Exporter Joins Supreme Court Challenge of Section 232, Citing Impact of Retaliatory Tariffs

An agricultural exporter recently joined a Supreme Court challenge of the constitutionality of Section 232 duties on steel and aluminum imports. Basrai Farms says the brunt of retaliatory tariffs imposed worldwide in response to the U.S. tariffs has fallen on the agriculture industry, and that the Supreme Court should find Section 232 unconstitutional because President Donald Trump was required to consider these broader effects when imposing the tariffs.

Basrai, an exporter of walnuts, said retaliatory tariffs have been “specifically designed to target the agricultural industry.” Imposed by China, the European Union, Turkey, Canada and Mexico, among other countries, “the retaliatory actions have had a significant impact on industries that depend to an outsized degree on exports, including the U.S. agricultural industry, which exports more than 20 percent of its total production,” Basrai said in its amicus brief, filed May 16. Canada and Mexico recently lifted their retaliatory tariffs after striking deals with the U.S. to end Section 232 tariffs on the two countries (see 1905200054).

As a result of these tariffs, the U.S. Department of Agriculture has forecast a decrease of $1.9 billion in agricultural exports between fiscal years 2018 and 2019. “The decrease in U.S. agricultural exports has had a permanent effect on existing supply chains. Many foreign countries are replacing U.S. exports with the same commodities produced in other countries,” the brief said. “These supply chain changes will not be easy to reverse even if foreign countries remove their retaliatory tariffs.”

Further harm to exporters could come from Section 232 decisions currently in the pipeline on uranium and automobiles and auto parts. And the value of the latter is significantly higher than U.S. imports of steel and aluminum, Basrai said.

“The harm inflicted by retaliatory tariffs on the U.S. agricultural industry, as detailed above, illustrates the expansive unconstitutional authority granted to the President under Section 232,” Basrai said. “The statute grants the President the authority to favor particular industries, in this case the steel and aluminum industries, to the detriment of any and all others. But the statute provides no guidance on how the President is to weigh these trade-offs.”

“By failing to require that the President assess the likelihood of collateral damage caused by retaliatory measures imposed on U.S. exports, especially agricultural exports, Section 232 unconstitutionally extends the President’s authority to adjust imports over the entire economy regardless of any impact on ‘national security,’” the exporter said.