CIT Strikes Down Section 232 Tariffs on Steel 'Derivatives'
The Court of International Trade found that President Donald Trump violated procedural time limits when expanding Section 232 tariffs to steel and aluminum “derivatives,” in an April 5 decision granting refunds to steel nail importer PrimeSource Building Products. Judges Timothy Stanceu and Jennifer Choe-Groves, as part of a three-judge panel, struck down the tariff expansion, ruling that the president exceeded his authority to impose tariffs when he elected to extend them to derivative products. Judge M. Miller Baker, the remaining judge on the panel, dissented from the opinion.
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The April 5 decision grants refunds to PrimeSource for any payments made towards the 25% steel derivative tariffs and also bars the implementation of the duties towards other importers' entries. However, refunds will only be granted on a per-company basis by the court for imports that have already been liquidated. For the numerous companies with cases similar to PrimeSource's in CIT, applications for refunds at the court may have to hold off until the government makes its appeal. “We don't get anything back yet because we'd have to get another order from the court, that's how our stay order works,” said Brenda Jacobs, a lawyer with similar challenges to the steel derivatives at CIT. “I think we're going to have to wait and see what happens with the appeal.”
PrimeSource initiated its challenge following Trump's decision to expand the Section 232 tariffs to cover steel derivatives in January 2020. The importer successfully argued that the tariffs were announced well after the 105-day deadline for tariff action following the Commerce Department's report that led to the initial imposition of Section 232 steel tariffs in 2018 (see 2101280034). The PrimeSource lawsuit prompted many other companies to file similar cases at CIT.
After the court found PrimeSource's claim of timeliness to be correct, Stanceu and Choe-Groves gave the Department of Justice the chance to make additional arguments on whether the president truly violated the time limit in making his decision to expand the tariffs' reach. DOJ declined to submit additional arguments in a March 5 Joint Status Report to the court, guaranteeing that the judges would uphold their earlier findings that Trump exceeded his authority when he made his decision after the 105-day mark had passed (see 2103100010). In the status report, DOJ held that all procedural requirements were met by the initial 2018 Commerce report.
Commerce may appeal the decision to the U.S. Court of Appeals for the Federal Circuit, where it may make a different argument more in line with Baker's lengthy dissent on what was covered under the president's tariff proclamation (see 2101280034). “I fully believe the government will appeal this. I think that was their intention,” Jacobs said. “They're relying on, I suspect, where Judge Baker is, which is that the derivatives are already covered. He also thought the president had unlimited discretion, and maybe that's the argument the government will go with.” The judge's dissent came up during a related case in front of CAFC on the timeliness of increased tariff rates (see: 2103230041).
“Obviously, Judge Baker has a very broad view of presidential discretion that goes beyond time limitations,” Jacobs said.