Can the US slap tariffs on auto imports? Not anymore

The Trump administration continues to threaten to impose tariffs on imports of autos and auto parts from around the world despite no longer having the authority to do so. 

On January 23, Commerce Secretary Wilbur Ross said that “we have a perfect justification to put tariffs on if we wish to,” adding that people “simply don’t understand” the executive’s tariff authority, according to Bloomberg. The White House and cabinet officers have connected the auto tariff threat to several other desired objectives in recent days.

But our members in the auto sector raised doubts about the issue. Their question: Does the administration retain the authority under Section 232 of the Trade Expansion Act of 1962 to impose tariffs on auto imports?

After extensive analysis of the issue, we discovered the short answer is: No, not anymore. Further, if the administration now attempts to impose these tariffs, the move would certainly be litigated, and that litigation has a high chance of success.

So what happened here? In May 2018, the Department of Commerce initiated its “Section 232 National Security Investigation of Imports of Automobiles, Including Cars, SUVs, Vans and Light Trucks, and Automotive Parts.” The investigation produced a report, which the department reportedly submitted to the president on February 17, 2019. But the report was never made public. 

The investigation and the proposal to impose tariffs on auto imports was widely panned. Industry opposition was fierce and universal. Members of Congress decried the proposal and urged the administration to reverse course. Yet the process appeared to move forward.

However, this process has deadlines. The statute gives the president 90 days after receiving the report to determine whether it is necessary to impose tariffs or take some other action. If the action is to increase tariffs, he has 15 additional days to do that. Alternatively, the president may do nothing or may choose to enter into trade negotiations to reach an agreement that “limits or restricts the importation” into the United States of the article that poses a national security threat. 

Ninety days after receiving the report, on May 17, 2019, the president issued a proclamation instructing the U.S. trade representative to pursue trade negotiations “to address the threatened impairment of the national security with respect to imported automobiles and certain automobile parts from the European Union, Japan, and any other country the Trade Representative deems appropriate.”

The statute states that, if no deal is reached within 180 days, the president may either (1) take no further action or (2) impose tariffs or otherwise address the national security threat. Whatever the choice, the president must “publish in the Federal Register” his determination not to take further action or provide notice of “any additional actions” taken under section 232.

Those 180 days lapsed on November 13, 2019. In that time span, the president neither imposed tariffs nor explained, via the required Federal Register notice, what further action he was taking or why no other action was taken.

It is now plain that any move to apply tariffs on imports of autos and auto parts under the current Section 232 action would not be in compliance with these legal requirements. The Trade Act sets forth clear time limits on the president’s authority to invoke the extraordinary power granted by the Congress in Section 232. Compliance with these time limits is not optional; to argue otherwise is to argue that there is no limit to when the executive may impose tariffs based upon an increasingly stale investigation.

Other recent legal developments confirm this analysis. On November 18, the U.S. Court of International Trade (CIT) ruled that the president “ran out of time on a Section 232 investigation of steel imports, when he tried to double the tariffs on Turkish steel to 50% in August 2018,” according to reporting by Reuters. 

The CIT, which handles appeals of U.S. duty determinations, ruled in the plaintiff’s favor and said the administration’s “expansive view” of its Section 232 powers was “mistaken.” CIT judges Claire Kelly and Jane Restani wrote in the decision:

“Although the statute grants the President great discretion in deciding what action to take it cabins the President’s power both substantively, by requiring the action to eliminate threats to national security caused by imports, and procedurally, by setting the time in which to act.” [Emphasis added.]

Just so. The Constitution vests in Congress, not the president, the exclusive authority to “regulate Commerce with foreign Nations” and the “Power to lay and collect Taxes, Duties, Imposts and Excises.” This authority cannot be delegated to the executive without limitation, including the limitation of deadlines which by any read of the statute have now passed.

So, can the United States slap tariffs on auto imports under its recently concluded Section 232 investigation? No, it cannot.

John G. Murphy is senior vice president of international affairs and directs the U.S. Chamber’s advocacy relating to international trade and investment policy. Steve Lehotsky is executive vice president and chief litigation counsel for the U.S. Chamber Litigation Center, the litigation arm of the U.S. Chamber of Commerce.