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Trade Expansion Act

(Redirected from Section 232)

The Trade Expansion Act of 1962 (Pub. L. 87–794, 76 Stat. 872, enacted October 11, 1962, codified at 19 U.S.C. ch. 7) is an American trade law.[1]

Trade Expansion Act of 1962
Great Seal of the United States
Long titleAn Act to promote the general welfare, foreign policy, and security of the United States through international trade agreements and through adjustment assistance to domestic industry, agriculture, and labor, and for other purposes
Enacted bythe 87th United States Congress
Citations
Public law19 U.S.C. ch. 7
Legislative history

The law was intended to maintain American economic influence in the wake of the creation of the European Economic Community.

The Trade Expansion Act granted the president of the United States unprecedented authority to negotiate tariff reductions of up to 50%. It paved the way for the Kennedy Round of General Agreement on Tariffs and Trade (GATT) negotiations, concluding on June 30, 1967, the last day before expiration of the Act.[2]

Section 232 of the act permits the president to impose tariffs based on a recommendation by the U.S. secretary of commerce if "an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security."[3] This section was used only in 1979 and 1982,[3] and had not been invoked since the creation of the World Trade Organization in 1995,[4] until President Trump cited it on March 8, 2018, to impose tariffs on steel and aluminum.[citation needed]

Background

In the early 1960's US politicians were worried about the growing influence of the European Economic Community and the ever-present influence of the Soviet Union. President John F. Kennedy determined that a loosening of trade restrictions would spark an increase in economic growth and keep the American economy competitive. [5] Therefore, they began to champion a new trade act that would give the President the authority to revamp US trade policy. Republicans and some industry leaders were initially skeptical, however, and believed that a loosening of trade policy would cause significant harm to American domestic industries and workers, especially amidst a persistent unemployment issue.[6]

Provisions

The act's stated purpose is to stimulate the US economy through the lowering of trade barriers, with a focus on countering Communist economic influence. To accomplish this goal the act granted the President a 5-year authority to reduce or increase tariffs by a maximum of 50% the initial level. The President was also empowered to eliminate trade barriers on goods that the United States and EEC combined accounted for at least 80% of the market, with agricultural products being exempt to the 80% rule. A "Tariff Commission" would also be created that was tasked with advising the President on the economic effect of adjustments to tariff policy. The law also created the Office of the United States Trade Representative. This office would serve as the primary negotiator with foreign countries concerning trade. The President and the Tariff Commission would also be required to submit annual reports to congress on their activities under the act. Many, however, were concerned about negative impacts to domestic industries as a result of these adjustments, to soften the blow a system was created that would allow industry leaders, firms, and workers to submit petitions to the Tariff Commission for relief. In the event the Tariff Commission found that damage was done as a result of the new trade policies it would require the President to offer assistance. This could take many forms; The President could invoke the "Escape Clause" which allowed the president to rapidly raise tariffs again. The President could also provide monetary aid to businesses in the form of loans or tax-breaks. Workers could be eligible to receive unemployment aid or even retraining. Another avenue would be the imposing of international quotas to protect industries.[7]

Legislative Timeline

The act started its journey with a massive public relations campaign spearheaded by the Kennedy administration. The goal of the campaign was to frame the act as necessary in order to maintain national security. The campaign also sought to reach out to important interest groups, highlighting how they could benefit from the reforms in the proposed legislation.[8]

The House

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The act was officially introduced in the House on August 8, 1961, and would remain in committee for the remainder of the year and into 1962. It passed through the House Committee on Ways and Means, and the House Committee on Rules, with the Ways and Means committee making modifications to the bill. The most important was the addition of an "Escape Clause" section. Which, In the event of economic damages, the President would be required to lower tariffs to compensate.[9] Protectionists attempted to kill the bill on June 12, 1962, in committee by having it recommitted, but their attempt was unsuccessful.[10] The act then passed the House on June 29, by a significant margin with no amendments made on the floor.[11]

