CIT Drops Broad Challenges to Section 232 Duties, Allows Exclusion Rejection Challenge to Proceed

The Court of International Trade in a June 22 decision dismissed all but one of importer Maple Leaf Marketing's claims against Section 232 steel tariffs levied against goods shipped to Canada for further processing then reimported to the U.S. Finding that the president has broad authority to determine the "nature of the action necessary to adjust imports that threaten the national security," a three-judge panel tossed Maple Leaf's challenges to the imposition of the tariffs on Canada, which Maple Leaf had argued was untimely, as well as to the assessment of Section 232 duties on steel articles qualifying for repair and alteration treatment under Chapter 98, among other things.

The trade court allowed Maple Leaf's remaining challenge of the Commerce Department's denial of its request for exclusions from the duties to proceed.

Maple Leaf's case involved imports of a specially hardened and boronized J-55 steel tubing known as EndurAlloy. The Texas-based company is the exclusive U.S. importer. The J-55 tubing is either produced or imported into the U.S. before shipping to a Canadian company for a proprietary chemical deposition alteration treatment (see 2007080055). Maple Leaf then reimports the EndurAlloy tubing under a special classification provision of Chapter 98 of the tariff schedule.

Upon the initial imposition of Section 232 tariffs in 2018, President Donald Trump exempted the duties on goods from Canada and Mexico pending the outcome of negotiations on the tariffs (see 1803080025). The tariffs would only be subsequently imposed after that exemption was lifted more than two months later (see 1805310028). Maple Leaf said the implementation of the Section 232 duties was untimely, the assessment of the duties on goods under Chapter 98 was unlawful, the failure to publish a report predicating the tariffs in the Federal Register was unlawful, and the imposition of Section 232 duties violated Maple Leaf's due process rights.

Judges Claire Kelly, Gary Katzmann and Jane Restani dismissed each claim. “Nothing in the statute purports to limit the President’s authority to act without contingencies; to the contrary, the broad grant of authority under 19 U.S.C. § 1862(c)(1) empowers the President to exercise his judgment and determine the nature of the action necessary to adjust imports that threaten the national security,” the opinion said.

The panel also said Maple Leaf could not challenge CBP's implementation of the tariffs on Chapter 98 goods by way of a Cargo Systems Messaging Service message. Since CSMS messages are not final agency action, they cannot be challenged, the court said.

The panel ruled Maple Leaf did not point to any instance where due process rights were violated. All the importer established was that it had a “protectable claim” against the tariffs, the ruling said. “Regardless of whether Plaintiff has a protected interest, a claim that challenges the lawfulness of the Government’s actions does not on its own demonstrate that Maple Leaf was deprived of a meaningful opportunity to be heard, or that more process was due to protect its interests,” the judges said.

(Maple Leaf Marketing, Inc. v. United States, Slip Op. 21-77, CIT # 20-00125, dated 06/22/21, Judges Kelly, Katzmann and Restani. Attorneys: Richard O'Neill of Neville Peterson for plaintiff Maple Leaf Marketing, Inc.; Ann Motto for defendant U.S. government)