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Updated June 29, 2018
Section 232 of the Trade Expansion Act of 1962
Background
or will cause a weakening in the national economy.
On March 8, 2018, the President announced tariffs on
Commerce may request public comments or hold hearings,
imports of steel and aluminum after Department of
if appropriate. An Executive Summary of the final report
Commerce (Commerce) investigations determined that
(excluding any confidential or classified material) must be
current imports threaten to impair national security. Such
published in the Federal Register.
investigations are carried out pursuant to Sec. 232 of the
Presidential Action and Notification. If Commerce finds
Trade Expansion Act of 1962 (19 U.S.C. § 1862, as
in the negative, Commerce informs the President and no
amended), sometimes called the “national security clause.”
further action is required. If Commerce determines in the
The last time a president imposed tariffs or other trade
affirmative, the President, upon receipt of the report, has 90
restrictions under Section 232 was in 1986, based on a 1983
days to (1) determine whether he concurs with its findings;
investigation into imports of machine tools. The use of
and (2) if the President concurs, determine the nature and
Section 232 by the Trump Administration has generated
duration of the action to be taken to adjust the subject
active debate at the multilateral level and in Congress,
imports. The President may decide to impose tariffs or
including legislative initiatives to amend the congressional
quotas to offset the adverse effect, without any limits on the
delegation of authority under Section 232 to the President.
duration on tariff or quota amounts. The President has
Section 232 Process
discretion to exclude specific product categories, countries,
or provide other exemptions. After making a determination,
Section 232 allows any department or agency head, or any
“
the President must implement the action within 15 days,
interested party,” to request Commerce to initiate an
investigation to ascertain the effect of specific imports on
and submit a written statement to Congress explaining the
the national security of the United States. Commerce may
actions or inaction within 30 days. The President must also
also self-initiate an investigation.
publish his determination in the Federal Register.
Investigation. Once a Section 232 investigation is
Figure 1. Section 232 Investigation Process
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 whether the targeted product
is being imported “in certain quantities or under such
circumstances” to impair U.S. national security, and to
provide recommendations for action or inaction based on
the findings.
The Bureau of Industry and Security (BIS) at Commerce
conducts the investigation based on federal regulations
codified in 15 CFR § 705 (Effect of Imported Articles on
the National Security). In terms of national security,
Commerce considers: (1) existing domestic production of
the product; (2) future capacity needed; (3) the manpower,
raw materials, production equipment, facilities, and other
Source: CRS graphic based on 19 U.S.C. § 1862.
supplies needed to meet projected national defense
Prior Section 232 Actions
requirements; (4) growth requirements, including the
Prior to the Trump Administration, 26 Section 232 national
investment, exploration, and development to meet them;
security investigations were initiated, beginning in 1963.
and (5) any other relevant factors.
Previous investigations of manufactured goods were more
Regarding the subject imports, Commerce must consider:
tightly focused on specific products, including antifriction
(1) the impact of foreign competition on the domestic
bearings and gears and gearing products. Of the 26 cases
industry deemed essential for national security; (2) the
initiated (excluding Trump Administration investigations),
effects that the “displacement of domestic products” cause,
Commerce made negative determinations 62% of the time.
including substantial unemployment, decreases in public
Prior to 2018, when Commerce made positive
revenue, loss of investment, special skills, or production
determinations, the President recommended action six times
capacity; and (3) any other relevant factors that are causing,
(Figure 2). In one case, the President sought voluntary
https://crsreports.congress.gov
Section 232 of the Trade Expansion Act of 1962
restraint agreements. Five positive determinations and
Other enforcement tools include antidumping (AD) and
actions were related to petroleum products or crude oil: one
countervailing duty (CVD) actions, provided when a
resulted in a conservation fee, later held illegal by a federal
domestic industry is materially injured, or threatened with
court; two actions were based on the Mandatory Oil Import
material injury, either by sales found to be at less than fair
Program that predated enactment of Section 232; and twice
value in the U.S. market (AD) or of products found to be
the President imposed an embargo (on crude oil from Iran
subsidized by a foreign government or other public entities
in 1979 and on crude oil from Libya in 1982).
