Sen. Pat Toomey, R-Pa., is leading the charge to roll back Section 232 tariffs and put Congress in the driver's seat for future 232 actions, but he doesn't know how close the consensus Senate Finance Committee bill will come to his vision for how to address what he called an antiquated law.
Two Ohio Democrats who voted against the original NAFTA -- Rep. Marcy Kaptur and Sen. Sherrod Brown -- have clearly not been won over by the efforts of U.S. Trade Representative Robert Lighthizer to satisfy union autoworkers that the revised deal will stop the flow of jobs to Mexico. According to the Ohio state government, auto parts, auto manufacturing, and RV, tire and trailer manufacturing jobs employed more than 107,000 workers in 2019 -- though that included 1,700 who just lost their jobs at GM's Lordstown plant. That closure follows more than 38,500 jobs lost in the industry in the state between 2007 and 2009.
Nine members of the New Democrats -- free-trade oriented members whose votes will be needed to ratify the new NAFTA -- wrote to President Donald Trump March 27 arguing that imported cars are not a security threat and noting his response during a TV interview that acknowledged that they are not a threat. In the interview, he immediately added that the trade deficit is a threat. The letter, led by Rep. Terri Sewell, whose Alabama district is home to both Hyundai and Mercedes car plants, said, "We are pleased to hear that we are in agreement that no national security threat exists. Therefore, we urge you to remove any threat of unilateral tariffs on automobiles and auto parts under Section 232 of the Trade Expansion Act as soon as possible. Imposing tariffs under Section 232 on autos and auto parts for reasons not related to national security concerns clearly oversteps the authority granted by Congress."
As momentum seems to build in the Senate to rein in Section 232 tariffs, steel company CEOs told a sympathetic group of Congress members that the tariffs are working to increase domestic producers' market share and increase profits as well as employment numbers and pay for steelworkers. "The U.S. steel industry is still vulnerable. Now is not the time to blink," U.S. Steel CEO David Burritt said. Section 232 tariffs or a hard quota "must continue to be applied to all steel-producing countries, especially the top import sources. If the Section 232 doesn't apply everywhere, it's nowhere as border leaks will continue from global excess capacity."
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, is finding a way to bridge the gap between an approach that would roll back existing Section 232 tariffs and prevent any new ones without congressional assent and an approach that would leave metals tariffs in place and give Congress the opportunity to rein in Section 232 authority only by disapproving tariffs that have been levied. The latter tack would require a veto-proof majority (see 1902120033).
Canada's top diplomat in Detroit, Consul General Joe Comartin, said the Canadians used to get assurances, whether from politicians or the Office of the U.S. Trade Representative, that the tariffs on its steel and aluminum exports were going to come off soon. "We're not even getting those assurances anymore," he told International Trade Today March 27 in an interview. "We're just not seeing any movement on this side on the tariffs."
An appeal of the Court of International Trade’s recent decision finding Section 232 duties constitutional will be filed at the U.S. Court of Appeals for the Federal Circuit to avoid any distraction caused by the government’s likely opposition to a direct appeal to the Supreme Court, said Alan Morrison, a George Washington University law professor and the American Institute for International Steel’s lead counsel in the case. A three-judge CIT panel on March 25 ruled against the trade group and a pair of steel importers in their challenge to the Section 232 tariffs imposed in 2018 on iron and steel, finding itself bound by four-decade-old precedent that held Section 232 duties are not an excessive delegation of power (see 1903250032). “We think that a direct appeal to the Supreme Court is possible, but it would [be] opposed by the Government and therefore be a distraction,” Morrison said. The AIIS initially requested the three-judge panel because it would allow a direct Supreme Court appeal (see 1806270036).
The U.S. should keep in place the Section 232 tariffs on aluminum and steel from both Mexico and Canada even if it impedes movement on the U.S.-Mexico-Canada Agreement, the American Line Pipe Producers Association said in a news release. The group, a coalition of large-diameter welded pipe (LDWP) producers, took issue with recent United Steelworkers calls for the removal of the tariffs before any USMCA ratification (see 1903250035). "While ALPPA supports the USMCA, it strongly rejects that USMCA should be tied to removal of Section 232 tariffs, particularly given the trade-distortive practices of Canada and Mexico," the group said.
The Court of International Trade on March 25 denied a bid to declare Section 232 tariffs unconstitutional in a lawsuit brought by the American Institute of International Steel and other steel importers. A 1976 Supreme Court decision had found Section 232 to be a permissible delegation by Congress of its tariffs-setting powers to the president, and while the three judge CIT panel expressed some concerns, they were “beyond this court’s power to address, given the Supreme Court’s decision,” CIT said. Judge Gary Katzmann penned a separate “dubitante” – a step below a dissent -- noting that, while he agreed that the trade court could not deviate from the Supreme Court’s ruling, he had “grave doubts” about its real world implications.
The American Institute for International Steel will appeal a March 25 Court of International Trade decision that found Section 232 tariffs on iron and steel products to be constitutional and left them in place, a lawyer representing the trade group said in an email. In that decision, CIT had found itself bound by precedent and unable to overturn the tariffs, despite some concerns over whether they violate the separation of powers principle of the Constitution.