Federal Circuit Says President Can Modify Section 232 Tariffs After Procedural Timelines

The president may impose greater Section 232 national security tariffs beyond the 105-day timeframe for action set out in the statute, the U.S. Court of Appeals for the Federal Circuit said in a July 13 ruling. Overturning a lower court ruling, the Federal Circuit found that the underlying law's deadline for the president to take "action" can refer to a "plan of action" carried out over a period of time following the 105-day deadline. That authority is not unlimited, though, in that modifications must be related to the underlying reasoning for the tariffs and those reasons can't be "stale," CAFC said.

The case concerns President Donald Trump's August 2018 tariff increase on Turkish steel, from 25% to 50%. The Court of International Trade ruled against the increased rate, finding that it came after the relevant deadline. Under 19 USC 1862, the president must decide whether to impose tariffs 90 days from a Commerce Department report on the need for such restrictions, then must implement the tariffs within 15 days (see 2007140046).

According to CAFC, as long as the tariffs continue their original purpose as laid out in the Commerce report, the president has the authority to hike tariffs as he pleases. Seeing as the original purpose of the Section 232 steel and aluminum tariffs was to bolster domestic capacity utilization of steel and aluminum, any further tariffs beyond the deadline meant for this purpose are not in violation of the law. "Specifically, we conclude that the best reading of the statutory text of [Section 1862] ... is that the authority of the President includes authority to adopt and carry out a plan of action that allows adjustments of specific measures, including by increasing import restrictions, in carrying out the plan over time."

The Federal Circuit found CIT to have taken too narrow a view of what the law allows. The trade court found that statute's explicit time limits meant that no burden-increasing action could be taken after the 105-day deadline, and that the time limit is applied to every individual tariff action rather than to an overall plan of action. The Federal Circuit found both of these contentions to unnecessarily restrain the law, declaring that the language does not support either reading. It pointed to Supreme Court precedent that laws directing that the government "shall" take an action by a certain time don't mean it can't take action if that time has passed.

Further, the appeals court said that CIT's narrow ruling actually obstructs the purpose of the tariffs. The cited threat to national security as a basis for the tariffs was an excess of imports from numerous countries that left domestic capacity less utilized than an "identified, plant-sustaining level." To alleviate this, the president sought to negotiate with other countries over the tariffs. "To prevent the President from increasing the impositions on non-agreement countries after the initial plan announcement would be to impede the President’s ability to be effective in solving the specific problem found by the Secretary," the decision said.

The president's authority to modify Section 232 import restrictions is not unlimited, however, the Federal Circuit said. "This does not mean that the statutory purpose is furthered by permitting any presidential imposition after the 15-day period, even an imposition that makes no sense except on premises that depart from the Secretary’s finding, whether because the finding is simply too stale to be a basis for the new imposition or for other reasons." But the appeals court declined to clearly articulate limits. "This case involves presidential adherence to the key finding of a need for a certain capacity-utilization level, with no indication of staleness of that finding. We have no occasion to rule on other circumstances or to decide what aspects of presidential decisions under [Section] 1862 are judicially reviewable," it said.

Judge Jimmie Reyna dissented from the decision. Accusing his colleagues of going beyond legislating from the bench and even amending the U.S. Constitution itself, he said that the majority excessively expanded executive authority with the decision. Reyna said the majority erred by overlooking the context of Section 232 as a "trade statute," in an area where the Constitution gives Congress supreme authority. He also said the majority failed to articulate a reason to deviate from the "plain words" of Section 232, and did not account for the legislative history showing Congress' intention to eliminate the practice of "perpetually modifying earlier actions without obtaining a new report from Commerce and without reporting to Congress."

Reached for comment, Matt Nolan of Arent Fox, who represents plaintiff Transpacific, and Julie Mendoza of Morris Manning, who represents plaintiff Borusan Mannesman, both expressed their disappointment in the majority's decision. "We are assessing our next steps," Mendoza said. "We are evaluating further appeal options," Nolan said.

(Transpacific Steel LLC et al. v. U.S., CAFC # 2020-2157, dated 07/13/21, Judges Reyna, Taranto and Chen. Attorneys: Matthew Nolan of Arent Fox for all plaintiffs-appellee Transpacific LLC; Julie Mendoza for plaintiff-appellees Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Borusan Mannesmann Pipe U.S. Inc.; Lewis Leibowitz for plaintiff-appellee Jordan International Company; Tara Hogan for defendant-appellant U.S. government)