(CVD). Presidential action is not required in these
Figure 2. Section 232 Investigations 1963-2018
investigations; it is automatic based on affirmative findings
jointly by the ITC and Commerce Department.
WTO Implications
While the U.S. unilateral action may appear to be counter to
U.S. trade liberalization commitments 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.” However, several WTO
trading partners, including Canada, China, the EU, India,
and Mexico, have challenged the current U.S. actions by
alleging that they violate GATT Article I, which obligates
Source: CRS Graphic based on BIS data (https://www.bis.doc.gov/).
WTO members to treat one country’s goods no less
Trump Administration and Section 232
favorably than another member’s; and GATT Article II,
Commerce initiated its steel and aluminum investigations in
which generally prohibits members from placing tariffs on
April 2017 (82 FR 19205, 82 FR 21509), and sent both
goods in excess of the upper limits to which they agreed to
reports to the President on January 22, 2018. In each
when acceding to the WTO. Some WTO members have
investigation, Commerce analyzed current and future
also asserted that the U.S. actions violate the WTO
requirements for national defense and 16 specific critical
Agreement on Safeguards and have, or plan to, impose
infrastructure sectors, and determined that the quantities
counter tariffs on U.S. imports, which also may raise
and circumstances of imports threaten to impair the national
questions about whether they are upholding similar WTO
security and provided recommendations for implementing
commitments.
tariffs and/or quotas.
Issues for Congress
The President concurred with Commerce’s findings, and
The recent Section 232 investigations and actions raise a
effective March 23, 1018, applied 20% tariffs on steel
number of issues for Congress, including:
imports and 10 % tariffs on imports of aluminum. Initially,
What is the potential economic impact of the tariffs,
several countries, including Canada, Mexico, and European
and retaliatory tariffs, on U.S. producers, downstream
Union (EU) were temporarily exempted from the tariffs
domestic industries, and consumers?
pending negotiations on potential alternative measures.
Should Congress consider amending current delegated
Permanent tariff exemptions were granted to Brazil and
authorities under Section 232, possibly by requiring
South Korea for steel and to Argentina for steel and
congressional consultation or approval, requiring an
aluminum in exchange for quantitative limitations.
economic impact study, or by further delineating the
Australia was exempted from both tariffs with no
factors to be considered in an investigation?
quantitative restrictions.
Should Congress consider establishing specific or
In January 2018, two U.S. mining companies requested a
enhanced new trade agreement negotiating objectives
Section 232 investigation into uranium imports. The most
to pursue negotiations to establish multilateral rules
recent Section 232 investigation, initiated by Commerce in
that address newer issues such as excess capacity,
May 2018, on imports of U.S. automobiles and parts has
state-owned enterprises, or anti-corruption?
raised multiple issues, including how broadly Congress
What is the potential impact of using unilateral
intended the national security definition to be.
enforcement tools on U.S. allies? Will they be less
How Does Section 232 Differ from Other
likely to engage or partner in other negotiations?
Trade Enforcement Tools?
Could U.S. unilateral actions and broad application of
Section 232 is one of several U.S. policy tools to address
the WTO Article XXI undermine the WTO rules and
imports and unfair trade practices. For example, Section
the multilateral trading system?
201 of the Trade Act of 1974 (19 U.S.C. § 2252 et seq.)
addresses temporary safeguard measures for import surges
Rachel F. Fefer, Analyst in International Trade and
of fairly traded goods based on U.S. International Trade
Finance
Commission (ITC) investigations of whether the imports
Vivian C. Jones, Specialist in International Trade and
are causing or threaten to cause serious injury. Rather than
Finance
focusing on national security, however, Section 201
IF10667
investigations aim to help the U.S. industry return to health.
Presidential action is also required in Section 201.
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Section 232 of the Trade Expansion Act of 1962
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https://crsreports.congress.gov | IF10667 · VERSION 10 · UPDATED