New Section 232 CIT Decision Paves Way for Import Litigation

By: Adrienne Braumiller, Partner & Founder, Braumiller Law Group

On July 14, 2020, the U.S. Court of International Trade (CIT) ruled that the doubling of Section 232 duties on imports of Turkish steel after the initial imposition of the original national security duties at 25% is a violation of the Fifth Amendment guarantee of equal protection and due process. As a result, the Presidential Proclamation raising the Turkish steel duties to 50% is unlawful and void. With this win for importers of Turkish steel comes a lantern-lit pathway for more of its kind.

More than two years ago, the President imposed national security tariffs on imports of steel and aluminum from all countries under the authority of Section 232 of the Trade Expansion Act of 1962 (Steel – 25%, Aluminum – 10%). The measures, meant to protect the domestic steel and aluminum industries, invited countries to strike a trade deal concerning steel and aluminum to become exempt, or exempt up to a certain quota, from the additional duties. Several countries were able to come to this agreement after the fact, including Canada and Mexico, but one country ended up going in the opposite direction in relation to steel. Steel imports from Turkey, beginning in August 2018 through May 2019 were subject to additional 50% tariffs.

Transpacific Steel LLC, importer of Turkish steel, brought suit against the U.S. Government alleging the hike in duties on Turkish steel was unlawful and lacked a nexus to national security measures. The CIT found that the proclamation doubling the duty on the subject imports was indeed unlawful, and the importers were entitled to a refund of the 25% duty difference for imports during this time period. The CIT rested its opinion on the very specifically prescribed order and time limit of imposing Section 232 national security measures. In 1988, the statutory process was altered as to clearly define time limits on the President’s ability to act on Commerce’s affirmative finding that investigated imports are a threat to U.S. national security.

Once a Section 232 investigation is commenced, the Secretary of Commerce has 270 days to submit a report of findings to the President. Within 90 days of receiving the report, the President must decide whether he or she concurs with the findings and must decide whether to take action. If the President decides to take action, it must be taken within 15 days of this decision. Therefore, the President only has a combined 105 days to take action once Commerce delivers its negative findings.

Commerce delivered its steel findings to the President on January 11, 2018. Action was taken for imports of steel from Canada, Mexico, and the European Union 141 days later. Additional action was taken on Turkish steel 214 days after the initial report.

The potential progeny from this case is currently untapped. There is strong legal authority for similar cases where Section 232 duties on steel or aluminum were imposed later than the 105 days. For importers interested in exploring their options for refunds on Turkish steel paid during the period in which the tariffs doubled, or avenues for steel and aluminum imports from Canada, Mexico or the European Union, please contact us.