After the tariffs went into effect, an importer of Turkish steel sued the Trump administration in the USCIT, arguing (among other claims) that the president cut corners in the procedures required by law. In November 2019, a unanimous three‐judge panel agreed that “the President’s expansive view of his power under Section 232 is mistaken, and at odds with the language of the statute, its legislative history, and its purpose.”30
Despite the court’s order that the Trump administration’s “expansive view” of presidential power is “mistaken,” however, President Trump soon advanced an even more expansive view of his power. On January 24, 2020, Trump announced that he was broadening the original “national security” tariffs to include “derivative” steel and aluminum products such as nails, pins, and staples.31 Again, he pointed to the original proclamations as his source of legal authority32—the same justification that the USCIT had denied weeks earlier. Furthermore, the tariffs were scheduled to go into effect on February 8, 2020, just 16 days after the announcement, leaving little room for public consultation and thorough consideration of the impact of such actions. Several companies filed lawsuits against these tariffs at the USCIT, challenging the actions being taken outside Section 232’s prescribed 90‐day window, the lack of public consultations, and disrespect to their due process. Since February 13, 2020, the USCIT has granted injunctions to these companies, preventing U.S. Customs and Border Protection from collecting tariffs on their “derivative” steel and aluminum imports, until it hears their cases.33
Simply put, not only did President Trump ignore the court as he rushed these tariffs out the door without procedures required by Congress, but he also injected the entire Section 232 process with uncertainty as businesses and trading partners clamored to respond. Just the announcement of tariff actions has been shown to rattle stock markets.34 The “reinstatement” of aluminum tariffs against Canada in August 2020 is also illustrative of the Trump administration’s disregard for procedural requirements. The administration argued that such action was allowed under the agreement to lift the initial tariffs in May 2019. The agreement said that the parties could enter into consultations and then take action if “imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time.”35 The Canadian government, however, countered that no such negotiations occurred, and Canadian Deputy Prime Minister Chrystia Freeland called the decision “unnecessary, unwarranted and entirely unacceptable.”36 After Canadian threats to retaliate, the tariffs were quickly lifted, but any goodwill achieved by the implementation of the United States–Mexico–Canada Agreement months earlier quickly dissipated.
Equally concerning in this regard is the process by which domestic industry was granted exemptions from tariffs. In addition to international exemptions for key trading partners, the Trump administration set up a tariff exclusion process for domestic industry, which also allows U.S. companies to object to these requests.37 The process was no less arbitrary, erratic, and lacking in transparency than the reinstatement of tariffs and the opaque manner by which “negotiations” were conducted. In October 2019, the U.S. Department of Commerce’s Office of the Inspector General issued a memorandum stating that “the Section 232 exclusion request review process is neither transparent nor objective” and cited concerns of “the appearance of improper influence in decision‐making for tariff exclusion requests.” For example, “of the more than 100 meetings and telephone conversations between Department officials and interested parties that we examined for the period March 1, 2018, through March 31, 2019, none had an official record of the subjects discussed during the meeting.”38 This lack of transparency should have raised an alarm.
The volume of requests submitted amplify concerns of abuse and crony capitalism. Recent estimates suggest that 169,929 steel and 19,288 aluminum exclusions requests have been made as of September 2020.39 For steel requests, 56 percent were approved and 15 percent denied, while for aluminum requests, 58 percent were approved and 11 percent denied. Many are still pending. Economist Christine McDaniel has observed that objections from industry play an important role in the denial of requests, since the Commerce Department will deny requests if the product is domestically available.40 Four major steel‐producing companies, Nucor, US Steel, Timken, and AK Steel, have made up more than half of all objections, though as McDaniel notes, “it is not clear whether Commerce confirms that the steel or aluminum were actually produced and delivered to the US manufacturer that filed (and was denied) the exclusion.”
That few companies benefit from these tariffs while the rest of the economy shoulders the costs is enough to question the reasonableness of such actions.
Finally, the Trump administration abused statutory ambiguity with respect to the formal publication of Commerce Department findings and recommendations in Section 232 investigations. In particular, the agency’s report must be submitted to the president and “published in the Federal Register” (minus confidential information), but the statute provides no time frame for doing so. As a result of this loophole, Section 232 reports on automotive goods, uranium, and titanium sponge have been completed but remain confidential, even as the Commerce Department found a national security threat and the president took “action” thereon. It is precisely because of the law’s open‐endedness that actions related to it become so difficult to track.
In transformers and certain grain‐oriented electrical steel parts, the Commerce Department made no official notice of an affirmative finding or the delivery of a report to President Trump, but a news report stated that the report had been issued and that the administration had pursued a “remedy” in the form of negotiations with Mexico.41 Thus, those accused of undermining national security (by importing subject goods) and potentially facing the closure of their businesses via new U.S. import restrictions have been unable to see the allegations against them. As the president of the American International Automobile Dealers Association put it upon the non‐release of the Section 232 report on automotive goods in 2019, “if you’re subjecting products that my members sell to tariffs and accusing me of potentially being a national security threat, I think the least you can do is let them know the outcome.”42
An additional problem with Section 232 is that it is not clear on what happens if the Commerce Department does not submit a report to the president within 270 days. This is the case of the investigation into vanadium, which was initiated on June 2, 2020. The 270‐day period for the completion of that investigation ended on February 27, 2021. It could be argued that after 270 days have lapsed, the Commerce Department would have to initiate a new investigation. But there still appears to be substantial leeway for the Biden administration to simply restart the clock.
Congress has raised questions about these actions and even sought to overturn one, but like the court rulings, these calls have been ignored.