On April 24, 2023, plaintiffs in an ongoing challenge at the U.S. Court of Appeals for the Federal Circuit filed a Petition for Rehearing En Banc of their argument that former President Donald Trump improperly imposed additional Section 232 national security tariffs on derivatives of certain imported steel articles. In their petition for consideration by the full court, the petitioners — PrimeSource Building Products, Inc. and Oman Fasteners, LLC — state that the prior three-judge panel, which heard arguments on the matter and upheld the president’s authority to expand national security tariffs even after certain statutory deadlines had passed, ignored the plain language of Section 232 of the Trade Expansion Act of 1962.

The petitioners argue that if the three-judge panel’s decision stands, “the President will enjoy unbounded legislative power to regulate foreign trade—to take any action, at any time, targeting any imported product, so long as at any point in the past, the Secretary [of Commerce] made a threat determination regarding either the targeted product or any material used to make that product. Given its profound expansion of the Executive’s power, this case merits rehearing by the Court en banc.” In addition to alleging that the plain language of the statute was ignored, the petitioners also argue that the panel abandoned strict limitations on presidential power under Section 232 that were set forth in an earlier appellate decision in Transpacific Steel LLC v. United States. In doing so, the three-judge panel, the petitioners claim, has done “far greater violence to the procedural safeguards Congress built into Section 232.” In seeking an en banc rehearing, the petitioners are asking a full Federal Circuit panel to affirm the U.S. Court of International Trade’s original decision invalidating the Section 232 duties on derivatives of certain imported steel products.

Our Update of  February 8, 2023 provides details on the three-judge panel’s opinion that reversed the CIT decision. See also Updates of April 6, 2021 and January 28, 2021 for additional background on the case and the CIT’s dismissal of other claims.

On February 7, 2023, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit (CAFC) issued an opinion in PrimeSource Building Products, Inc. v. United States et al., Case No. 2021-2066, reversing a lower court decision and upholding the imposition of additional Section 232 national security tariffs on derivatives of certain imported steel articles implemented by former President Donald Trump. In April 2021, the U.S. Court of International Trade (CIT) issued an opinion invalidating Presidential Proclamation 9980 that imposed 25% tariffs on these derivative steel products pursuant to Section 232 of the Trade Expansion Act of 1962. The CIT found in favor of plaintiff PrimeSource Building Products, Inc., a U.S. importer, which argued that the proclamation was issued after a key statutory deadline had passed that required presidential action. See Updates of April 6, 2021 and January 28, 2021 for additional background on the case and CIT’s dismissal of other claims.

In the CAFC opinion, the judges reversed the CIT’s ruling that the government waited too long to act, stating that “the President was making a ‘contingency-dependent choice[] that [is] a commonplace feature of plans of action.’” The judges noted that President Trump utilized “a tool that he could have used in the initial set of measures and later found important to address a specific form of circumvention Congress recognized when it authorized coverage of derivatives of the articles whose imports the Secretary found to threaten national security.” The judges determined “[t]here is no textual basis for a specific time limit on adjustments under a timely adopted plan” and that former President Trump had the authority to impose the tariff on steel derivatives. The judges noted that impositions under Section 232 “have on numerous occasions been modified many years after they were first adopted.”

The opinion relies on and references frequently the CAFC’s decision in Transpacific Steel LLC v. United States, in which it upheld “a presidential proclamation that increased tariffs on steel beyond Proclamation 9705’s rate, concluding that when the President, within the § 232 time limits at issue, adopts a plan of action that contemplates future contingency-dependent modifications, those time limits do not preclude the President from later adding to the initial import impositions in order to carry out the plan to help achieve the originally stated national-security objective where the underlying findings and objective have not grown stale.” (For additional details on the Transpacific ruling, see Update of July 13, 2021). In upholding Proclamation 9980 in this PrimeSource appeal, the judges found that there was no staleness or other reason for “overriding the President’s judgment” and that, in fact, the Department of Commerce had been instructed to continue monitoring imports of steel articles and report any circumstances that might require further action. Once informed that steel derivative imports had increased in an apparent effort to circumvent Section 232 duties, the president had the authority to extend the duties. The opinion concludes that Proclamation 9980 “comes within the [CAFC’s] interpretation of § 232 we adopted in Transpacific.”

