CIT Nixes Attempt to Block Section 232 Steel Tariffs
The Court of International Trade on April 5 rejected a bid to stop Section 232 tariffs on steel products, finding the recently announced 25 percent tariff may be imposed for economic reasons in addition to national security. The court denied Severstal’s motion for a preliminary injunction barring imposition of the tariffs on the importer, and will now proceed to hear arguments over whether it should dismiss the case entirely.
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Severstal Miami and Severstal Exports, affiliates of a Russian steel manufacturer, had filed the lawsuit March 23 (see 1803280054). They argued President Donald Trump exceeded his authority when he imposed the tariffs (see 1803080025). Though Congress usually has the power to set tariffs, Section 232 of the Trade Act of 1962 authorizes the president to impose them if imports imperil national security. But statements from the administration and Trump himself indicate the tariffs were actually put in place for economic and political reasons, Severstal argued.
In order to secure an injunction, Severstal had to show it would suffer irreparable harm without one, that it would be more harmed than the government, that the public interest would be served and that its arguments are likely to prevail in the overall legal challenge. CIT denied the motion, finding Severstal’s legal arguments were unlikely to succeed. “While we respect the court’s decision, we are disappointed that the judge denied our motion for a preliminary injunction," said Thompson Hine partner Mark Lunn, who represents Severstal. "We are reviewing our options with our client.”
The national security factors the president must consider when implementing Section 232 tariffs “are required, but not exclusive,” CIT said. Factors considered under Section 232 are “quite broad and permissive, and apparently not limited to production necessary for national defense purposes,” it said.
The statute even explicitly calls on the president to “recognize the close relation of the economic welfare of the Nation to our national security,” and consider “the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security,” CIT said.
The potential harm to Severstal was not enough to overcome the company’s “very low” likelihood of success in the overall legal challenge, CIT said. The court ordered Severstal and the government to “further brief the Government’s motion to dismiss” the case.
Despite CIT’s ruling, Severstal's challenge of Section 232 tariffs may not be over, Lawrence Friedman of Barnes Richardson said in a blog post. “This is a preliminary ruling. The Plaintiffs did not succeed in securing a preliminary injunction. Now they must decide whether they want to press forward with a challenge to the duties,” he said. “They might also seek an expedited appeal from the Federal Circuit. If this really is bet-the-farm litigation for the U.S.-based plaintiff, expect there to be more.”