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Trump’s Turkish Steel Duties Unconstitutional, Trade Court Says

July 14, 2020, 4:27 PM

President Donald Trump’s decision to double national security tariffs on Turkish steel was unlawful, because it was procedurally deficient and singles out importers in violation of the constitutional guarantee of equal protection, the U.S. Court of International Trade said.

In March 2018 Trump imposed 25% tariffs on steel imports from around the world using his authority under Section 232 of the Trade Expansion Act of 1962. This law allows the president to impose tariffs or other restrictions on imports if he determines these goods pose a threat to national security. The president argued that steel imports were threatening to weaken the U.S. steel industry to the point where it wouldn’t be able to meet production requirements to adequately respond to a national emergency.

In August of that year, in Presidential Proclamation 9772, Trump announced he was doubling the Section 232 tariffs to 50% on steel from Turkey. U.S. importer Transpacific Steel LLC challenged this move, seeking refund of a purported $2.8 million in additional tariffs it had to pay.

The trade court agreed that Proclamation 9772 was unlawful.

Section 232 lays out specific procedural steps and time limits an administration must follow before issuing national security tariffs. The Commerce secretary must investigate and prepare a report to the president on the national security impacts of the imports. The president must decide within 90 days of receiving this report whether to impose restrictions, implement them within 15 days after that, and inform Congress of his reasoning.

The Trump administration didn’t follow these procedures by expanding the Turkish steel tariffs well more than 90 days after Commerce’s original steel report, the trade court said.

“National security is dependent on sensitive and ever-changing dynamics; the temporal restrictions on the President’s power to take action pursuant to a report and recommendation by the Secretary is not a mere directory guideline, but a restriction that requires strict adherence,” the court said. This procedure ensures the president has the most up-to-date national security guidance, it added.

The court rejected the government’s contention that the president has the authority to modify preexisting Section 232 tariffs outside the stated timelines.

Moreover, the steel report evaluated the collective impact of global steel imports on U.S. national security, and not the impact of imports from Turkey individually. Therefore “the decision to increase the tariffs on imported steel products from Turkey, and Turkey alone, without any justification, is arbitrary and irrational” in violation of equal protection, the court said.

The opinion was written by Judge Jane A. Restani and joined by Judges Claire R. Kelly and Gary S. Katzmann.

Arent Fox LLP represents Transpacific. Morris, Manning, & Martin LLP represents Turkish steel pipe producer Borusan Mannesmann Boru Sanayi ve Ticaret A.S. The Law Office of Lewis E. Leibowitz represents the Jordan International Co.

The case is Transpacific Steel LLC v. United States, Ct. Int’l Trade, No. 19-00009, 7/14/20.

To contact the reporter on this story: Brian Flood in Washington at bflood@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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