On March 8, 2018, President Trump signed Proclamation 9704Footnote ¹ and Proclamation 9705Footnote ² imposing tariffs on imported aluminum and steel articles, respectively. According to Trump, the tariffs are “necessary and appropriate to address the threat that imports” of steel and aluminum articles “pose to the national security.”Footnote ³ The imposition of tariffs in the name of national defense is the latest and most high-profile move by the Trump administration to orient the United States toward an “America First” trade policy.

The Trump administration enacted the tariffs pursuant to Section 232 of the Trade Expansion Act of 1962.Footnote ⁴ Section 232 provides that when “the [secretary of Commerce] finds that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security” and the president “concurs with the finding of the Secretary,” then the president shall “determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.”Footnote ⁵

In making the national security determination, the statute instructs the secretary of Commerce and the president to consider:

In addition, the secretary of Commerce and the president must “take into consideration the impact of foreign competition on the economic welfare of individual domestic industries.”Footnote ⁷ And “any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered.”Footnote ⁸

Since 1980, the Department of Commerce has conducted fourteen Section 232 investigations, the most recent of which occurred in 2001.Footnote ⁹ During that time the president has issued restrictive tariffs only once—in 1982, when President Reagan embargoed crude oil produced in Libya.Footnote ¹⁰ In every other instance, the president determined that, notwithstanding any potential threat to national security, no action was necessary to adjust imports.Footnote ¹¹

In April of 2017, Trump instructed the Department of Commerce to conduct Section 232 investigations into steel and aluminum imports to the United States.Footnote ¹² The Department of Commerce released its report on February 16, 2018, finding that “the quantities and circumstances of steel and aluminum imports threaten to impair the national security.”Footnote ¹³ The Department “determined that ‘national security’ for purposes of Section 232 includes the ‘general security and welfare of certain industries, beyond those necessary to satisfy national defense requirements, which are critical to minimum operations of the economy and government.’”Footnote ¹⁴ Thus, the Department concluded that “present quantities and circumstance” of steel and aluminum imports threaten national security by “weakening our internal economy.”Footnote ¹⁵ For both metals, the Department provided three alternative recommendations: the imposition of a global tariff, targeted tariffs on specific nations, or quotas limiting imports from all countries.Footnote ¹⁶

In a memorandum responding to the Section 232 investigation, the Department of Defense, while agreeing with the Department of Commerce that “imports of foreign steel and aluminum based on unfair trading practices impair the national security,” noted that it does “not believe that the findings in the reports impact the ability of [Department of Defense] programs to acquire the steel or aluminum necessary to meet national defense requirements.”Footnote ¹⁷ It also warned of the “negative impact on our key allies regarding the recommended options within the reports.”Footnote ¹⁸

Nevertheless, on March 1, Trump announced at a press event his intention to “impos[e] tariffs on steel imports, and tariffs on aluminum imports” because “[w]e need great steelmakers, great aluminum makers for defense.”Footnote ¹⁹ A week later, on March 8, Trump signed Proclamation 9704 and Proclamation 9705, concurring with the secretary of Commerce's findings that steel and aluminum articles “are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States.”Footnote ²⁰ Effective March 23, 2018, the Proclamations imposed a global “25 percent ad valorem tariff on steel articles”Footnote ²¹ and a global “10 percent ad valorem tariff on aluminum articles.”Footnote ²² According to Trump, the global tariffs are “an important first step in ensuring the economic viability of our domestic” steel and aluminum industries.Footnote ²³

The proclamations carve out exemptions from the global tariff for Canadian and Mexican imports of aluminum and steel, “at least at this time.”Footnote ²⁴ As Trump explained, “Canada and Mexico present a special case,” given the nations’ shared commitments “to supporting each other in addressing national security concerns” and “addressing global excess capacity,” “the physical proximity of our respective industrial bases, the robust economic integration between our countries,” and the export of aluminum and steel produced in the United States to Canada and Mexico.Footnote ²⁵ On the day the proclamations issued, the secretary of Commerce remarked that “the action the president took today is a further motivation to both Canada and Mexico to make a fair arrangement with the United States” in its continuing renegotiations over the North American Free Trade Agreement (NAFTA).Footnote ²⁶

In addition to the exemptions granted Mexico and Canada, the tariff scheme leaves open the possibility of tariff relief for “[a]ny country” that has a “security relationship” with the United States.Footnote ²⁷ Such nations may propose “alternative ways to address the threatened impairment of the national security caused by imports from that country.”Footnote ²⁸ Trump states in both proclamations that:

On March 9, Trump tweeted that he and Australian Prime Minister Malcom Turnbull were “[w]orking very quickly on a security agreement so we don't have to impose steel or aluminum tariffs on our ally.”Footnote ³⁰ In addition, reporting suggest that the potential for additional carveouts has “prompted a stampede by foreign countries and companies and their American partners pressing for exemptions and exclusions that could be worth billions of dollars in trade.”Footnote ³¹ Depending on what further actions the Trump administration takes, the overall result may more closely resemble a regime of targeted tariffs on specific nations rather than a truly global tariff.

