The U.S. Supreme Court on Monday refused to hear a case seeking to deny the administration’s power to impose more than $4 billion in steel tariffs, turning away an appeal that challenged its use of national security as the legal justification for the United States’ trade agenda.
The appeal, led by a steel industry trade group, was spurred by the president’s decision last year to slap a 25% tariff on imported steel. The group contends that the provision invoked, Section 232 of the Trade Expansion Act of 1962, gives the president such broad discretion to impose tariffs on national security grounds that it violates the Constitution. Congress, not the president, has exclusive power over taxes and foreign duties and cannot delegate that power to the president, the group, the American Institute for International Steel, said.
Source: Bloomberg
The administration is also threatening to utilize Section 232 to place tariffs on imports of automobiles and parts, which could have an even larger impact on the U.S. economy; the auto industry has historically contributed 3% to 3.5% percent to overall U.S. gross domestic product. The industry says tariffs of up to 25% on millions of imported cars and parts would add thousands of dollars to vehicle costs and potentially lead to hundreds of thousands of job losses throughout the United States. The Center for Automotive Research found that a 25% tariff would result in:
- 2 million fewer new vehicles sold per year;
- U.S. employment losses of nearly 714,700 jobs;
- GDP losses of $59.2 billion
Automakers can produce cars for about a month before the costs associated with the 25% tariff take effect, but by December (if the tariffs go into effect after the six-month delay), consumers may begin to see the impact in the form of higher prices, amounting to around $4,400 on the typical vehicle sold in the United States, according to the National Automobile Dealers Association. This would also possibly force many consumers to the used-car market, putting further pressure on new car sales at a time when industry sales have been on the decline.
The case is known as American Institute for International Steel v. United States, No. 18-1317.
