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On July 13, 2021, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) issued a majority 2-1 <a href="https://filehost.thompsonhine.com/uploads/Fed_Cir_-_Transpacific_Opinion_90f4.pdf" target="_blank" rel="noopener">opinion</a> reversing the ruling of the U.S. Court of International Trade (CIT) that former President Donald J. Trump violated the provisions of Section 232 of the Trade Expansion Act of 1962 (Section 232) by increasing tariffs on steel imports from Turkey beyond those previously implemented under an earlier Presidential proclamation. See Update of <a href="https://www.thompsonhinesmartrade.com/?s=transpacific">July 14, 2020</a> for more details on the CIT ruling. The Federal Circuit ruling remands the case to the CIT for an entry of judgment against the plaintiff group led by Transpacific Steel LLC.
The plaintiffs had argued that the Trump administration&rsquo;s actions violated both the statutorily-mandated procedures for a Section 232 national security investigation and the U.S. Constitution&rsquo;s guarantee of equal protection under law. In its opinion, the CIT agreed, determining that the subsequent presidential proclamation implementing additional tariffs solely affecting Turkish steel (i.e., raising the duty rate from 25% to 50%) was issued well after the statutory time period allowed under Section 232. The CIT also found that former President Trump acted &ldquo;without a proper report and recommendation by the [Secretary of Commerce] on the national security threat posed by imports of steel products from Turkey.&rdquo;
The Federal Circuit, however, ruled that former President Trump did not depart from the finding of the Secretary of Commerce (Secretary) of a national security threat and did not violate the process and timing standards applicable to the Secretary&rsquo;s finding of a national security threat. According to the decision, the statute &ldquo;empowers and directs the President to act to alleviate threats to national security from imports&rdquo; and &ldquo;[t]he key issue is whether [the statute] permits the President to announce a continuing course of action within the statutory time period and then modify the initial implementing steps in line with the announced plan of action by adding impositions on imports to achieve the stated implementation objective. We conclude that the President does have such authority in the circumstances presented here.&rdquo;
Overall, the Federal Circuit found that the president &ldquo;specifically adhered to the Secretary&rsquo;s underlying finding of the target capacity-utilization level that was the rationale for the predicate threat finding,&rdquo; and that the &ldquo;initial presidential action (in March 2018) itself announced a continuing course of action that could include adjustments as time passed.&rdquo; In a detailed review of the legislative history and congressional intent for the Trade Expansion Act of 1962 and its subsequent amendments, the Federal Circuit found that this history undermined the CIT&rsquo;s ruling, concluding &ldquo;that the increase in the tariff on steel from Turkey by Proclamation 9772 did not violate [the provisions of Section 232].&rdquo; The Federal Circuit also concluded that Proclamation 9772 did not violate the equal protection guarantees of the Fifth Amendment&rsquo;s due process clause.
The Federal Circuit decision made clear that the judges were not addressing &ldquo;other circumstances that would present other issues about presidential authority to adjust initially taken actions without securing a new report with a new threat finding from the Secretary.&rdquo; As a result, the Federal Circuit indicated, the immediate impact of this ruling should be limited to the facts and issues surrounding the implementation of additional duties on imports of Turkish steel.
In his dissenting opinion, Judge Jimmie Reyna started by quoting President John Adams, stating that &ldquo;Power must never be trusted without a Check&rdquo; and adding that the &ldquo;essential question posed by this appeal is whether Congress enacted [Section] 232 to grant the President un-checked authority over the Tariff.&rdquo; He based his dissent on three grounds: (1) The &ldquo;majority overlooks the context of Section 232 as a trade statute&rdquo; and Congress delegated only narrow authority to the President over trade; (2) Section 232 is &ldquo;written in plain words that evoke common meaning and application&rdquo; and the majority offers no clear reason &ldquo;to diverge from that plain language,&rdquo; and (3) Section 232&rsquo;s &ldquo;legislative history shows that Congress intended, for good reason, to end the Executive Branch&rsquo;s historical practice of perpetually modifying earlier actions without obtaining a new report from the Secretary of Commerce and without reporting to Congress.&rdquo;
The next steps in this litigation remain unclear. After remand to the CIT, the plaintiffs have the option of challenging the decision by either seeking a review by the full Federal Circuit or appealing to the U.S. Supreme Court.

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

International Trade

Federal Circuit Reverses CIT on President’s Authority to Increase Section 232 Tariffs on Steel Imports from Turkey