The Senate and Passage

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The Senate Committee on Finance deliberated for several weeks sent the bill to the floor on September 14th. The Finance committee version was similar to the House version, but it differed in that it restored the most favored nation status of Yugoslavia and the Polish People's Republic. This was previously added by the House as a means to combat Communist economic influence and would become a point of debate between the two branches.[12] On the floor the legislation was subject to a lengthy amendment process before being passed by a wide margin on September 19.[13] Both the Senate and House agreed to a conference committee to resolve their differences. The committee agreed to strip out the provision restoring the most favored nation status for Yugoslavia and Poland and revert other changes to the House version. The bill was then sent to Kennedy on October 4 and signed on October 11.[14]

Recent Developments

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On April 27, 2017, President Donald Trump ordered a review of the aluminum imports and threats to national security under the Trade Expansion Act of 1962.[15][16][17][18][19] On March 8, 2018, President Trump signed an order to impose the tariffs on steel and aluminum under Section 232 of the act and citing "national security" grounds.[20]

On May 23, 2018, President Trump "instructed Secretary Ross to consider initiating a Section 232 investigation into imports of automobiles, including trucks, and automotive parts to determine their effects on America's national security. Core industries such as automobiles and automotive parts are critical to our strength as a Nation."[21][22][23][Notes 1]

In mid-February 2019, Commerce Department secretary Wilbur Ross delivered a confidential report to President Trump which concluded the Department's investigation under Section 232, that there was a legal rationale for the imposition of steep tariffs on the import of foreign automobiles, as these imports—like steel and aluminum—posed a threat to U.S. national security. According to a March 20, 2019, article in Politico, the proposed tariffs could be as high as 25%.[24][Notes 2] Politico also reported that as of March 20, the requests by the chair of the Senate Finance Committee—Chuck Grassley (R-Iowa) to access a copy of the confidential report, had been denied.[24] The deadline for Trump's decision on the imposition of the tariffs is in mid-May, ninety days after the report's release.[24]

Early in Trump's second term, he established tariffs on aluminum and steel imports under Section 232. While Trump had imposed other tariffs against all imports from several countries as part of his Liberation Day tariffs, claiming this power under the International Emergency Economic Powers Act, at least two lower courts have ruled these unconstitutional, though the United States Supreme Court will hear the case Learning Resources v. Trump to review these rulings in November 2025. Alongside these challenges, Trump intended to add new tariffs on pharmaceuticals, semitrucks, and kitchen cabinets in September 2025. Section 232 tariffs are expected to be more difficult for courts to review as they typically defer to the executive branch for matters of national security, according to The New York Times.[25]

See also

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Notes

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  1. ^ Following weeks of investigation, Forbes published the results in a June 18, 2018 article in which they expressed concerns about Wilbur Ross' financial conflicts, for example in regards to the Section 232 tariffs and the International Automotive Components Group, that Ross had created by "merging several formerly separate automotive interior companies". Forbes said that it was problematic that Trump's "instructions" to "Secretary Ross to consider initiating a Section 232 investigation into imports of automobiles, including trucks, and automotive parts to determine their effects on America's national security" were problematic because the U.S. imposition of "new taxes on imports of foreign cars and car parts" would "obviously...have a direct bearing on the fortunes of Ross's car parts company."
  2. ^ According to a March 20, 2019 article in Politico, Trump's "allies" said that he "wants to impose a "ring tax" around U.S. borders to protect the country from foreign imports."

