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Steel Importers Aim to Challenge Tariffs in Supreme Court

March 5, 2020
The AIIS says the tariffs are unconstitutional. Domestic steelmakers warn the steel industry is still vulnerable to overproduction.

Almost two years after President Trump imposed 25% tariffs on imported steel in March 2018, the American Institute for International Steel vowed it would appeal its case for “free trade in the global steel market” to the United States Supreme Court.

The AIIS’s lawsuit has been a long time coming to the highest body of the judicial branch. On March 2, 2020, the U.S. Court of Appeals for the Federal Circuit affirmed a ruling by the Court of International Trade that the tariffs were constitutional. Two days later, the AIIS released a statement saying it would appeal.

“While disappointed, we are not surprised by the Appeals Court ruling,” said AIIS President Richard Chriss. In a statement, Chriss pointed out that his organization tried to bring their complaint to the Supreme Court back in 2018, but the body declined to hear the case before it went through the Court of Appeals. “We intend to seek Supreme Court review promptly, and we are hopeful that the court will act before it adjourns in June,” said Chriss.

According to the AIIS’s complaint, the law used by the President as justification for imposing the March 2018 tariffs violates Constitutional separation of powers. The tariffs cited section 232 of the Trade Expansion Act of 1962, which allows the President the power to adjust imports of an article if an investigation leads them to the opinion that the article, or how it’s imported, threatens national security.

“AIIS argues that, in enacting section 232, Congress relegated, without boundaries, powers to the Executive Branch that the Constitution reserves solely to Congress,” the group said in a statement. But a previous Supreme Court case, Federal Energy Administration vs. Algonquin SNG, Inc., upheld the constitutionality of section 232 tariffs. That precedent is why the AIIS sought to have the Supreme Court view their case first, and it’s also a factor in the lower courts’ decisions to rule against the AIIS.

Although steel trading groups like the AIIS cry foul, the section 232 tariffs are popular among domestic steel producers. On March 5, Richard L. Fruehauf, VP of strategic planning at U.S. Steel, gave testimony at the Congressional Steel Congress’s “State of the Steel Industry” hearing. In his speech, Fruehauf argued that section 232 protected American industry from global steel overcapacity.

“This national security action on steel is spurring the U.S. industry to innovate and invest to modernize operations to supply America’s demand for steel,” said Fruehauf, “which in turn fortifies the future of the domestic steel-consuming supply chain.” He touted new domestic investments by U.S. Steel in Pennsylvania, Indiana, Arkansas and Ohio before cautioning the U.S. steel industry “remains vulnerable.”

The section 232 tariffs “must be kept strong,” he said: “A sudden weakening or dramatic change to the policy could result in a tidal wave of foreign steel swiftly undermining domestic production and jobs.”

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