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US Court Decision on Turkey Steel Tariffs may Impact Future Increases, Auto Tariffs: Panjiva

https://en.steelhome.com [SteelHome] 2019-11-21 10:27:42

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The US Court of International Trade's recent ruling that the Trump administration incorrectly increased Turkey's Section 232 tariffs on steel from 25% to 50% may have a knock-on effect in future dealings with Turkey, as well as the timing of potential Section 232 duties targeting the automotive sector, researcher Panjiva said Wednesday.

"In essence the case argues that the tariffs have to be used specifically to address national security concerns regarding that case and that there is a limited timeframe involved in the Section 232 process, which had been exceeded," Panjiva said in a research note, adding this is of particular interest in determining the likelihood of future auto tariffs. Like Platts, Panjiva is a division of S&P Global.

US President Donald Trump failed to announce a decision by November 14 on potential Section 232 tariffs on imports of foreign-made cars and automotive parts after initially delaying the decision for an additional six months earlier this year. By not taking action ahead of the deadline, combined with the court's recent decision on the time line for the implementation of tariffs under Section 232, trade experts are now saying it seems unlikely the auto tariffs will come to fruition.

In a court decision dated November 15, the CIT denied a motion filed by the US government to dismiss a case challenging Trump's August 2018 decision to double Turkey's steel tariff from 25% to 50% under Section 232. Transpacific Steel, a Texas-based importer, filed a legal challenge with the court requesting a refund of the difference between the 50% tariff and 25% tariff as it claims the increased tariffs violated the law.

"Based upon the facts alleged, Plaintiff's arguments that the President failed to follow the procedure set forth in the statute and, further, that singling out importers from Turkey violated the equal protection guarantees under the US Constitution, support its claim for a refund and defeat Defendants' motion to dismiss," CIT judges Claire Kelly and Jane Restani state in the court opinion.

The judge's note that Trump's expansive view of his power under Section 232 is "mistaken, and is at odds with the language in the statute, its legislative history, and its purpose." While the US government pointed to a general need to increase Turkey's steel tariffs under Section 232, it did not explain the singular imposition of a 50% tariff on Turkish steel, the judges found.

"Given this standard, it is difficult to imagine Presidential action in connection with Section 232 where one would be at a loss to conjure a rational justification; yet, the reality of this case proves otherwise," the opinion states.

The US has argued that the president retains the power to modify any action taken under Section 232 at any time, however the court noted there is an established time line under the Section 232 statute in which these decision should be issued. Under Section 232, the president has 90 days to issue a decision on tariffs after receiving the 232 report from Congress and a further 15 days to implement any trade actions.

In a separate concurring opinion, CIT Judge Gary Katzmann noted the most recent decision on Section 232 in this case does not address whether the statute itself is constitutional, but rather whether the statute itself has been violated.

The American Institute for International Steel filed a lawsuit with the CIT in June 2018 challenging the constitutionality of the Section 232 tariffs on steel and aluminum, however the court ruled against the importers as it said it was bound by precedent in a 1976 oil tariffs case. At the time, Katzmann noted in his opinion that the laws governing Section 232 may need to be revisited, however the Supreme Court declined to hear the case in June 2019.

Source: Platts
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