In an extraordinary ruling this summer, the U.S. Court of International Trade (CIT) has held that President Trump’s decision to increase tariffs on Turkish steel products violated both a statute in force and the Constitution’s Fifth Amendment Equal Protection clause.

Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862, allows the President to “adjust” imports that pose a threat to national security by imposing additional customs duties or import restrictions. However, the statute imposes certain procedural requirements on the Executive Branch. First, the Secretary of Commerce must investigate, consult with the Secretary of Defense, and submit a report regarding the national security impact of the targeted imports. Within 90 days of receiving the report, the President must determine what action to take basing on its findings and recommendations. Once a determination is made, the President should implement it within 15 days and inform Congress within 30 days.

On January 11, 2018, the Secretary submitted a report (“Steel Report”) on the collective impact of global steel imports on national security, with no finding on Turkish imports individually. In March 2018, President Trump issued Proclamation No. 9705, imposing a 25% tariff on steel imports from a range of non-allied countries. In August 2018, the President issued Proclamation No. 9772, increasing the tariff specifically on Turkish steel to 50%.

The court held that Proclamation No. 9772 was unlawful on three grounds. First, it violated the statutorily mandated time restraint because it was made more than 90 days of receiving the Steel Report. The court disagreed with the government’s argument that the first proclamation was made within the 90-day period, and that the President should have the authority to make modifications. Such expansive reading of the statute is “at odds with the language of the statute, its legislative history, and its purpose.” Any possibility of interpreting the statute as granting the President continuing authority to modify was clearly foreclosed after the 1988 amendments to the statute. Furthermore, the court noted that because of the time-sensitive nature of national security issues, having a strict temporal requirement “ensures that the President is acting on up-to-date national security guidance.”

Second, the Proclamation was not properly based on a report by the Commerce Secretary. The Steel Report evaluated steel imports collectively; it made no specific finding regarding imports from Turkey. Although the Proclamation mentioned informal discussions between the President and the Commerce Secretary about Turkish steel imports, the statute strictly requires the President to act on formal reports.

Finally, and most unexpectedly, the Proclamation violated the Constitution’s Fifth Amendment Equal Protection guarantees. The key issue is whether there is a rational relationship between the disparate treatment and some legitimate governmental purposes. National security is obviously a legitimate purpose. But there was no apparent reason that increasing tariffs on Turkish steel imports could serve this purpose, because the Steel Report made no such finding. Thus, the court held that treating Turkish imports differently was “arbitrary and irrational.”

The full judicial opinion is available on Justia.com.