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February 13, 2023

Circuit Court Upholds Tariffs On Imports Of Steel Derivatives

On Tuesday, February 7, the U.S. Federal Circuit Court of Appeals for the District of Columbia voted 3-0 to reverse a lower court ruling regarding imports of steel derivatives that, since 2020, have been subject to the 25 percent tariffs put into place by the Trump administration and kept in place by the Biden administration.

When the Trump administration imposed the new tariffs two years ago, it argued the penalties were needed after capacity utilization had not recovered for an extended period. (The tariffs on derivatives came two years after the Trump administration issued proclamations for its more general Section 232 penalties on steel and aluminum.)

PrimeSource Building Products Inc., Oman Fasteners LLC, Huttig Building Products Inc., and Huttig Inc., challenged the 2020 decision, arguing that the extension of the increased tariffs to derivatives violated the time limits for presidential action under Section 232 of U.S. trade law.

The Biden administration defended the Trump administration’s proclamation in court. The U.S. Court of International Trade struck down the tariffs on derivatives in 2021, arguing the Trump administration missed statutory deadlines to impose them.

As Reuters reported, last week, the appeals court disagreed with that conclusion, arguing a president has the ability impose “contingency-dependent” tariff increases to fulfill their original national security objectives, assuming those objectives remained valid. Stay tuned to Connecting the Dots to see if the tariff opponents appeal the decision.

As a reminder, when it comes to Section 232 tariffs, Connecting the Dots is reporting the results of this case for members’ information only. 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, MSCI has 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.

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