US Tells CAFC That Section 232 'Derivative' Extension Part of 'Original Plan of Action'

President Donald Trump's move to expand the Section 232 steel and aluminum tariffs onto "derivative" products was part of the president's original "plan of action," thus making the expansion legal, the U.S. argued in a June 10 reply brief at the U.S. Court of Appeals for the Federal Circuit. Centering the reply on a key Federal Circuit opinion, Transpacific Steel v. U.S., which said the president can carry out certain Section 232 tariff action beyond procedural deadlines, DOJ told the appellate court that the derivatives expansion sought to carry out the president's original goal of reaching an 80% domestic capacity utilization rate for steel and aluminum.

In Transpacific, the Federal Circuit said that the president was allowed to raise the duties on Turkish steel beyond the 105-day deadline that runs from a report from the commerce secretary that predicates the tariff action (see 2107130059), reversing a Court of International Trade decision that strictly applied the deadline (see 2104050049). The appellate court said that the president could buck these deadlines without a new report so long as the tariff move was part of the original plan of action as laid out in the report.

The appellees sought to prove that the standard established in Transpacific didn't apply to the president's move to expand the tariffs onto steel and aluminum derivative products. One such argument was that the derivatives expansion was based on "stale" information, given the two-year gap between the original tariff pronouncement and the expansion.

The U.S. contested this point, arguing that a "simple examination of the facts" shows why the staleness argument is bogus since the derivative expansion was clearly meant to help achieve 80% domestic industry utilization. First, DOJ pointed out that the expansion was not merely a disjointed ramping up of the tariffs, but rather it was one in a line of "incremental steps in pursuit of a constant, well-defined, and oft-repeated objective" laid out in the president's initial proclamation.

Further, DOJ argued that the tariff expansion was needed to help reach the 80% utilization goal by cracking down on "circumvention" of the tariffs. Foreign producers were circumventing the tariffs by shifting greater export volumes to the products' derivatives, undermining the stated goal of the tariffs, the U.S. said. "The President roundly agreed with the Secretary’s assessment, and found it 'necessary and appropriate' to adjust his tariff yet again -- this time to close that loophole," the brief said. "Those factual findings, and the President’s exercise of judgment in response to the Secretary’s monitoring of the situation, are not subject to judicial review." Thus, the appellees cannot "seriously" argue that the move was based on stale information, the U.S. argued.

The appellees further argued that the president's ability to expand the tariffs should be limited to products mentioned in the "universe of merchandise" mentioned in the original secretary's report. The U.S. told the Federal Circuit that this claim has no textual support, relies on a "fundamental misunderstanding" of the statute more generally, and is "textually irrational."

The U.S. said the general purpose of the statute is to "alleviate" the national security threat identified by the secretary. "Section 232’s purpose should carry great weight in this case," the brief said. "Here, there is no meaningful dispute that the reason why the President issued [the expansion] was to supplement [the original tariffs]. In fact, that supporting role is the only reason why [the expansion] exists. It was a tailored adjustment to [the original tariffs], and its purpose was to address clear 'circumvention' efforts by foreign producers and help better achieve [the original tariffs'] stated objective."