Last week saw a flurry of new activity around section 232 of the
Trade Expansion Act of 1962. That is the statute that authorizes
the President (following an investigation by the Commerce
Department) to take action to "adjust" imports of an
article and its derivatives "so that such imports will not
threaten to impair the national security." Section 232 tariffs
already are in place for imports of steel, aluminum, copper, and
autos and auto parts. Earlier this year, the Commerce Department
announced 9 new section 232 investigations. Then last week, it was
announced that Commerce would initiate two more such investigations
(bringing the pending total to 11): one involving personal
protective equipment and another involving robotics. Also last
week, President Trump announced that section 232 tariffs soon will
be imposed on certain trucks, furniture, and pharmaceuticals.
The activity under section 232 is unprecedented, heralding what
amounts to a 232 renaissance. The Administration seems to take
comfort from the apparent breadth of the President's discretion
under this statute and the fact that his exercise of that
discretion already has withstood judicial scrutiny. See American
Inst. for Int'l Steel, Inc. v. United States, 806 F. App'x
982 (Fed. Cir. 2020). Moreover, given pending challenges to the
President's reliance on the International Emergency Economic
Powers Act (IEEPA) as a basis for imposing tariffs on imports, the
Administration may well see section 232 as a crucial part of its
"plan B" in the event that the IEEPA tariffs do not
withstand judicial scrutiny.
But one should not assume that the section 232 tariffs are
impervious to legal challenge. As the section 232 drama unfolds, I
am watching three developments in particular as possible triggers
for legal action. One concerns the sheer volume of Commerce-led
section 232 investigations. With 11 cases going on at once and
limited staff available to manage those cases, will the Commerce
Department findings be sufficiently robust to withstand challenge?
Or will the findings and underlying investigations be vulnerable in
ways that could in turn make any resulting presidential action
vulnerable?
Second, it is notable that the President announced forthcoming tariffs on heavy trucks, furniture, and pharmaceuticals even though the Commerce Department has not yet issued any findings in the relevant section 232 investigations. Or at least it has not done so publicly. That is not surprising, since the relevant investigations only began in March and April of this year. Section 232 contemplates a Commerce investigation taking as long as nine months. If the President's announcement preempted the Commerce findings, the appearance of prejudgment could be an additional source of vulnerability.
Finally, it is notable that existing section 232 actions related to steel, aluminum, and auto parts have relied increasingly on the President's authority to take action not only with respect to the article investigated by Commerce but also "derivatives" of that article. As the statute does not define "derivatives," one can imagine a party challenging particular tariffs on the grounds that the Administration has interpreted the term too broadly, sweeping in goods that cannot reasonably be labeled derivatives of the investigated good.
As the section 232 renaissance continues, affected parties
should follow these developments closely.
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