Additional legislation introduced in US seeks revision of Section 232

A group of US lawmakers introduced legislation that would require the US Department of Defense to justify the national security basis for new tariffs under Section 232 and increase congressional oversight of that process.

The legislation seeks to reform Section 232 to better align the statute with its original intent as a trade remedy tool for the president and Congress to respond to genuine threats to national security, Senator Rob Portman (Republican, Ohio), one of the co-sponsors of the bill, said in a statement on Wednesday February 6.

“I have repeatedly expressed concerns about the misuse of the Section 232 statute to impose tariffs on automobiles and auto parts, and its impact on Ohio jobs and the US economy as a whole. This bipartisan legislation preserves this trade tool while properly placing the national security designation at the Department of Defense and expanding the role of Congress in the process,” Portman said.

Senators Doug Jones (Democrat, Alabama), Joni Ernst (Republican, Iowa), Lamar Alexander (Republican, Tennessee), Dianne Feinstein (Democrat, California), Deb Fischer (Republican, Nebraska), Kyrsten Sinema (Democrat, Arizona) and Todd Young (Republican, Indiana) also backed the new bill.

Blanket tariffs of 25% on steel imports and 10% on aluminium imports were implemented against shipments from most countries last March, and applied against typical allies Canada, Mexico and the European Union on June 1, 2018.

Fastmarkets AMM’s daily US Midwest HRC index, which stood at $34.15 per hundredweight ($683 per short ton) as of February 6, had reached a nearly 10-year peak of $45.84 per cwt last July compared with $40.03 per cwt in early March and $32.63 per cwt at the start of 2018.

Defense versus Commerce
The newly introduced legislation would revise the Section 232 statute to ensure that any Section 232 actions are based on a national security determination by the Defense Department and to give Congress a larger role in the Section 232 process.

National security was broadly defined in the March 2018 presidential proclamations on the Section 232 tariffs, which contended that imports pose a threat to the United States because they “weaken our internal economy.”

The new bill would divide the existing Section 232 process into an investigation phase, led by Defense, and a remedy phase, led by the Department of Commerce. It also calls for Defense, not Commerce, to justify the national security basis for new tariffs.

And the bill would expand the process whereby Congress can disapprove of a Section 232 action by passing a joint resolution of disapproval. It also requires consultation with Congress throughout the Section 232 process.

The Trade Security Act is not the first attempt by the legislative branch to limit President Donald Trump’s ability to impose unilateral import tariffs.

Last week, legislation was introduced that would require approval from Congress before Trump could take any trade action, including implementing tariffs and quotas under Section 232. That bill also called for a clear definition of national security, and for Section 232 investigations to be restricted to goods with applications in military equipment, energy resources and/or critical infrastructure.

In mid-January, two Senators reintroduced legislation that would delay the imposition of additional Section 232 tariffs on US imports of automobiles and automotive parts. Last June, another bill was sponsored that would require the president to get approval from Congress before levying tariffs.

And other groups have filed lawsuits challenging the constitutionality of the existing Section 232 tariffs.

Many countries responded to the Section 232 action by setting retaliatory duties against US exports and filing complaints with the World Trade Organization.

Various groups have called for removal of the Section 232 tariffs against Canada and Mexico, arguing that the duties have resulted in rising supply chain costs across business sectors.