Are Trump's Metals Tariffs Unconstitutional?

July 2, 2018

The economic impact of Trump administration tariffs imposed on steel and aluminum, continues to generate growing concern – especially regarding the cost of infrastructure projects.

The AASHTO Journal reports the American Institute for International Steel (AIIS) says U.S. steel-using manufacturers are encountering product price increases of 50 percent or more and are experiencing difficulty in obtaining the steel they need, regardless of whether they buy domestic-sourced or imported steel.

"We continue to hear from many members that they are experiencing significant increases in the prices they are paying for steel and aluminum products. Some are even getting reports that delivery schedules will be delayed," Brian Turmail, spokesman for the Associated General Contractors of America trade group, explained to the AASHTO Journal.

Rep. Pete Olson of Texas explained to the Journal that "past precedent" has shown tariffs have "unintended consequences" on consumers and businesses across the country, raising prices on everything from a new car or truck to a new pipeline or petrochemical plant, and could also trigger broader and more damaging trade disruptions.

In response and limit the consequences of the administration's steel and aluminum tariffs, AIIS and two of its member companies – SIM-TEX, LP, of Waller, Texas, and Kurt Orban Partners, LLC, of Burlingame, California – are pursuing a broader legal tactic.

The suit, filed Wednesday, June 27 in the United States Court of International Trade in New York City questions the "constitutionality" of the statute under which President Trump imposed a 25 percent tariff on imported steel.

AIIS and the two companies allege that the statute, Section 232 of the Trade Expansion Act of 1962, violates the constitutional prohibition against Congress delegating its legislative powers to the President because it lacks any “intelligible principle” to limit the discretion of the President.

Section 232 allows the President to impose unlimited tariffs or create other trade barriers at his unfettered discretion if he believes they are needed so that “imports will not threaten to impair the national security,” which is expansively defined in Section 232. 

"Our complaint asks for a declaratory judgment and an injunction against its enforcement – meaning that the tariffs will no longer be collectable," explained Alan Morrison, lead counsel for the plaintiffs, during a press conference in Washington D.C. on June 27 regarding the lawsuit.

Most of the members of AIIS – which include railroads and other transportation companies, port authorities, union locals, traders and logistics companies–do not pay the tariff increase directly. Their businesses and employees are harmed because the tariff increase significantly reduces the amount of steel imported into the United States—its intended effect—thereby reducing their revenues, and the hours and possibly jobs of their workers, which are dependent in significant part on how much product their businesses handle. 

"We are not seeking monetary damages at this time [because] most of the [AIIS] members do not pay the tariffs themselves – they are harmed because their businesses are reduced. That's why we need an injunction; the harm is irreparable," he said. "We're also not debating wisdom of the tariff policy, because we think Congress is the forum for doing that." 

The lawsuit also seeks a court order preventing further enforcement of the tariff as well.

The AIIS complaint also rests on another constitutional flaw in the law, which plaintiffs say violates the doctrine of separation of powers and the system of checks and balances that the Constitution protects: there is no provision for judicial review of the President’s decisions in how he responds to the perceived threat to national security from imported steel.

Moreover, recent Supreme Court cases have precluded judicial review of discretionary decisions by the President under similar statutes, and the Justice Department in a recent case involving this very tariff has stated that the courts cannot rule on whether the President has complied with the law. 

“Unlike most cases brought against actions of the Trump administration, it is Congress—through its delegation of unfettered discretion to the President in this statute—and not the President that is the violator of the Constitution,” noted Morrison. “The President simply took advantage of the opportunity to impose his views on international trade on the American people, with nothing in the law to stop him.” 

With their complaint, plaintiffs filed a motion asking the Chief Judge of the Court of International Trade to appoint three judges, instead of a single judge, to hear this case. That request is supported by a specific federal statute and a rule of the Court that authorize such an appointment when a case presents a constitutional challenge or has “significant implications” for the administration of the law. Plaintiffs believe that if the case is decided by a three judge court, there is a direct appeal to the Supreme Court, without having to go to the Federal Circuit, which is the normal review court for the Court of International Trade. That route would provide a speedier means of resolving this case, which is in the interest of all concerned. 

AIIS offers a Q&A webpage that explains their mission:  AIIS Lawsuit Challenging Constitutionality Of Section 232 Steel Tariff