The Section 232 Process
Section 232 allows any department, agency head, or any “interested party” to request the Department of Commerce (Commerce) to initiate an investigation to ascertain the effect of specific imports on U.S. national security. Commerce may self-initiate an investigation.
Investigation. Once a Section 232 investigation is requested in writing, Commerce must “immediately initiate an appropriate investigation to determine the effects on the national security” of the subject imports. After consulting with the Secretary of Defense, other “appropriate officers of the United States,” and the public, if appropriate, Commerce has 270 days from the initiation date to prepare a report advising the President on whether the targeted product is being imported “in certain quantities or under such circumstances” to impair U.S. national security, and to provide recommendations based on the findings.
The Bureau of Industry and Security (BIS) at Commerce conducts the investigation (15 CFR Section 705). In terms of national security, Commerce considers (1) existing domestic production of the product; (2) future capacity needs; (3) manpower, raw materials, production equipment, facilities, and other supplies needed to meet projected national defense requirements; (4) growth requirements, including the investment, exploration, and development to meet them; and (5) any other relevant factors.
On imports, Commerce must consider (1) the impact of foreign competition on the domestic industry deemed essential for national security; (2) the effects that the “displacement of domestic products” cause, including substantial unemployment, decreases in public revenue, loss of investment, special skills, or production capacity; and (3) any other relevant factors that are causing, or will cause, a weakening in the national economy. Commerce may request public comments or hold hearings, if appropriate. An Executive Summary of the final report (excluding any confidential or classified material) must be published in the Federal Register.
Presidential Action and Notification. If Commerce finds in the negative, Commerce informs the President and no further action is required. If Commerce determines in the affirmative, the President, upon receipt of the report, has 90 days to (1) determine whether he/she concurs with its findings; and (2) if so, determine the nature and duration of the action to be taken to adjust the subject imports. The President may decide to impose tariffs or quotas to offset the adverse effect, without any limits on their duration, or take other action. The President may exclude specific products or countries. After a determination, the President must implement the action within 15 days, and submit a written statement to Congress explaining the actions or inaction within 30 days. The President must also publish his determination in the Federal Register.
Prior Section 232 Actions
Prior to the Trump Administration, Commerce initiated 26 Section 232 national security investigations, beginning in 1963. Previous investigations of manufactured goods focused on specific products, including antifriction bearings and gears, and gearing products. Of these 26 cases, Commerce made negative determinations 62% of the time. Prior to 2018, when Commerce made positive determinations, the President took action six times (Figure 2). In one case, the President sought voluntary restraint agreements. Five positive determinations and actions addressed petroleum products or crude oil: one resulted in a conservation fee, later held illegal by a federal court; two actions were based on the Mandatory Oil Import Program that predated enactment of Section 232; and, twice the President imposed an embargo (on crude oil from Iran in 1979 and on crude oil from Libya in 1982).
How Does Section 232 Differ from Other Trade Enforcement Tools?
Section 232 is one of several U.S. policy tools to address imports and unfair trade practices. Section 201 of the Trade Act of 1974 (19 U.S.C. §2252 et seq.) addresses temporary safeguards measures for import surges of fairly-traded goods, based on U.S. International Trade Commission (ITC) investigations of whether the imports are causing or threaten to cause serious injury. Rather than focusing on national security, however, Section 201 investigations aim to help the U.S. industry return to health. Presidential action is required under Section 201 before tariffs can be imposed.
Other enforcement tools include antidumping (AD) and countervailing duty (CVD) actions, provided when a domestic industry is materially injured, or threatened with material injury, either by sales found to be at less than fair value in the U.S. market (AD) or of products found to be subsidized by a foreign government or other public entities (CVD). Presidential action is not required in these investigations; it is automatic, based on affirmative findings jointly by the ITC and Commerce.
Under the World Trade Organization (WTO) agreements, Article XXI of the General Agreement on Tariffs and Trade (GATT) allows WTO members to take measures in order to protect “essential security interests.” Several WTO trading partners, including China, the EU, and India, have challenged the current U.S. tariffs by alleging that they violate GATT Article I, which obligates WTO members to treat one country’s goods no less favorably than another member’s; and GATT Article II, which generally prohibits members from placing tariffs on goods above the upper limits to which they agreed. Some WTO members have also asserted that the U.S. actions violate the WTO Agreement on Safeguards and have imposed (or plan to impose) counter tariffs on U.S. imports without WTO authorization, which also may raise questions about whether those members are upholding similar WTO commitments.