Section 232 Tariffs on Steel Derivatives - Update

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. An opinion was issued by the U.S. Court of International Trade (CIT) in April 2021 that invalidated the Presidential Proclamation 9980, which imposed 25% tariffs on these derivate steel products pursuant to Section 232 of the Trade Expansion Act of 1962. The CIT found in favor of plaintiff PrimeSource Building Products, Inc., which argued that the proclamation was issued after a key statutory deadline had passed that required presidential action. For additional background on the case and CIT’s dismissal of other claims, see Updates of April 6, 2021 and January 28, 2021.

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.”

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.”

Crane Trade Services can assist you with questions regarding this matter.  For assistance please contact CWTSConsulting@craneww.com.