Free Trade

This Lawsuit Could Sink Trump's Steel Tariffs

Today, the U.S. Court for International Trade will hear a challenge to the "national security" rationale Trump used to impose those tariffs in June.



President Donald Trump's steel and aluminum tariffs face their first major legal battle on Wednesday, as the U.S. Court of International Trade will hear oral arguments in a lawsuit challenging the constitutionality of the 1962 federal law used to impose those tariffs.

The lawsuit argues that Section 232 of the Trade Expansion Act of 1962 should be found unconstitutional because the law lacks any "intelligible principle" limiting the president's authority to impose tariffs on supposedly "national security" grounds. The U.S. Constitution grants Congress the sole authority for setting trade policy, the lawsuit contends, and delegation of that authority is allowed only in specific instances—not in the sweeping way authorized by Section 232.

Under the terms of Section 232, presidents have the authority to impose tariffs only for "national security" reasons, but lawyers involved in the case tell Reason that restriction is insufficient—in part because the definition of what counts as a "national security" reason has been stretched so wide by this administration.

Trump invoked Section 232 in March when he announced plans to impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. Those tariffs went into affect on June 1. Though Trump has publicly offered a wide range of explanations for why he imposed those tariffs—ranging from an attempt to punish American trading partners to straight-up protectionism for American steel manufacturers—the legal rationale for the tariffs is that, per Section 232, they are a "national security" matter.

"Our case is a straightforward request that the court declare Section 232 as written to be unconstitutional because the power to tax and to regulate foreign commerce is vested by the Constitution in the Congress," says Gary Horlick, one of the attorneys working on the case. "Congress may delegate aspects of that power to the Executive Branch, but only if the statute contains an intelligible principle on how to proceed."

The legal effort is backed by the American Institute for International Steel (AIIS), a Virginia-based trade association representing importers and other industries involved in the steel trade.

Since the lawsuit was filed in July, the AIIS has already scored a small but potentially significant victory. The U.S. Court for International Trade has assigned a panel of three judges to hear the arguments on Wednesday—most cases before the court are heard by only a single judge. In a statement, AIIS said the appointment of a panel "bolsters our chances of achieving an end to the damaging, unwarranted, and potentially indefinite trade restrictions imposed under this statute."

The case bears some important resemblance to the 1995 Supreme Court case United States v. Lopez, which placed new limits on Congress' use of the Commerce Clause when the court ruled a federal law imposing gun-free zones in schools was unconstitutional because Congress' power to regulate interstate commerce did not allow it to dictate rules at such a local level. A "formulation of federal power" that allows Congress to regulate school zones under the Commerce Clause, Justice Clarence Thomas concluded in a concurring opinion in Lopez, "is no test at all: it is a blank check."

"Section 232 is precisely the same sort of 'blank check' that Justice Thomas concluded would result if the Government's position in Lopez were sustained," the plaintiffs argue in the new Section 232 lawsuit. "Once the President has concluded that imports of a product like steel have some adverse impact on any aspect of the national economy, there is nothing he cannot do through tariffs, quotas, and similar remedies to bring about whatever result he thinks desirable, for any reason whatsoever."

There are few examples of the courts ruling that Congress has delegated too much authority, and the Supreme Court upheld the delegation of authority contained in Section 232 in a 1976 case challenging a series of oil import quotas. But that case, Federal Energy Administrtion v. Algonquin, arguably had a closer link to actual national security issues and was decided in a narrow way. The big challenge for AIIS will be "to persuade the court to breathe new life into the nondelegation doctrine and to overturn, or at least side-step," that earlier ruling, writes Todd Tucker at Lawfare.

Regardless of the legal outcome, it's pretty obvious that the Trump administration's national security rationale for tariffs is pretty weak. It's an argument that's built atop decades of congressional deference to presidential authority, combined with an equally longstanding effort to stretch the concept of what's in America's national security interest to cover almost anything and everything.

The tariffs are necessary because relying on imported steel and aluminum "threatens to impair the national security," Commerce Secretary Wilbur Ross said in March, when the tariffs were first announced. The theory is that, because American weapons of war depend on steel and aluminum supplies, domestic producers must be protected from international supplies that could be cut-off in the event of a conflict. The administration is also considering new tariffs on imported cars that would be grounded in the same national security authority allowed by Section 232.

Trump's other tariffs on Chinese goods were authorized under a different trade law and are not targeted by the AIIS lawsuit.

"Making claims regarding national security to justify what is inherently an economic question not only harms the very people we all want to help and impairs relations with our allies but also could invite our competitors to retaliate," Sen. Bob Corker (R-Tenn.) wrote in a series of tweets on June 6. Sen. Pat Toomey (R-Penn.) has called the national security rationale for steel and aluminum tariffs a "false pretense."

But other than those comments, Congress has been flaccid when it comes to standing up against Trump's tariffs. A bill introduced by Corker would require the president to submit proposed Section 232 tariffs to Congress for a 60-day review period before they could be enacted. There is precedent for this—Congress overturned Jimmy Carter's national security restrictions on oil imports in 1980—but it would require a veto-proof majority and Corker's bill went nowhere.

Like in other cases of Trump administration executive overreach, the courts are likely the last, best chance to stop the Section 232 tariffs—and to prevent Trump, or future presidents, from further expanding the definition of national security in order to shape the economy to their liking.