232 on Derivatives Invalid, Likely Headed for Court of Appeals

The Court of International Trade on April 5 invalidated tariffs on derivate steel and aluminum products that the Trump Administration had imposed under Section 232 of the Trade Expansion Act of 1962. The decision comes in PrimeSource Building Products, Inc. v. United StatesThe tariffs followed the initial round of tariffs on steel and aluminum in primary forms that were imposed (allegedly) to protect the national security in light of excess global capacity and low capacity utilization in the U.S. 

The issue in the case was whether the subsequent extension of the tariffs to nails, staples, and other “derivative” products was done consistent with the statutory requirements, specifically the 105-day time limit baked into Section 232. The Presidential Proclamation extending 232 duties to derivative products occurred outside that time without a new recommendation from Commerce to restart the clock. The Court had previously denied the Government’s motion to dismiss on this issue and allowed the case to move forward. 

However, in a required joint status report, the United States waived the opportunity to provide information supporting the legality of the extension of the tariffs to derivative products. Furthermore, the Government noted that while it continues to assert that the additional tariffs were legally applied, there was no reason for the Court to delay entering a final judgment. Finally, the Government reserved its arguments for appeal. The Court of International trade took the Government’s invitation and issued a judgment in favor of the plaintiffs. The Court declared the Proclamation imposing the tariffs to be invalid and ordered the U.S. to reliquidate the entries without the duties. This puts the issue on a clear path to the Court of Appeals.

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