Effects of CAFC TransPacific Decision Unclear for Sections 232, 301 Litigation, Lawyers Say

The U.S. Court of Appeals for the Federal Circuit's July 13 decision in favor of President Donald Trump's Section 232 tariff increase for Turkish steel past the 105-day deadline set by statute may be a serious setback for Turkish steel exporters (see 2107130059), but what it means for the remaining litigation challenging the president's authority under Section 232, Section 301 or any other statute granting the executive tariff powers is less clear, lawyers said in the days following the decision.

In particular, another broad Section 232 challenge is working its way through the Federal Circuit, PrimeSource Building Products Inc. v. U.S. (see 2104050049). In the case, the Court of International Trade ruled that the president imposed tariffs on steel and aluminum "derivatives" beyond the 105-deadline set from the submissions of a Commerce Department report on the need for the tariffs. "With respect to the challenges to duties on derivative steel and aluminum products, this may impact arguments around the timing of those duties," Lawrence Friedman of Barnes Richardson said in a July 13 blog post. "Separate from the timing issues, however, is the question of what constitutes a derivative product that can be covered by Section 232 duties based on the original Commerce Department Report."

Added Chris Kane of Simon Gluck in a LinkedIn post: "The President has leeway as long as his actions are in furtherance of national security concerns on which section 232 duties on aluminum and steel are served by otherwise 'out of time' impositions of tariffs." This ruling gives the government defense further rationale in which to support their position in the national security tariff cases, Kane added in an email. This burden may not be easily overcome by the challengers to the tariffs.

The massive Section 301 presents a different story, however. Since Section 301 falls under a different statute than Section 232, it is even less clear how the Transpacific Steel LLC et al. v. U.S. opinion may surface in the litigation over the lists 3 and 4A China tariffs. "Most important, Section 301 is a separate statute with different language and different history," Friedman said. "Possibly in relation to the Section 301 case, the Federal Circuit noted in Transpacific that 'We do not address 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.'"

The decision may hardly be applicable to the Section 301 litigation since the level of deference provided to the government in national security statutes is higher than that of intellectual property ones, as is the case in the Section 301 litigation, Kane said. "Even in the instance of national security and 232 tariffs, the CAFC did not grant carte blanche to the President to do whatever he wanted whenever he wanted," another post said. "The questions of the retroactivity of 301 exclusions and the propriety of the implementation of List[s] 3 and 4A duties in the China [Section] 301 cases now at the Court of International Trade remain viable."

Friedman believes it likely that the Transpacific case will see further litigation. "An initial possibility is a request for a rehearing by the entire Federal Circuit," he said. "The alternative is an immediate petition for review by the Supreme Court."