Latest Constitutional Challenge to Section 232 Duties

Beginning in March 2018, President Trump issued proclamations imposing duties on steel and aluminum imports into the United States.  In response, one company filed a complaint last week alleging that the administration of these duties is unconstitutional.  Thyssenkrupp Materials, NA, Inc. and several of its related operating divisions, filed a complaint with the Court of International Trade (CIT) last week seeking to challenge the Section 232 duties.

The complaint alleges improper administration of the exclusion request process.  The Presidential Proclamations imposing the Section 232 tariffs on steel and aluminum imports indicated that the Department of Commerce be permitted to “exclude from any adopted import restrictions” certain steel and aluminum “articles.”   However, the final rules promulgated by the Commerce Department approve exclusions only to the “individual or organization that submitted the request” and that “[o]ther individuals or organizations that wish to submit an exclusion request for steel or aluminum product that has already been the subject of an approved exclusion request may request an exclusion under this supplement.”

As a result, the complaint alleges that the Commerce Department has unfairly and arbitrarily granted exclusions of steel and aluminum products to some requesters, yet the same products imported by a different party may have to pay the duties on items subject to Section 232.   Thyssenkrupp lists 27 non-exhaustive subheadings under which it has imported since the Section 232 duties went into effect.  While Thyssenkrupp paid duties on these imports, the complaint alleges that other companies had the benefit of having their products under the same subheadings excluded from the duties.

The complaint alleges that this unfair treatment is a violation of Uniformity Clause of the Constitution which states “. . . all duties, imposts, and excises shall be uniform throughout the United States . . . .”  The complaint further seeks relief on grounds that Section 232 is an unconstitutional delegation of authority from Congress to the Executive Branch, that the exclusion process is arbitrary and capricious.

This lawsuit is among many over the years challenging the validity of Section 232.  Last year, for example, the CIT ruled that Section 232 of the Trade Expansion Act of 1962 was properly delegated from Congress to the Executive Branch.

If you need advice about the Section 232 tariffs on steel and aluminum, please contact Camelia Mazard at cmazard@dbmlawgroup.com or (202)589-1837.