DOJ Makes Opening Arguments in Case Over Section 232 Tariffs on Steel 'Derivatives'

Section 232 allows the president to expand tariff action beyond procedural time limits laid out in the law, as he did when he expanded the tariffs to cover steel and aluminum derivatives over a year after the tariffs were initially imposed, the Department of Justice told the U.S. Court of Appeals for the Federal Circuit in its Jan. 3 brief. Relying heavily on a recent CAFC opinion on an increase of tariffs on Turkish steel, DOJ said the president is allowed to expand Section 232 tariffs to products beyond the ones laid out in the original commerce secretary report as long as it's part of the original "plan of action" (PrimeSource Building Products v. U.S., Fed. Cir. #21-2066).

In the key decision, Transpacific Steel v. U.S., the Federal Circuit said that President Donald Trump was allowed to raise the duties on Turkish steel beyond the 105-day deadline that runs from the Commerce report (see 2107130059), reversing a Court of International Trade decision that strictly applied the deadline (see 2104050049). Questions lingered, however, after Transpacific, over how this would impact the remaining litigation over the president's use of Section 232. Some lawyers differentiated the tariff hike on the same products in the Transpacific case from an extension of the tariffs to new products in the PrimeSource case (see 2107150051).

DOJ, in its opening brief, argued that any such difference is irrelevant. While CIT also recognized such distinctions in its PrimeSource decision, the U.S. said the cases need not be differentiated since they stem from the same presidential determination. Section 232 allows the president to adjust duties against imports of derivative products even if the derivatives were not subject to the Commerce secretary's initial investigation, since it is still part of the original plan of action, DOJ said. The need for the duties on derivatives may not be immediately clear, so requiring that the president anticipate the extent to which he will need to use the duties undermines the effectiveness of the law, the government argued.

The U.S. frequently tapped the Transpacific decision in its brief. DOJ echoed the decision in its argument that strictly enforcing the deadline defies "commonsense linguistic" points made in the statute. As the court pointed out in Transpacific, violating the deadlines in the statute doesn't necessarily run against its original purpose, which is to take action to adjust imports. For example, an instruction to "return the car by 11 p.m." still requires the car to be returned even after 11 p.m., the brief said.

DOJ argued that CIT failed to account for the president's inherent authority when it limited the president's power in striking down the derivative tariffs. The power to reconsider or modify an action is inherent in an official's power to act regardless of explicit statutory authority, the brief said. "Thus, even when a statute does not specify how and when an official may reconsider or modify, courts should not assume, as the trial court did here, that an official lacks authority to take further action."

Transpacific also rejected an argument made by plaintiffs in both the Transpacific and PrimeSource actions, that where Congress intended for the president to act beyond the 105-day limit, it said so. The plaintiffs cited a section of the statute that allows for action beyond the time limits if the president chooses to resolve the national security threat via negotiation with another country. In Transpacific, the Federal Circuit said that this provision is superfluous given its interpretation that the president can take continuing action. "In sum, the trial court misread a provision designed to spur presidential action as barring the very action that Congress was attempting to spur," DOJ's brief said.