The International Business Transactions Blog

CIT Dismisses Unconstitutionality Claim Against Trump’s Metal Tariffs

By BethEl Nager, Law Student Editor
& Aaron Fellmeth, Faculty Co-Editor

On March 10, 2021, the U.S. Court of International Trade (CIT) dismissed a claim questioning the constitutionality of former President Trump’s tariffs on metal imports under Section 232 of the 1962 Trade Expansion Act, 19 U.S.C. § 1862. The Act authorizes the President to impose tariffs on imports that yield a danger to national security. The Secretary of Commerce also has the power to investigate the impact of the national security threat, collaborate with the Secretary of Defense, and create a report detailing the threat caused by the imports. The President then may decide what action to take based on the report within 90 days of its submission. Subsequently, the President may implement the tariff and inform Congress within thirty days.

As detailed in an IBTBlog post last year, Donald Trump issued a proclamation in March 2018 imposing a 25% tariff on steel imports and a 10% tariff on aluminum imports from numerous countries. However, he also authorized the Secretary of Commerce “to exclude aluminum and steel articles from the imposition of these tariffs if the article is ‘determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality and [Commerce] is also authorized to provide such relief based upon specific national security considerations.’”

Early in 2021, the CIT heard a complaint brought by Thyssenkrupp Materials, an importer of aluminum and steel. Thyssenkrupp argued that the exclusion process adopted by the Department of Commerce violated the Uniformity Clause of the Constitution, which requires that the federal government apply a uniform tax rate on similar kinds of businesses and property across the United States. Thyssenkrupp complained that, because it did not apply for and receive an exclusion, other importers paid lower import duties on metals than Thyssenkrupp in violation of the Uniformity Clause. Also, Thyssenkrupp alleged an abuse of discretion under Section 232 of the Trade Expansion Act because the exclusion process was granted to specific importers rather than to all importers of specific imported products, despite the Proclamation’s language directing Commerce to provide import relief for a specific steel or aluminum “article.”

The three-judge panel of the CIT found the exclusion process consistent with the Uniformity Clause and granted the government’s motion to dismiss. The Government argued there were non-geographic requirements for companies to avoid the tariffs. United States v. Ptasynski set forth a “simple test” holding that if there were non-geographic criteria in the law, the Uniformity Clause is not violated. Because the national security criteria were not geographical in nature, the CIT upheld former President Trump’s tariffs. As for the Proclamation itself, the CIT found that the Commerce Department’s interpretation of the Proclamation is entitled to “great deference” under Chevron USA v. NRDC, and given the ambiguity of the Proclamation’s language, Thyssenkrupp had not made out a convincing case that Commerce’s interpretation limiting exclusions to specific companies was an abuse of discretion.

Although the U.S. Government has been unable to present a plausible national security rationale for granting import duty exclusions to specific importers rather than on specific imports, Thyssenkrupp’s complaint focused on the consistency of the Commerce regulations with the Uniformity Clause and with the Proclamation, not with the consistency of the Proclamation with the Trade Expansion Act. The CIT granted the Government’s motion to dismiss Thyssenkrupp’s case for failure to state a claim.