On April 20, 2017, President Trump issued a memorandum announcing that Commerce Secretary Wilbur Ross had initiated an investigation of national security effects of steel imports and on April 27 President Trump issued a memorandum announcing a similar investigation of aluminum imports. Secretary Ross initiated the investigations pursuant to Section 232 of the Trade Expansion Act of 1962, a little-used provision that provides broad authority to impose import restrictions after an investigation lasting up to 270 days.
These steel and aluminum investigations are consistent with the President’s prior statements on trade, such as when, as a candidate, he complained that “[f]oreign nations are dumping vast amounts of steel all over the United States.” Secretary Ross has also indicated that he is considering additional Section 232 investigations (e.g., shipbuilding and semiconductors).
Investigations and Orders
Under Section 232, Secretary Ross will conduct studies into whether steel and aluminum are being “imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” The Commerce Secretary is to consider a broad range of factors related to national security and "national economic welfare." Specifically, the studies are to examine, inter alia, (1) U.S. national defense requirements; (2) capacity of domestic industries to meet those requirements; (3) availability of human resources, products, raw materials and other supplies; (4) the requirements for growth of those industries; and (5) the importation of goods and their use to meet national security requirements. Under Section 232, the Secretary is also to consider "the relation of the economic welfare of the Nation to our national security," the effect of foreign competition on the economic welfare of domestic industries, impacts on employment, and effects on government revenues.
At the end of the steel and aluminum investigations, the Commerce Secretary is to submit reports to the President containing determinations on whether the imports "threaten to impair the national security." If the President agrees, the President may implement measures necessary "to adjust the imports” and “derivatives" to remove national security threats. Such action could include an agreement with exporting countries to limit exports or other trade restrictive measures such as tariffs and/or quotas.
Actions to Consider
Secretary Ross has indicated, consistent with Commerce Department regulations, that the Department will hold “at least one and perhaps more public hearings” and will accept written submissions for the Section 232 investigations. In addition, the investigations will, by statute, include input from the Defense Department on national defense requirements for steel and aluminum. Moreover, there will be opportunities for diplomatic and political input into the Section 232 processes.
Given the broad nature of the investigations (e.g., investigations covering “aluminum imports” which presumably includes raw materials, semi-fabricated articles and finished goods), the broad nature of the potential remedies (e.g., additional duties, etc.), it will be important for companies that rely on aluminum or steel articles to engage on this issue to ensure their interests are protected. Specifically, affected companies should identify relevant articles/products and analyze the national security implications of the same. Companies should also be prepared to participate in the investigation and pursue exemptions, where applicable.