The U.S. Court of International Trade ruled last month that many tariffs imposed by President Trump in 2018 were illegal. The tariffs included a 10% rate on almost all countries, except Argentina and Brazil, which have reciprocal rates. However, the court’s ruling was stayed by an appeals court while it is under review, meaning the tariffs remain in effect for now.
Appeals Court Stay
On Tuesday night, the Federal Circuit Court of Appeals granted another stay, blocking enforcement of the lower court ruling pending appeal.
Background on Section 232
The case centers around Section 232 of the Trade Expansion Act of 1962, which allows presidents to impose tariffs on national security grounds without congressional approval. In March 2018, President Trump invoked Section 232 to impose a tariff on imported steel and aluminum products from most countries. Some countries were exempted from these tariffs due to their own retaliatory measures against U.S. goods or because they had agreed to negotiate with Washington over trade terms related to steel and aluminum exports.
Legal Challenges
In response to these exemptions and exclusions granted by Commerce Secretary Wilbur Ross, several companies challenged them as unlawful under federal law for not following proper procedures. A group of companies led by Nucor Corp., including:
- U.S.-based Steel Dynamics Inc.
- AK Steel Corp.
- ArcelorMittal USA LLC
- Nippon Steel & Sumitomo Metal Corp.
- Tata Steel Ltd.
- ThyssenKrupp AG
filed a lawsuit against Commerce Secretary Wilbur Ross in May, seeking an injunction against enforcement of any exclusion or exemption granted prior to June 1st based on reasons other than national security considerations.
Plaintiffs’ Arguments
The plaintiffs argued that any exclusion or exemption should only be based on national security considerations as required under Section 232. They claimed that granting such exceptions violated public notice requirements set forth in Executive Order No. 13-19, which mandates that all agencies issuing regulations affecting commerce must provide advance notice before implementing new rules.
Government’s Defense
In response, Commerce Department lawyers argued that there was no evidence showing harm caused directly from actions taken outside the intended purpose of protecting domestic industries. They contended that the duties aimed to protect jobs in the U.S. rather than abroad, where production costs are lower, giving unfair competitive advantages to overseas producers.
Court’s Decision
After hearing arguments from both sides, Judge Leo T. Moore ruled partially in favor of the plaintiffs, stating that certain types of exemptions were illegally issued, violating the public notice requirement contained within Executive Order 13-19. However, he did not fully agree with the plaintiffs, as he could not find evidence proving direct harm resulting solely from actions taken outside the intended purpose.
He ordered the defendants (Commerce Department) to remove non-security-related exclusions effective immediately but stayed his order to allow the government time to appeal the decision.
Ongoing Trade Tensions
This development comes amid ongoing tensions between Washington D.C. officials and international trade negotiations involving multiple nations, including China, Japan, South Korea, Canada, and Mexico. Representatives from these countries continue to push back against the hardline stance adopted by the U.S. regarding various issues, including protectionism, economic nationalism, human rights, labor practices, and climate change mitigation efforts.
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