References

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  1. ^ McAdam, Mark (2022). "Making ideas actionable in institutionalism: the case of trade liberalization in Kennedy's foreign economic policy". Journal of Institutional Economics. 18 (5): 827–841. doi:10.1017/S1744137421000849. ISSN 1744-1374. S2CID 245040776.
  2. ^ Rehm, John B. (April 1968). "Developments in the law and institutions of international economic relations: the Kennedy Round of Trade Negotiations". The American Journal of International Law. 62 (2). American Society of International Law: 403–434. doi:10.2307/2196880. JSTOR 2196880.
  3. ^ a b Shannon Togawa Mercer & Matthew Kahn, America Trades Down: The Legal Consequences of President Trump's Tariffs Archived 2024-01-13 at the Wayback Machine, Lawfare (March 13, 2018).
  4. ^ Tom Miles, Trump's extraordinary tariffs Archived 2018-03-14 at the Wayback Machine, Reuters (March 5, 2018).
  5. ^ Monson, Diane (1963). "Interests and Tariff Policy: A Case Study of the Trade Expansion Act of 1962". New York University: 80–88.
  6. ^ Congressional Quarterly Weekly Report (20 ed.). January 5, 1962. pp. 9–18.
  7. ^ "H.R.11970 - 87th Congress (1961-1962): Trade Expansion Act of 1962". www.congress.gov. 1962-10-11. Retrieved 2025-11-16.
  8. ^ Congressional Quarterly Weekly Report (20 ed.). January 26, 1962. p. 98.
  9. ^ Congressional Quarterly Almanac. Vol. 20. 1962. pp. 249–300.
  10. ^ Morris, John (June 12, 1962). "Trade Bill Ready for House Today: Protectionist Moves Fail as Rules Committee Clear Measure for Debate". The New York Times.
  11. ^ Morris, John (June 29, 1962). "House Passes Trade Bill; G.O.P Aids in 298-125 Vote; President Hails Victory: Powers Are Wide Would Enable Nation to Negotiate Broad Cuts in Tariffs". The New York Times.
  12. ^ Mooney, Richard (June 27, 1962). "Trade Bill Ready for House Today: Protectionist Moves Fail as Rules Committee Clear Measure for Debate". The New York Times.
  13. ^ Morris, John (June 27, 1962). "Senate Vote 78-8: Measure Gives Broad Power Over Tariffs to White House, Trade Bill Voted in Senate". The New York Times.
  14. ^ Mooney, Richard (October 12, 1962). "Trade Act Signed, Also Postal Bill: Kennedy Lauds 2 Measured--Federal Pay to Rise". The New York Times.
  15. ^ Office of the Press Secretary (April 27, 2017). "Presidential Memorandum on the Aluminum Imports and Threats to National Security under the Trade Expansion Act of 1962". whitehouse.gov. Washington, D.C.: White House. Archived from the original on 2017-04-28. Retrieved April 27, 2017.
  16. ^ Korte, Gregory (April 27, 2017). "Ordering national security investigation, Trump could block aluminum imports". USA Today. McLean, Virginia: Gannett Company. Archived from the original on June 13, 2018. Retrieved April 27, 2017.
  17. ^ Lawder, David (April 27, 2017). "U.S. launches national security probe into aluminum imports". Reuters. Canary Wharf, London: Thomson Reuters. Archived from the original on June 12, 2018. Retrieved April 27, 2017.
  18. ^ Colvin, Jill; Wiseman, Paul (April 27, 2017). "Trump to order aluminum imports investigation". ABC News. New York City: ABC. Associated Press. Archived from the original on April 27, 2017. Retrieved April 27, 2017.
  19. ^ Palmer, Doug; Nussbaum, Matthew (April 27, 2017). "Trump puts aluminum imports in 'national security' crosshairs". Politico. Arlington County, Virginia: Capitol News Company. Archived from the original on May 5, 2021. Retrieved April 27, 2017.
  20. ^ Scott Horsley, Trump Formally Orders Tariffs on Steel, Aluminum Imports Archived 2019-12-31 at the Wayback Machine, All Things Considered (March 8, 2018).
  21. ^ "Statement from the President on Potential National Security Investigation into Automobile Imports". whitehouse.gov. May 23, 2018. Archived from the original on January 20, 2021. Retrieved March 20, 2019 – via National Archives.
  22. ^ Yglesias, Matthew (June 20, 2018). "Commerce Secretary Wilbur Ross is tied up in major financial conflicts of interest". Vox. Archived from the original on March 21, 2019. Retrieved March 20, 2019.
  23. ^ "Lies, China And Putin: Solving The Mystery Of Wilbur Ross' Missing Fortune". June 18, 2018. Archived from the original on March 20, 2019. Retrieved March 20, 2019.
  24. ^ a b c Johnson, Eliana; Restuccia, Rew (March 20, 2019). "Trump administration withholds report justifying 'shock' auto tariffs". Politico. Retrieved March 20, 2019.
  25. ^ Swanson, Ana (September 26, 2025). "Trump Expands Tariffs Beyond Supreme Court's Reach". The New York Times. Retrieved September 28, 2025.
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