On August 23, 2021, the plaintiff group led by Transpacific Steel LLC filed a petition with the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) requesting a rehearing by all the Federal Circuit judges of the July 2021 three-judge panel decision reversing the ruling of the U.S. Court of International Trade (CIT) that former President Donald J. Trump violated the provisions of Section 232 of the Trade Expansion Act of 1962 (Section 232) by increasing tariffs on steel imports from Turkey beyond those previously implemented under an earlier presidential proclamation. In the July 2021 ruling, the Federal Circuit panel ruled 2-1 that former President Trump did not depart from the finding of the Secretary of Commerce of a national security threat and did not violate the process and timing standards applicable to the Secretary’s finding of a national security threat. See July 13, 2021 Update.

The plaintiff group seeks a rehearing before the full membership of the court “because the Majority [in the panel hearing] disregarded important statutory provisions in Section 232, reducing them to irrelevance,” and, if the decision stands, “Presidents will be able to usurp congressional authority to set tariffs by simply receiving an affirmative ‘threat to impair’ report from the Secretary of Commerce, who serves at the President’s pleasure.” The plaintiff group specifically argues that the panel majority overlooked or misapplied three points of law and fact:

  • Misread Section 232 as providing the President unfettered discretion to increase tariffs on, or otherwise adjust, imports at any time following an affirmative report by the Secretary of Commerce.
  • Transformed Section 232 into “an unlimited delegation of legislative power to the President to regulate international commerce.”
  • Misconstrued the equal protection guarantees of the Fifth Amendment to the U.S. Constitution.

In seeking a full rehearing, the plaintiff group asks that the Federal Circuit uphold the CIT’s July 14, 2020 decision that former President Trump’s tariff increase on steel imports from Turkey was unlawful. See July 14, 2020 Update.

On July 13, 2021, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) issued a majority 2-1 opinion reversing the ruling of the U.S. Court of International Trade (CIT) that former President Donald J. Trump violated the provisions of Section 232 of the Trade Expansion Act of 1962 (Section 232) by increasing tariffs on steel imports from Turkey beyond those previously implemented under an earlier Presidential proclamation. See Update of July 14, 2020 for more details on the CIT ruling. The Federal Circuit ruling remands the case to the CIT for an entry of judgment against the plaintiff group led by Transpacific Steel LLC.

The plaintiffs had argued that the Trump administration’s actions violated both the statutorily-mandated procedures for a Section 232 national security investigation and the U.S. Constitution’s guarantee of equal protection under law. In its opinion, the CIT agreed, determining that the subsequent presidential proclamation implementing additional tariffs solely affecting Turkish steel (i.e., raising the duty rate from 25% to 50%) was issued well after the statutory time period allowed under Section 232. The CIT also found that former President Trump acted “without a proper report and recommendation by the [Secretary of Commerce] on the national security threat posed by imports of steel products from Turkey.”

The Federal Circuit, however, ruled that former President Trump did not depart from the finding of the Secretary of Commerce (Secretary) of a national security threat and did not violate the process and timing standards applicable to the Secretary’s finding of a national security threat. According to the decision, the statute “empowers and directs the President to act to alleviate threats to national security from imports” and “[t]he key issue is whether [the statute] permits the President to announce a continuing course of action within the statutory time period and then modify the initial implementing steps in line with the announced plan of action by adding impositions on imports to achieve the stated implementation objective. We conclude that the President does have such authority in the circumstances presented here.”

Overall, the Federal Circuit found that the president “specifically adhered to the Secretary’s underlying finding of the target capacity-utilization level that was the rationale for the predicate threat finding,” and that the “initial presidential action (in March 2018) itself announced a continuing course of action that could include adjustments as time passed.” In a detailed review of the legislative history and congressional intent for the Trade Expansion Act of 1962 and its subsequent amendments, the Federal Circuit found that this history undermined the CIT’s ruling, concluding “that the increase in the tariff on steel from Turkey by Proclamation 9772 did not violate [the provisions of Section 232].” The Federal Circuit also concluded that Proclamation 9772 did not violate the equal protection guarantees of the Fifth Amendment’s due process clause.

