Customs Law

I realize I have been gone for a while. The first Trump Administration generated enough compliance work, litigation, and general chaos to keep me too busy and too stressed to do many things. One such thing was writing this blog. I did it mainly because I enjoy the process, and it forced me to stay on top of cases from the Court of International Trade and Court of Appeals for the Federal Circuit. Explaining those decisions in what I intend to be an approachable style helped me understand them. Over the past year, I have at times considered restarting the blog and never found the time or inspiration. Apparently, that has changed.  You may have noticed that the second Trump administration is off to a fast start in the trade space. We have new 10% tariffs on goods from China and 25% tariffs on an expanded list of steel and aluminum products. The 232 exclusion process has been shuttered. Reciprocal tariffs are being floated, as are potential tariffs on cars, pharmaceuticals, and chips....

Section 232 of the Trade Expansion Act of 1962 allows the President, following an investigation by the Department of Commerce, to adopt a plan of remedial action to protect the national security from harm caused by imports. The statute has several procedural requirements including that the Commerce Department complete its investigation within 270 days and that the President decide within 90 days of receiving the report whether the President concurs in Commerce's finding. If so, the President must come up with a plan of action, including the steps that "must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security." For this discussion, the key point is that the President must implement the plan within 105 days of the findings in Commerce's report. On March 8, 2018, President Trump imposed 25% duties on listed steel products in an effort to ensure that U.S. steel production was operating ...

We sometimes hear from a domestic party that someone is allegedly importing merchandise using an incorrect tariff classification or understating value in a way that both violates the law and creates an unfair commercial advantage for the importer. Often, the domestic party has spent considerable time and effort securing an order imposing antidumping or countervailing duties and has reason to believe someone is improperly avoiding the payment of those duties. The question is what tools exist to allow that domestic producer to ensure the law is being properly enforced and also to offset the unfair advantage.  One thought that often comes up is the Domestic Interested Party Petition under 19 USC § 1516 , which is a little used but potentially useful tool. But, as we will see, it has limitations. This section of the customs law allows an "interested party" to submit a written request for Customs to furnish to it the classification and rate of duty imposed on "designated impo...

Still catching up. This time, I look at PrimeSource Building Products, Inc. v. United States , which is another piece of litigation spinning out of President Trump’s Section 232 duties on steel and aluminum products. I posted about the merits decision in this case here . In that decision, the Court found that the extension of the duties to derivative products occurred beyond the 105-days in which the President is authorized to act. At an earlier stage, the Court enjoined CBP from collecting the duties and required the importer to maintain a sufficient bond to ensure payment to CBP should the decision be reversed on appeal. That injunction dissolved on the issuance of the judgment by the Court of International Trade. This new decision arises out of a request from the United States to stay the enforcement of the judgment and reinstate the terms of the injunction while the government appeals to the Federal Circuit on the merits. A stay pending appeal is not uncommon. It is a tool that...

Exactly how to go about getting refunds of incorrectly collected Section 232 duties on steel and aluminum products is a complicated issue. The result, it seems, turns on what caused the incorrect collection. And it is important to act quickly to preserve the right to collect a refund because it turns out that failing to act can result in the loss of the refund. This all comes up in the context of Voestalpine USA Corp and Bilstein Cold Rolled Steel LP v. US . The underlying facts in this case are not terribly complicated. In July of 2018, Bilstein submitted to Commerce a Section 232 exclusion request. The request contained a non-existent 10-digit HTSUS code. Despite the error, and the fact that requests are supposed to be reviewed by CBP for “administrability,” Commerce granted the request with the invalid HTSUS code. VoestAlpine, the importer, entered steel that should have been covered by the exclusion and, noting that the correct HTSUS code on the entry would not match the exclus...

Reposted from the swanky new website of Barnes, Richardson & Colburn (but still my work). The Court of Appeals for the Federal Circuit today reversed the Court of International Trade’s decision in Transpacific Steel. The CIT had held that the President lacked authority to increase Section 232 duties on steel from Turkey to 50% while imposing a 25% on imports from other countries. The CIT’s decision was based on the fact that President Trump did not impose the additional duties on products from Turkey within the statutory 105-day time limit imposed by § 1862(c) or without relying on a new Section 232 report from the Secretary of Commerce. The CIT also found that singling out Turkish imports violated the equal protection guaranteed by the Fifth Amendment. Regarding the statutory time limit, the Federal Circuit opinion by Circuit Judge Taranto (with Circuit Judge Chen in agreement) framed the question as whether the law “permits the President to announce a continuing course of actio...

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 States .  The 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 thi...

