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Legislation aims to limit Trump's 232 authority

Jan 31, 2019 | 11:37 AM | New York | Yvonne Li


Lawmakers in the United States have introduced legislation to limit presidential power to impose tariffs on imports for national security reasons.

The legislation, called the Bicameral Congressional Trade Authority Act of 2019 in the Senate and the House of Representatives, highlights concerns among US politicians over the unilateral power delegated to the president under Section 232 to regulate international trade, along with the rising costs for US consumers as a result of the trade policies.

“The current administration has used Section 232 more broadly - imposing sweeping 25% tariffs on foreign steel, 10% tariffs on imported aluminium and threatening tariffs on auto imports. Such wide-ranging Section 232 actions have been economically disruptive and have damaged US relationships with allies, including Mexico, Canada, Japan, the [European Union] and India,” a summary of the Senate bill states.

Blanket 25% and 10% tariffs on steel and aluminium imports were implemented by US President Donald Trump in late March of last year, implemented against such allies as Canada, Mexico and the EU on June 1, 2018.

Such blanket tariffs have resulted in rising supply chain costs across business sectors. US importers have been forced to pay additional taxes on roughly $23 billion in steel imports and $17 billion in aluminium imports, the Senate bill states.

"The imposition of these taxes, under the false pretense of national security (Section 232), is weakening our economy, threatening American jobs and eroding our credibility with other nations. I've seen, first-hand, the damage these taxes are causing across Pennsylvania," Senator Pat Toomey (Republican, Pennsylvania), co-sponsor of the Senate legislation, said in a statement on Wednesday January 30.

Senators Mark Warner (Democrat, Virginia), Ben Sasse (Republican, Nebraska) and Maggie Hassan (Democrat, New Hampshire) are the other backers of the legislation.

Domestic prices for steel and aluminium products have increased following implementation of the Section 232 tariffs, hurting downstream consumers.

Fastmarkets AMM’s daily US Midwest HRC index reached a nearly 10-year peak of $45.84 per hundredweight ($916.80 per short ton) in July last year, up from $40.03 per cwt in early March and $32.63 per cwt at the start of last year. The index has since retreated to $33.57 per cwt on January 30.

After the 232 duties took effect, many countries retaliated against US exports, with agriculture and food products among the hardest hit.

“Trade actions with such significant repercussions should not be solely within the authority of the executive,” the summary of the Senate bill said.

Congressional approval
The legislation would require approval from Congress before Trump could take any trade action, including implementing tariffs and quotas under Section 232 of the Trade Expansion Act of 1962.

A clear definition of national security will be spelled out under the legislation and Section 232 investigations would be restricted to goods with applications in military equipment, energy resources and/or critical infrastructure. Under the current law, national security is elastically defined, which means there is no guideline as to what the president can do.

The American Institute for International Steel, a trade group representing users of imported steel, filed a lawsuit last June challenging the constitutionality of the Section 232, arguing that the law improperly delegates Congress’ power to the president in violation of the Constitution.

The International Trade Commission would be required to administer an exclusion process for future Section 232 actions - given current issues with backlog, pace and transparency at the Department of Commerce, whose Bureau of Industry Security (BIS) division is currently conducting the exclusion request process.

As of December 20, there have been 50,402 steel and aluminium tariff exclusion requests filed by 901 companies, according to data produced by researchers with the Trade and Immigration Project of the Mercatus Center at George Mason University. Of these filings, 44,389 exclusion requests have asked for exemptions from the steel tariffs, and steel manufacturers have filed 15,047 objections.

The BIS has reached a decision on 42.9% of the steel exclusion requests, with 14,301 approved and 4,723 denied, the research indicates.

US Representatives Mike Gallagher (Republican, Wisconsin), Darin Lahood (Republican, Illinois), Ron Kind (Democrat, Wisconsin) and Jimmy Panetta (Democrat, California) introduced the House legislation.

The proposed legislation has drawn discontent from the Alliance for American Manufacturing (AAM), which called the Senate version of the bill “misguided,” the group said on January 30.

"Weakening the ability to push back against market-distorting, anti-competitive practices will only embolden the nations whose trade cheating puts our national security at risk. And it will cost American jobs. Instead of pulling the rug from under the current and future executive, I'd like to see Congress initiate its own trade actions to stand up for American workers," AAM president Scott Paul said.