Focus on America: Trump on trade

On the campaign trail, Donald Trump made great play of promises to protect factory workers from imports – though not necessarily with a view to the legal strategy required to do so. The options are many and various, including accusing China of violating the WTO agreements or citing old-fashioned dumping laws. Or perhaps something more esoteric.

And so it proved when, on April 19 and April 27, President Trump invoked national security as a grounds for the Commerce Department to investigate raising tariffs on global steel and aluminium imports under Section 232 of the Trade Expansion Act of 1962. Bill Perry, who writes the ‘US China Trade War’ blog, sees this obscure Cold War law as an extremely clever vehicle for fulfilling protectionist pledges with virtually no juridical oversight. ‘Trump can start imposing tariffs willy-nilly using this 232 investigation approach,’ he says. ‘This could be the real beginning of a trade war.’

Section 232 may appeal to Commerce Secretary Wilbur Ross as an end-run on the International Trade Commission. In ordinary trade remedy cases, Commerce can't act without an injury finding by the ITC -- a bipartisan body funded by Congress that is no one's puppet. The ITC 'will not be embracing any alternative facts,’ the Democratic ex-commissioner Jennifer Hillman has warned President Trump.

In February, the ITC riled US industry by halting a billion-dollar dumping case against Chinese Truck and Bus Tires in its tracks. Perry, who worked at both agencies, estimates that the ITC finds 'no injury' close to a third of the time. By contrast, he reckons that the Commerce Department, which is fully controlled by the executive, finds dumping at least 90 percent of the time. 'Section 232 is totally a creature of the Commerce Department,' Perry says, and 'the Commerce Department is very protectionist.'

But what really makes Section 232 a game changer, in Perry's view, is that it could evade juridical oversight. US courts might decline jurisdiction because the Trade Expansion Act does not expressly provide for judicial review. The WTO might take its national security clause to be self-judging. In either forum, jurists naturally tend to defer on national security. 'We know Donald Trump wants to find a way to unilaterally impose tariffs on his own,' Perry says. 'He always in the campaign said “I'm going to put a tariff on them”. Well, now he's got a way to do so. And he's going to do so with a friendly Commerce Department, no independent check at the International Trade Commission, no court review of the determination... And [in] the WTO, [the only check is] a provision that's never been used and gives a country wide latitude.'

‘‘He always in the campaign said “I'm going to put a tariff on them”. Well, now he's got a way to do so. And he's going to do so with a friendly Commerce Department

Bill Perry, Author, US China Trade War blog

But, says Professor Robert Howse of NYU School of Law, ‘It's far from certain that Commerce will find a section 232 violation or that the executive would choose aggressive tariffs as the remedy. And it's unlikely that such a tariff would survive review by the U.S. courts and WTO. Launching a section 232 investigation is good for a tweet or a soundbite.

'But it's completely preposterous. I'd be very amused to see any reasoned argument that steel imports threaten US security.' The logic seems to be that America lacks the means to supply its military, yet these industries are far from extinct. And in any event, a tariff won't magically build a new steel mill in Pittsburgh. 'We'll hear a lot of belligerent rhetoric,’ Howse says. ‘But will there be any actions in obvious violation of WTO treaty obligations? I don’t think so.'

Howse expects the US courts to read a reasonableness requirement into the Trade Expansion Act. He doubts the WTO would undermine its own system by giving members carte blanche to impose tariffs under the guise of self-assessed national security needs. And at both levels, the decision-makers may feel a responsibility to act as a check on a President who openly campaigned in opposition to free trade, globalization, and the liberal world order. As he signed the section 232 orders, he reiterated his stance. 'We're going to fight for American workers and American-made steel. For decades, America has lost our jobs and our factories to unfair foreign trade...and we're going to reverse that.'

Just as US judges read the President’s travel ban in light of his rage against Muslims, the WTO may read his 'national security orders' in light of his protectionist pledges. Charlene Barshefsky, who served as US Trade Representative under President Bill Clinton, says jurists aren't deaf: 'There's such sensitivity internationally because of all the rhetoric in the campaign, that as the administration takes action that looks like that rhetoric, it will be interpreted as fulfilling the rhetoric.... I don't think there's any panellist in the world, just as there's no judge in the world, who wouldn't also say, I know [why] this was enacted the way it was.'