In April, the Trump administration initiated an investigation under Section 232 of the Trade Expansion Act of 1962. Section 262 is titled “Safeguarding national security”, and the Act requires the Department of Commerce (Commerce), in coordination with the Department of Defense (DOD), to conduct an investigation to determine the “effects on national security of imports of articles.” The DOD’s primary role is to provide Commerce with an assessment of the defense requirements of any article that is the subject of an investigation conducted under Section 232. Other government agencies can also participate in the Section 232 based on the issues and policy questions that arise during the investigation.
Under Section 232, Commerce will have 270 days to determine whether steel is being “imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” Based on Commerce’s findings, the President must issue a report to Congress and may take such actions as he deems necessary to “adjust” steel imports “so that such imports will not threaten to impair the national security.”
During the course of an investigation, Commerce may provide the public with an opportunity to comment and present information and advice relevant to the investigation, usually through a notice in the Federal Register. Additional information is gathered from such sources as surveys of producers and end-users, on-the-record- meetings with interested parties, site visits, and a review of publicly available information.
Commerce has outlined the following as the most important critical factors to be taken into consideration in a Section 232 Investigation:
- Requirements of the defense and essential civilian sectors;
- Growth requirements of domestic industries to meet national defense requirements;
- Quantity, quality, and availability of imports;
- Impact of foreign competition on the economic welfare of the essential domestic industry;
- The displacement of any domestic products causing substantial unemployment, decrease in the revenues of the government, loss of investment or specialized skills and productive capacity; and
- Other factors relevant to the unique circumstances of the specific case
It is clear from the above that a Section 232 investigation considers factors beyond traditional defense applications such as the manufacture of weapons, ships and planes, but also includes consideration of ancillary concerns such as the economic welfare of the domestic steel industry, impacts on unemployment, tax revenues to the government, and the potential loss of essential skills in the industry. At a recent public hearing on the 232 investigation, U.S. producers made it clear that impacts to national security should be viewed very broadly and include that which is related to infrastructure requirements, including the federal interstate highway system and other federal procurement programs, as well as the overall health of the domestic industry itself.
The Section 232 investigation comes at a time when current restrictions on steel are extensive. These relate primarily to findings that steel products are being “dumped” or unfairly subsidized, and these measures currently serve to effectively exclude a wide range of foreign steel product from the U.S. market. This latest action is in line with President Trump’s stated objective to assist U.S. manufacturers and bring more jobs back to the U.S.
At this time, it is unknown which specific types of products will be identified in the investigation, as well as the extent of any potential restrictions, however importers and purchasers of steel products should follow the developments of the investigation carefully to determine if any products of interest are identified, and be prepared to participate in any available comment opportunities with the goal of favorably influencing the treatment of the products in any final decision.