Importer Files Lawsuit to Block New Section 232 Tariffs on Finished Steel and Aluminum Products

New Section 232 tariffs on finished products of steel and aluminum face a court challenge just before they’re set to take effect. PrimeSource, a Texas company that bills itself “one of the largest purveyors of fasteners in the world,” says the tariffs on steel and aluminum “derivatives” violate the statutory requirements of Section 232 and importers’ constitutional rights.

PrimeSource filed its complaint Feb. 4. The same day it asked the court for a temporary restraining order blocking the government from “implementing or further enforcing” the new Section 232 tariffs. A joint letter filed by lawyers for PrimeSource and the government on Feb. 6 says the government opposes the motion and “requests the opportunity to be heard.” It also says CBP “would need at least several hours of lead time to suspend implementation of the Proclamation before it goes into effect at 12:01 a.m. on February 8, 2020, and significantly more lead time to effectuate any order entered after the Proclamation has gone into effect.”

In some ways, the case follows in the footsteps of TransPacific’s tentatively successful challenge of increased Section 232 tariffs on Turkey (see 1911180013). PrimeSource says the tariffs, announced Jan. 25 (see 2001250003), violate the procedural requirements set by Congress when it enacted Section 232 nearly 50 years go.

“It has been 754 days since the President received Commerce's report, 664 days since the 90-day window closed for the President to determine what action must be taken, and 649 days since the 15-day window to implement such action expired,” PrimeSource said in the complaint, referring to the Commerce Department report upon which the steel tariffs are based (see 1801120023). “Nevertheless, on January 24, 2020, the President announced the imposition of tariffs of 25 percent and 10 percent on imports of steel- and aluminum-derivative products, respectively, 638 days after the period to adjust imports lapsed.”

The law underlying Section 232 gives the president 90 days to decide whether to act after Commerce submits its report, and 15 days to implement the action. In the TransPacific case, CIT found Commerce’s decision to raise Section 232 tariffs on Turkey, also well after the 90-day and 15-day deadlines, violated Section 232’s statutory requirements.

President Donald Trump’s Jan. 24 proclamation announcing the new tariffs on “derivatives” also referenced a Commerce “assessment” that the tariffs should be increased, but PrimeSource says it did not get a chance to comment on that assessment, which also violated Section 232’s requirements, the complaint said. Commerce also “violated the rulemaking provisions of the Administrative Procedures Act,” PrimeSource said.

PrimeSource is also challenging the constitutionality of the new tariffs. It says that failure by Commerce to gather public input and provide notice on the potential imposition of new duties violated its Fifth Amendment due process rights. And it says Section 232 itself is an unconstitutional delegation of the legislative power of the purse, echoing arguments made by the American Institute of International Steel that were initially rejected by CIT but are currently under consideration by the Federal Circuit (see 1903250032).

Beyond the temporary restraining order blocking the tariffs while its case is being heard, PrimeSource seeks an injunction stopping the government from implementing or further enforcing the tariffs, as well as a judgment that Proclamation 9980 imposing them was unlawful. PrimeSource also seeks a refund of “any duties that may be collected on its imported articles pursuant to Proclamation 9980.”

Email ITTNews@warren-news.com for a copy of the complaint.