Both in the lead up to and aftermath of the announcement, the imposition of Section 232 tariffs prompted pointed criticism from domestic and international actors alike. On March 7, over one hundred Republican members of the House of Representatives sent a letter to the president expressing “deep concern about the prospect of broad, global tariffs on aluminum and steel imports.”Footnote ³² In the Senate, Republican Jeff Flake announced his intention to draft and introduce legislation to “nullify these tariffs.”Footnote ³³ Wang Yi, China's Foreign Minister, warned: “Choosing a trade war is a mistaken prescription. The outcome will only be harmful. China would have to make a justified and necessary response.”Footnote ³⁴ Cecilia Malmström, the EU Trade Commissioner, expressed the view that “the E.U. should be excluded from these measures” as a “close ally of the U.S.”Footnote ³⁵ In addition, the EU signaled that it might impose retaliatory tariffs on U.S. products, including bourbon, blue jeans, and Harley-Davidson motorcycles.Footnote ³⁶

In her remarks, Malmström made clear that “we are talking to friends and partners around the world who are also affected by the 232 decisions and who would be impacted by these measures, to see if we can coordinate our rights in the WTO.”Footnote ³⁷ Were the issue to reach the World Trade Organization, one issue would be the scope of Article XXI of the GATT, which provides that

The invocation of Article XXI(b) has “only been challenged a handful of times, and those challenges have never resulted in a binding GATT/WTO decision.”Footnote ³⁹ Moreover, international trade scholars and practitioners are divided as to what extent the provision is “self-judging” and thus immune from WTO review.Footnote ⁴⁰ The ability of parties affected by the Section 232 tariffs to seek redress at the WTO is, therefore, an unresolved question.

Although the steel and aluminum tariffs mark the first use of the president's authority under Section 232 to impose protective trade measures on imports, the tariffs are largely consistent with the Trump administration's broader attempts to reshape U.S. trade relations in order to “stand[] up for American interests.”Footnote ⁴¹ A central plank of that approach is “renegotiating trade deals and international agreements that have not provided the expected benefits to the United State”—most notably NAFTA.Footnote ⁴² Indeed, Trump signed the steel and aluminum tariffs a mere three days after trade representatives from Canada, Mexico, and the United States wrapped up the seventh round of NAFTA renegotiations.Footnote ⁴³ Substantial disagreements between the nations remain in areas including rules of origin, labor standards, and dispute resolution mechanisms.Footnote ⁴⁴ As U.S. Trade Representative Robert Lighthizer explained, while “[t]he United States views NAFTA as a very important agreement,” and is “committed to moving forward” with the negotiations, the parties “are progressing very slowly.”Footnote ⁴⁵ Absent an agreement that favorably adjusts U.S. trade balances with Mexico and Canada,Footnote ⁴⁶ Trump has reiterated his commitment to “terminate” NAFTA.Footnote ⁴⁷ Such a threat has prompted questions as to the scope of presidential power to effectuate such a withdrawal in the absence of commensurate Congressional action.Footnote ⁴⁸

Beyond renegotiating trade agreements, the Trump administration has also “take[n] tough enforcement action against countries that break the rules,” in the form of countervailing duty and antidumping tariffs.Footnote ⁴⁹ On January 23, Trump signed Presidential Proclamations 9693 and 9694 imposing protective tariffs on imports of “crystalline silicon photovoltaic cells” and “large residential washers,” respectively.Footnote ⁵⁰ The Trump administration explained that the products were “being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat of serious injury, to the domestic industry producing a like or directly competitive article.”Footnote ⁵¹

Also in January, an earlier effort to issue antidumping and countervailing duties on Canadian aerospace imports was blocked by a unanimous determination of the United States International Trade Commission (USITC). The USITC found that U.S. industry is not materially injured by “imports of 100- to 150-seat large civil aircraft from Canada.”Footnote ⁵² The decision scuttled the Department of Commerce's plans to impose a 219.63 percent countervailing duty and a 79.82 percent anti-dumping duty on Bombardier jets.Footnote ⁵³ As the Department of Commerce explained: “If the U.S. International Trade Commission (ITC) makes affirmative final injury determinations, Commerce will issue AD and CVD orders. If the ITC makes negative final determinations of injury, the investigations will be terminated and no orders will be issued.”Footnote ⁵⁴ Notably, Section 232 tariffs do not require such a determination from the USITC.Footnote ⁵⁵