim of the original duties.

Beline said the Federal Circuit's findings support the "elimination of the country-specific arrangements and re-imposition of tariffs." He added that the process for providing exclusions isn't found in the statute and is created by the president, likely meaning a court would find that the president "retains discretion to reverse his determination if he sufficiently explains his decision."

An attorney for importers said Transpacific and PrimeSource aren't helpful for challenging the duties, since the decisions "basically said the president can modify to his heart’s delight, as long as the modification addresses the national security issue identified in the original BIS investigation."

However, the attorney suggested that a more feasible means of challenging the duties could come in the form of a claim against the president's invocation of national security for products that aren't made in the U.S. "There's no national security issue associated with products coming into this country that we don't make," the attorney said, noting that such an analysis would have to be done a product-by-product basis.

Beline expressed skepticism at this claim, noting that a court could still sustain the action if there's "existing domestic industry capacity," domestic capacity "could come online in the reasonably foreseeable future" or there are "substitutes." At that point, "the national security interest is certainly served by covering the article under the President’s rationale that a healthy domestic steel/aluminum is in the nation’s security/economic security interest," he said.

As far as other challenges to the tariff moves are concerned, Beline suggested that the withdrawal of exclusions without additional process, including notice-and-comment periods, could potentially be challenged as "lacking a factual basis to support the reversal of granting that relief."