Overview
On April 19, the Trump administration took action under a rarely-used provision of the Trade Expansion Act of 1962, allowing the United States to impose tariffs if it determines that certain imports pose a national security threat. Acting under section 232 of the Trade Expansion Act, the Department of Commerce announced the start of an investigation to assess whether steel imports threaten US national security and should be curtailed accordingly. Under the statute, the Department of Commerce has 270 days to submit to the President its findings and any recommendations for action. However, the process may go considerably faster than that, as President Trump has signaled he wants the Commerce Department to move expeditiously. Section 232 has not been invoked since 2001 and has not resulted in the imposition of tariffs since 1975.
During the campaign, President Trump repeatedly promised to take a tough line on international trade issues, particularly where he believed American jobs were at stake. He also frequently alleged that China, one of the principal sources of US steel imports, engages in unfair trade practices. The initiation of a Section 232 investigation can be seen as another step in following through on those campaign promises.
The invocation of Section 232 is particularly notable because it demonstrates a willingness to view traditional economic issues through a national security lens. Such an approach to international trade and investment could have a significant impact on administration policy in a variety of contexts, including the Committee on Foreign Investment in the United States (“CFIUS”), which is responsible for reviewing inbound investment that may have national security implications. CFIUS has historically taken a narrow view of national security by not defining it to include issues such as economic security or trade reciprocity. However, Section 721 of the Defense Production Act of 1950 (the authorizing legislation for CFIUS) states that the Committee may consider “such other factors” as determined “to be appropriate.” The broad language of that statute suggests that CFIUS could consider factors such as economic security when reviewing transactions if it was so inclined.
In that light, the Section 232 steel investigation serves as an interesting data point signaling that President Trump may see economic security and national security matters as more intertwined than previous administrations. In fact, there have also been industry rumors that a similar Section 232 investigation could be launched for aluminum products. Such an approach to national security policy could have a significant impact across the government, and Steptoe will be closely monitoring these developments and what they may mean for the CFIUS process.
