Bipartisan Legislation Would Reform Section 232 Tariff Program

Shortly after the U.S. Court of International Trade (CIT) upheld the constitutionality of the Section 232 steel and aluminum tariff exclusion process, a bipartisan group of U.S. senators reintroduced legislation to reform the Section 232 tariff program.

The legislation, called the Trade Security Act, would:

• Bifurcate the existing Section 232 process into an investigation phase, to be led by the U.S. Department of Defense (DOD), and a remedy phase, led by the U.S. Department of Commerce (DOC).
• Require DOD, instead of the DOC, to justify the national security basis for new tariffs and to make the determination about the national security threat posed by imports of certain products. If a threat is found, DOD would send its report to the president. In the event that the president desires to take action based on the DOD’s findings, the president would then direct the secretary of Commerce, in consultation with the secretary of Defense and the U.S. Trade Representative, to develop recommendations for how to respond. After receiving the recommendations of the secretary of Commerce, the president would decide whether to take action.
• Increase the role of Congress in the Section 232 process by expanding the process by which lawmakers can disapprove of a Section 232 action by passing a joint resolution and by requiring consultation with Congress throughout the Section 232 process.

The senators, led by Sen. Rob Portman (R-Ohio), argued their legislation would “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.”

As a reminder, MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets. To address this circumvention, in 2017 MSCI advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA).

MSCI also asked that Canada and Mexico be excluded from any trade penalties.

Click here to review all of MSCI’s advocacy on Section 232 tariffs.