On March 23, 2018, 25 percent tariffs on steel and 10 percent tariffs on aluminum imports formally entered into effect in the United States. The tariffs were a result of a nine-month investigation by the Department of Commerce, which ultimately concluded that current international quantities of steel and aluminum imports were displacing domestic industry, weakening the U.S. economy, and threatening to impair U.S. national security. 

       The investigation began last year when President Trump directed Commerce to determine whether steel and aluminum imports were in fact threatening U.S. national security.1 The investigation was conducted pursuant to a trade restriction mechanism known as Section 232, a provision of the Trade Expansion Act of 1962 used to determine the impact of imports on national security, historically in times of emergency. Section 232 has been invoked sparingly since the height of the Cold War, but it has now taken center stage in global trade negotiations. If your business uses steel and/or aluminum, you need to understand how the tariffs will affect your business and prepare your business for the short and long-term consequences of the tariffs.

Background

Section 232 investigations can be initiated by an interested party, a request from a department or agency head, or may be self-initiated by the Secretary of Commerce. Commerce then will conduct an investigation into specific product imports and present its findings and recommendations to the President. If the imports are determined to threaten U.S. national security,1 the President has 90 days to determine whether he agrees and then may adjust import restrictions accordingly. The statute notably does not place a limit on the nature of trade remedy restrictions or set out a limit on the tariffs to be implemented.

Section 232 national security investigations have been initiated judiciously in the past. There have only been 14 investigations conducted by Commerce since 1980, and very few have resulted in Executive actions that serve to restrict imports. However, in April 2017, President Trump requested that the Department of Commerce initiate a Section 232 investigation into whether steel and aluminum imports were threatening U.S. national security. Due to excess international steel and aluminum production, global markets have been flooded in recent years, leading to U.S. import volumes far above historical levels.