[UPDATE: See this post  clarifying that there is an open issue in this case regarding the increase in duties on products of Turkey from 25% to 50%.]  A three-judge panel of the Court of International Trade has granted the government's motion to dismiss a challenge to Section 232 duties on steel on the grounds that Presidential Proclamation 9705 and subsequent proclamations did not violate the statute. The plaintiffs are several steel importers that claim an injury caused by the tariffs President Trump imposed on certain imported articles of steel after a Commerce Department report found that the imports threaten national security due to the correspondingly lower U.S. production capacity. Plaintiffs challenge the imposition of the duties on procedural arguments related to the requirements of Section 232 itself and the Administrative Procedure Act . To leverage the Court's opinion, Plaintiffs allege: (1) the Steel Report is a reviewable, final agency action, is procedurally def...

UPDATED: On second look, my typing was atrocious in this post. My muscle memory typed "court" several times when my brain wanted "count." I fixed that and a few other things without changing the substance. Also, I am now kicking myself for not using the obvious pun: this case is a "nail biter."  On January 27, a three-judge panel of the U.S. Court of International Trade denied a government motion to dismiss PrimeSource Building Products, Inc. v. United States , which is the lead case challenging the extension of Section 232 duties to so-called derivative products.  PrimeSource's complaint contained five counts challenging the former President's imposition of duties on steel nails. As a general matter, the argument is that the initial 232 investigation and the resulting Proclamation did not cover nail and that the extension of the remedy to derivative product violates the law and is void. The question is exactly what law was violated and how? To cov...

 The ongoing litigation over whether the Section 232 duties were properly extended to cover certain downstream products of steel and aluminum took an interesting detour in Slip Opinion 21-6 , which covers multiple related cases with the lead case being Primesource Building Products v. United States. This opinion addresses the effort by the American Steel Nail Coalition to intervene in the case as a defendant in support of the United States and the continued application of the duties to imported steel nails. The Coalition is an ad hoc group that is not a formal entity as would be, for example, a trade association organized as an entity under state and federal law. Essentially, the Coalition wants a seat at the table in this litigation to protect its own economic interest in the continuation of the tariffs. Intervention is permitted in federal courts like the Court of International Trade either by right or by leave of the Court. Take a look at CIT Rule 24 for the details. To have a ...

 This is going to be my first catchup post and will hit the most salient points from some of the CIT and CAFC decision of the last six months. I may not cover everything, but as long as I am trying to read them, I may as well give you at least a blurb. You should read the full cases for details and keep in mind that the details matter. Vietnam Finewood Company Ltd.  involved a challenge to an ongoing enforcement action under the Enforce and Protect Act, 19 USC 1517 . Under this law, U.S. Customs and Border Protection is obligated to investigate allegations that an importer has avoided the payment of antidumping or countervailing duties through "evasion." In this context, evasion is the use of "any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material, and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties be...

In TransPacific Steel v. United States , the United States Court of International handed the Commerce Department and the President a defeat with respect to the Section 232 duties imposed on aluminum and steel products from Turkey. This case is narrow in scope but important. The specific issue before the Court was whether Presidential Proclamation 9772  which made aluminum and steel products from Turkey subject to twice the rate of Section 232 duty than has been applied to products of other countries. Plaintiffs in this case raised several arguments seeking to overturn the proclamation and recover the excess duties paid. The first argument is statutory and procedural. Section 232 duties are the result of a process that begins when the Commerce Department initiates an investigation. The results of that investigation are then communicated to the President who can chose to take action. The President only has 90 days in which to decide whether he (in this case) is going to act and what ...

Remember when the President imposed tariffs on steel and aluminum under Section 232? He did so following a Commerce Department study showing that imports of steel and aluminum suppress domestic production far enough below capacity to be a threat to the national security. The steel tariffs were set at 25% and the aluminum tariffs at 10%. Here is Proclamation 9705 . Those tariffs remain largely in place. In August of 2018, the President followed up with Proclamation 9772 , which doubled the tariff on steel from Turkey to 50%. In Transpacific Steel LLC   v. United States , an importer of Turkish steel challenged that increase and sought a refund of the difference. The bases for the challenge are, among other things, that singling out importers of products from Turkey violates the Equal Protection Clause of the Fourteenth Amendment and that the President’s failure to follow required procedures violates the Due Process clause of the Fifth Amendment. The United States moved to dis...

Here is a quick take on the decision of the Court of International Trade in American Institute for International Steel v. United States . This is the case challenging the constitutionality of Section 232, under which President Trump imposed duties on steel and aluminum products in furtherance of national security. Plaintiff's theory of the case is that the statute is facially unconstitutional because it violates the constitutional requirement for separation of powers. The starting point for this that Congress, not the President has the power to regulate trade. In Section 232, Congress delegated some of that power to the President so that he may make adjustments to trade to protect the national security. AIIS argued that the powers given to the President are unbounded by an "intelligible principle," meaning he can exercise legislative powers that are reserved to Congress. That would be unconstitutional. If, on the other hand, the President can only act within a define...

Here is the lowdown on President Trumps action on steel and aluminum .