Section 232 of the Trade Expansion Act: What It is, How It Works

What Is Section 232 of the Trade Expansion Act?

Section 232 of the Trade Expansion Act of 1962 authorizes the president of the United States to adjust the imports of goods or materials from other countries if the quantity or circumstances surrounding those imports are deemed to threaten national security. This can be done through tariffs or other means.

The Trade Expansion Act of 1962 was signed in law by President John F. Kennedy, who called it “the most important piece of legislation, I think, affecting economies since the passage of the Marshall Plan.”

Section 232 Process

The Section 232 process begins when a government official makes a request to the Department of Commerce to investigate the effects of a certain import on national security. The Secretary of Commerce may also self-initiate an investigation. Any investigation initiated must be reported to the Secretary of Defense, who can also be consulted for information and advice should any policy questions that arise during the investigation.

The Department of Commerce then reports its findings to the President within 270 days of initiating any investigation, with an emphasis on whether or not certain imports threaten to impair the country's national security. The President has 90 days to concur formally or not with the report received from the Commerce Department.

If they concur, their statutory authority under Section 232 allows them to modify or adjust the imports as necessary through tariffs or quotas. In effect, following the report submitted, the President of the country may take a range of actions, or no action, based on the Secretary's recommendations provided in the reports.

Section 232 and the Trump Administration

In 2018, during the presidential term of Donald Trump, the Department found that the quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232.

Wilbur Ross, the U.S. Secretary of Commerce, reported that the excess production of steel and the present quantities of steel imports were "weakening our internal economy and shrinking [of our] ability to meet national security production requirements in a national emergency.” The department's report also stated that United States steel imports were nearly four times the amount of exports and that aluminum imports had risen to 90% of total demand for primary aluminum; therefore, it concluded, imports in the industry threatened to impair the national security of the U.S.

Ross had recommended in the investigation report:

• a global tariff of at least 24% on steel imports from all countries, or
• a minimum 53% tariff on steel imports from 12 countries including Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey, and Vietnam, or
• a quota on steel products from all countries equal to 63% of each country's 2017 exports to the U.S.

On March 8, 2018, Trump exercised his presidential authority under Section 232 of the Trade Expansion Act of 1962 to impose a 25% tariff on steel imports and a 10% tariff on aluminum imports citing national security concerns. The U.S. Customs and Border Protection (CBP) agency began collecting the tariffs on March 23, 2018.

The United States is the largest importer of steel in the world. In 2017, the U.S. imported 34.6 million metric tons of steel, a 15% increase from 2016, according to the Department of Commerce. Those imports were worth nearly $30 billion. Canada represented 17 percent of those imports, and Brazil accounted for 14 percent. China accounted for 2 percent and threatened to levy tariffs on hundreds of goods and materials that it imports from the U.S. in retaliation.

The Bottom Line

Section 232 of the Trade Expansion Act of 1962 authorizes the president of the United States to modify imports of goods and services based on a determination of threat to national security. The process begins with an investigation by the Department of Commerce on a certain import. After the findings of such an investigation are then reported, the president may choose to impose tariffs or take other measures to limit imports, or to take no action at all.