US Looks to Rebut New Arguments Seeking to Halt Deduction of Section 232 Duties From US Price
Section 232 national security tariffs are not remedial and are in fact ordinary customs duties, meaning they should be deducted from an antidumping duty respondent's U.S. price, the U.S. argued in a reply brief at the Court of International Trade. Responding to exporter Nippon Steel Corporation's arguments attempting to overturn the trade court's prior ruling on the issue in three other cases, DOJ argued that Section 232 duties are imposed to address imports that threaten national security and not to boost the economic welfare of U.S. industries, making them non-remedial (Nippon Steel Corporation v. United States, CIT #21-00533).
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The case concerns the third administrative review of the antidumping duty order on hot-rolled steel flat products from Japan, in which Commerce ultimately assigned Nippon a 11.70% dumping rate, partly due to Commerce's reduction of Nippon Steel's U.S. price by the amount of Section 232 duties paid on its products. Nippon Steel filed its case to argue that the Section 232 duties should not be deducted from U.S. price (see 2203030034).
However, the court has previously ruled on this question, looking to three factors on whether the steel and aluminum duties are "United States import duties" and can thus be deducted: whether the duties are remedial, are temporary, and if deducting them from U.S. price would amount to a double remedy. If all three are answered yes, the duties are U.S. import duties and can be deducted. While finding that the duties aren't temporary, the court found that deducting them wouldn't amount to a double remedy and that they're not remedial. The court's analysis was partially based on Commerce's previous analysis, which found that Section 201 safeguard duties are not U.S. import duties.
Nippon Steel embraced a new tack not found in the prior cases on the issue, arguing that what the court missed was that the Section 232 duties are not meant to amass U.S. revenue. The duties are meant to boost national security, precluding them from being an ordinary customs duty that generates revenue. The U.S. replied that defining ordinary customs duties in this way is errant. DOJ said that while ordinary tariffs were originally imposed to raise revenue, this overlooks the fact that the current rates were negotiated between countries and based on more than revenue-raising concerns.
The exporter further argued that the Section 232 duties cut against Supreme Court precedent establishing that U.S. laws must be consistent with a country's obligations absent clear congressional intent. Seeing as the General Agreement on Tariffs and Trade sets negotiated tariff rates, imposing any tariffs beyond these rates would violate the law, Nippon Steel said. The U.S. argued against this claim, finding it "meritless," since the GATT has clear exceptions for national security purposes.
Nippon Steel also held that Commerce effectively collects Section 232 duties a second time via an increased antidumping margin. "Plaintiff is wrong, and its reasoning -- if implemented -- would allow importers to circumvent the Section 232 duty on the back end: if Commerce did not deduct Section 232 duties from United States price, then Nippon Steel would benefit from an inflated constructed export price, thereby reducing its antidumping margin, and rendering the Section 232 duties effectively useless," the brief said.