The Federal Circuit decision made clear that the judges were not addressing “other circumstances that would present other issues about presidential authority to adjust initially taken actions without securing a new report with a new threat finding from the Secretary.” As a result, the Federal Circuit indicated, the immediate impact of this ruling should be limited to the facts and issues surrounding the implementation of additional duties on imports of Turkish steel.

In his dissenting opinion, Judge Jimmie Reyna started by quoting President John Adams, stating that “Power must never be trusted without a Check” and adding that the “essential question posed by this appeal is whether Congress enacted [Section] 232 to grant the President un-checked authority over the Tariff.” He based his dissent on three grounds: (1) The “majority overlooks the context of Section 232 as a trade statute” and Congress delegated only narrow authority to the President over trade; (2) Section 232 is “written in plain words that evoke common meaning and application” and the majority offers no clear reason “to diverge from that plain language,” and (3) Section 232’s “legislative history shows that Congress intended, for good reason, to end the Executive Branch’s historical practice of perpetually modifying earlier actions without obtaining a new report from the Secretary of Commerce and without reporting to Congress.”

The next steps in this litigation remain unclear. After remand to the CIT, the plaintiffs have the option of challenging the decision by either seeking a review by the full Federal Circuit or appealing to the U.S. Supreme Court.

On July 14, 2020, a three-judge panel of the U.S. Court of International Trade (CIT) ruled in Slip Opinion 20-98 that a proclamation President Donald Trump issued increasing Section 232 duties on steel imports from Turkey beyond those previously implemented under a prior proclamation violates statutorily-mandated procedures and the Constitution’s guarantee of equal protection under law. Lead plaintiff Transpacific Steel LLC (Transpacific) argued that it should be refunded additional tariffs paid pursuant to Presidential Proclamation 9772 on certain imports of Turkish steel. This proclamation solely affected Turkish steel – raising the duty rate from 25 percent to 50 percent – and was issued well after the Section 232 national security investigation of steel imports had concluded and well after President Trump issued his initial Presidential Proclamation 9705 imposing a 25 percent tariff duty on steel products from several countries.

Transpacific argued that the statute requires the President to make a decision within 90 days of receipt of the Secretary of Commerce’s report and recommendation and to implement any chosen action within 15 days of that decision. The first proclamation was issued on March 8, 2018. The second proclamation was issued on August 10, 2018, which was outside of the statutory time period and was not the result of any formal Department of Commerce report. Attorneys for the U.S. government argued that Congress “inten[ded] to confer continuing authority and flexibility on the President to counter the threat identified” as confirmed by the “language, long-standing congressional understanding, and the purpose of the statute . . .” The three-judge panel agreed with the plaintiffs that the statutory language is clear and that Proclamation 9772 “was issued far beyond this temporal window.” The opinion notes that there is nothing in the statute to support the continuing authority to modify proclamations outside of the stated timelines and that the government offered “no citation to the statute nor to the recent legislative history to support” its theory that the President is permitted to modify his previous proclamation under the provisions of Section 232 of the Trade Expansion Act of 1962, as amended. The CIT also found that, in addition to acting outside of the statutory time limitations, President Trump acted “without a proper report and recommendation by the Secretary on the national security threat posed by imports of steel products from Turkey.”

The plaintiffs also raised a Fifth Amendment equal protection challenge to Proclamation 9772, arguing that the second proclamation discriminates between similarly situated importers based on the origin of their imports “without rational justification” and “that the government has offered no sensible reason for targeting imports from Turkey and that no reasonable rationale is apparent.” While the ruling found that national security is a legitimate purpose, it concluded that “[s]ingling out steel products from Turkey is not a rational means of addressing that concern. Section 232 does not ban the President from addressing concerns by focusing on particular exporters, but the decision to increase the tariffs on imported steel products from Turkey, and Turkey alone, without any justification, is arbitrary and irrational.” As a result, the CIT determined, Proclamation 9772 denied the plaintiffs equal protection under law.