US Supreme Court refuses to hear AIIS’ Section 232 challenge

The United States Supreme Court has denied a request by the American Institute for International Steel (AIIS) to hear its case challenging the constitutionality of the Section 232 tariffs and quotas on imported steel implemented by President Donald Trump’s administration.

While the AIIS is “disappointed” with the Supreme Court decision, “we continue to believe that we have a strong legal case,” it said on Monday June 24.

The appeal will now be heard by the US Court of Appeals for the Federal Circuit, which the steel trade lobby group had previously estimated could take a year or more.

“Once the Federal Circuit has spoken, we expect that the losing party will ask the Supreme Court to review that decision,” it added.

The AIIS filed a petition for writ of certiorari in mid-April after a three-judge panel at the Court of International Trade (CIT) ruled against it on March 25, arguing that the urgency of the matter justified the trade group bypassing the US Court of Appeals for the Federal Circuit.

The Trump administration subsequently sought an end to the AIIS’ challenge, citing a 1976 Supreme Court decision as precedent.

The AIIS’ challenge has been centered on two issues: Improper delegation of Congress’ constitutional power to the president to regulate international trade and an absence of a provision for judicial review of presidential orders, or no checks and balances.

The Trump administration used Section 232 to justify placing tariffs and quotas on imported steel in March of last year. The measure caused US steel prices to surge to their highest point in nearly a decade. It also resulted in unprecedented price volatility.

Hot-rolled coil prices started 2018 at $32.63 per hundredweight ($652.60 per short ton), surging by 40.5% to a nearly 10-year high of $45.84 per cwt in early July after the Section 232 duties were extended to traditional US allies and trading partners in Canada, Mexico and the European Union in June.

Trump removed the Section 232 tariffs against steel and aluminium imports from Canada and Mexico on May 17.

Fastmarkets AMM’s daily US domestic Midwest hot-rolled coil index slid to $25.54 per cwt on June 21, 44.3% below the July peak and the lowest level since November 10, 2016.

Through March, US Customs and Border Protection has collected $4.7 billion in steel tariffs and $1.5 billion in aluminium tariffs under Section 232. The tariffs collected are put in a general US Treasury fund.

Gundy versus the US
Legal experts in Washington said that a separate decision by the Supreme Court last week was interesting in terms of its effect on the AIIS lawsuit challenging the constitutionality of Section 232 as an excessive delegation of legislative power by Congress to the president.

The case, Gundy versus US, had nothing to do with trade but also challenged Congress’ delegation of legislative authority to the executive branch, the experts noted.

The Supreme Court held that the legislative delegation met the court-developed standards for lawful delegation of authority, with four justices affirming and three in opposition. One justice, Samuel Alito Jr, affirmed the judgement but indicated that he would be willing to reconsider the court-developed standards in a future case, according to the ruling dated June 20.

Justice Brett Kavanaugh, who has written extensively about the issue and is known to be skeptical about excessive delegation, did not participate in the case because his confirmation to the Supreme Court in October 2018 came too late to participate in the Gundy case.

Industry reaction
The Steel Manufacturers Association remains encouraged by the Supreme Court’s decision and continues to support the Trump administration’s actions on trade enforcement, it said on Monday.

“Currently, [Section] 232 national security measures have led to increased capacity utilization, industry job growth and additional investment announcements by steel producers throughout the United States,” SMA president Philip Bell said in a statement.

“President Trump imposed steel tariffs as a straightforward and effective measure countering against unfairly and illegally traded steel imports. Unfortunately, these imports continue to find their way to American soil,” he added.

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