UNDERSTANDING SECTION 232 OF THE U.S. TRADE EXPANSION ACT

Section 232 of the Trade Expansion Act of 1962 authorizes the U.S. President to impose import restrictions to protect U.S. national security.

1. Under Section 232, the Commerce Department initially conducts an investigation to determine the effects of imports on U.S. 'national security'.

2.  The term 'national security' is not defined, although Commerce has indicated in past Section 232 investigations that a threat to U.S. national security can arise either:

(i) by fostering U.S. dependence on unreliable or unsafe imports;

or (ii) by fundamentally threatening the ability of U.S. domestic industries to satisfy national security needs.  

3.  The law lists various factors that must be considered by the Department, focusing on:

• · Domestic production required for national defense requirements;
• · Capacity of domestic industry to meet such requirements;
• · Existing and anticipated availability of human resources, products, raw materials and other supplies and services essential to national defense;
• · Growth requirements of domestic industries to meet defense requirements;
• · Quantity, quality, availability, and character of imports as those affect domestic industries and U.S. capacity to meet defense requirements;
• · Impact of imports on domestic industries and displacement by excessive imports of any domestic products causing substantial unemployment, decrease in government revenues, loss of investment or specialized skills and productive capacity; and
• · Other relevant factors.

[I]f it is appropriate, the Department may hold public hearings or otherwise afford other opportunities for interested parties to present information.

4. The Department must also consult with the Department of Defense.

5.   If Commerce makes an affirmative finding that imports threaten to impair U.S. national security, it must submit a recommendation to the President regarding appropriate relief within 270 days of the date of initiation.

 6.  At this point, the process shifts to an inter‐agency deliberation over an appropriate remedy.   This process results in a recommendation to the President.  The President is not bound by the Department’s recommendation, and in some cases Commerce’s relief recommendations have been significantly modified. If Commerce determines that the national security is being impaired, the President must determine within 90 days if he concurs with the Secretary’s determination of a threat to national security and identify an appropriate remedial action. The President must implement any action within 15 days of making an affirmative determination to grant import or other relief,

8. and submit a report to Congress within 30 days of the determination.

The concept of national security

Author: Jennifer A. Hillman, professor at Georgetown University Law Center and  a member of the World Trade Organization’s Appellate Body from 2007-11.

" The Trump administration is making overly broad interpretations of national security and then insisting these claims cannot be challenged. These actions undermine international law and threaten the rules-based global trading system. The law being invoked to justify the steel and aluminum new tariffs was crafted during the Cold War. It gives the president broad power to ensure that the United States is not overly dependent on imports for critical defense needs, especially imports from countries the U.S. doesn’t trust to supply goods in times of war.

International law is more precise. It allows countries to pile on tariffs or take other actions that would otherwise violate their trade commitments when they judge them necessary to protect their essential security interests. This exception applies only in cases related to trade in nuclear materials, arms or ammunition; or during war or international emergency. Mr. Trump’s tariffs do not fit within any of those boxes.

Those who crafted the “national security” exception to the international trading rules tried to balance every country’s need to judge their own national security risks with the concern that an open-ended exception would be misused. Hence, “national security” is limited to cases involving emergencies, war and weapons. The Trump administration has upset that balance. If the United States can justify tariffs on cars as a threat to national security, then every country in the world can most likely justify restrictions on almost any product under a similar claim.

For more than two decades after the World Trade Organization was created in 1995, no claim for breaking the trade rules through the national security exception had ever reached a W.T.O. dispute settlement panel. None of the member countries wanted to allow the “nameless, faceless” bureaucrats in Geneva to define their essential security interests.

Blurring the line between economic and national security also invites retaliation. The United States has also broken its commitment not to discriminate among W.T.O. members. Already U.S. partners  are reacting: China, Canada, the European Union, Mexico, Japan, India, Turkey and Russia may impose their own retaliatory tariffs. This adds tremendous chaos to the trading system and may signal the start of a global trade war.

Erasing the line dividing national security from economic security threatens both. Congress needs to recognize the danger and limit the president’s authority to raise the specter of national security at every turn. At the same time, Congress must ensure that genuine concerns are not traded away for limited economic gains.