Trump’s New Tariffs Expand the Boundaries of Section 232

Earlier this month, President Trump announced significant changes to his tariffs on U.S. imports of steel, aluminum, and copper, some of which had been in place dating to his first term, and a new set of tariffs on imports of certain pharmaceutical products.

Trump is implementing these “product” tariffs under a different legal regime than the “IEEPA tariffs” Trump levied last year on imports from most U.S. trading partners, which the Supreme Court ruled unlawful in late February and which Trump is now trying to recreate under other statutes. The Trump administration is implementing the product tariffs pursuant to Section 232 of the Trade Expansion Act of 1962, which authorizes the president to take action to “adjust the imports” of an “article” if an investigation by the Department of Commerce finds that U.S. imports of the article “threaten to impair the national security.”

The courts have been deferential to the executive branch’s use of Section 232 since the Supreme Court upheld its use for tariffs in a 1976 case, Federal Energy Administration v. Algonquin SNG—and in recent years, the judicial branch’s deference to the executive in areas of national security has, if anything, increased. Indeed, while Trump’s original reciprocal tariffs last year drew multiple lawsuits that ended up at the Supreme Court, and the Court of International Trade recently heard oral arguments in two lawsuits against his fallback reciprocal tariffs, there have been comparatively few significant legal challenges to Trump’s Section 232 tariffs during his second term.

Nonetheless, Trump’s recent Section 232 tariff actions push the legal boundaries of the statute and should face greater legal and congressional scrutiny.

The Metals Tariffs: A Simplified Structure, but What Is a “Derivative”?

Trump’s revised metals tariffs seek to simplify a regime that Trump first put in place during his first term and expanded in 2025. The Commerce Department launched Section 232 investigations into U.S. imports of steel and aluminum in 2017, and in 2018 found that imports of both metals impaired U.S. national security and that the president should adjust imports to ensure that U.S. steel and aluminum mills operated at 80 percent capacity or more. To achieve that, the president imposed 25 percent tariffs on steel and 10 percent on aluminum.

Two years later, in 2020, Trump expanded the tariffs to cover “derivative” articles, a list that at the time affected products made almost entirely out of metal, such as nails and metal car bumpers. Then, last year, Trump hiked the steel and aluminum tariffs to 50 percent, making the announcement at a rally in western Pennsylvania, a major steel-producing region. Trump also began expanding the types of products subject to the metals tariffs, imposing tariffs on products that, in some cases, contained only a small quantity of metal or were tariffed simply because they were packaged in metal containers. For example, canned beer was tariffed as a derivative of aluminum—though importers had to pay the 50 percent tariff only on the value of the can, not on the value of the beer inside it. In August 2025, Trump also began using Section 232 to tariff copper imports.

Trump’s new Section 232 regime for metals, announced earlier this month, was designed to simplify this regime and effectively created a simplified structure of three tiers of tariffs on the imports of metals. The first tier is a 50 percent tariff on raw steel, aluminum, and copper and on products that are essentially made entirely out of the metals. These are products that are clearly metal products, such as copper or steel pipe, or steel nails.

The second tier is a 25 percent tariff on so-called derivative products that contain substantial metal content but that are not obviously metal products. Unlike the scheme announced in 2025, which applied the tariff only to the metal content in these products, Trump’s revised scheme applies the tariff to the entire value of the import. While this simplifies compliance for importing companies, which no longer need to calculate the “metal value” of their products, it also means that many importers will pay higher effective tariffs on the products they bring in. For example, appliances such as gas stoves, air conditioners, and heaters now face 25 percent tariffs on their full value, as Trump has identified them as derivatives of steel. The only exception is if the importer can show that a potentially covered product contains less than 15 percent of a tariffed metal by weight, in which case the product is exempt.

There is also a third tier of lower tariffs for metal products that meet specific criteria. Products made abroad that show they are using U.S.-origin metals are subject to a 10 percent rate. And products from the U.K. that use U.K.-origin metal also face lower tariffs, reflecting terms of a deal that Trump struck with the U.K. last year.

Legal challenges to Trump’s Section 232 on metals tariffs generally face an uphill battle in the courts. Challenges to Trump’s first term steel and aluminum tariffs never reached the Supreme Court, but the U.S. Court of Appeals for the Federal Circuit took a deferential view to the president’s first term steel and aluminum tariffs. For example, in 2023 they upheld the president’s power to substantially modify the tariffs to cover additional products outside of the original timeline that Section 232 specifies for imposing tariffs. Courts were also dismissive of other legal arguments against Trump’s Section 232 tariffs during his first term. And while the public may argue over whether the secretary of commerce’s determination that imports of some items impair U.S. national security and over the president’s decision to “adjust” imports—for example, Trump’s decision last year to tariff upholstered furniture and bathroom vanities pursuant to a Section 232 investigation into timber imports was politically controversial—both the text of the statute and case law are clear that the Commerce Department and the president have wide latitude in their factual findings about national security threats and in imposing tariffs on investigated products and derivatives.

One area that does seem ripe for a legal challenge, however, is the scope of what products the government can actually deem derivatives. In short, is a window air conditioning unit really a derivative of steel within the meaning of the statute?

Section 232 does not define derivative products, simply authorizing the president to impose tariffs on “the article and its derivatives.” Previous Section 232 cases have not significantly addressed the question of what a derivative is because edge cases have never been squarely presented in court: The products at issue in the Federal Circuit’s 2023 decision on Section 232, for example, included metal nails and fasteners, and the plaintiffs did not challenge whether they were metal derivatives.

That said, basic principles of statutory construction do apply to the meaning of a derivative, and, after the Supreme Court’s 2024 decision in Loper Bright v. Raimondo overturning Chevron deference, the courts need not give the government’s interpretation of a “derivative” particular deference. A plain language understanding of “derivative” suggests a product or material that is derived from something else—not simply a product that contains another material. A 1960 edition of Webster’s dictionary, for example, defines a derivative as “anything obtained or deduced from another” or, in chemistry, “a substance related to another substance by modification or partial substitution as to be regarded as to be derived from it[.]” A steel nail would fit that definition; an air conditioner would not.

The legislative history of the Section 232 power to tariff derivatives is not particularly clear: Congress added the power to impose tariffs on derivatives to Section 232’s predecessor statute in 1958. But Senate hearings from 1958 suggest that the Senate, which added the phrase, was probably mostly concerned about oil products—several senators wanted to make sure that if the president decided to adjust imports of oil, something that was being discussed, he could also limit imports of refined products, lest the U.S. simply import gasoline and other refined fuels in order to avoid tariffs on crude oil. And indeed in 1959 President Eisenhower used Section 232’s predecessor to impose quantitative restrictions on imports of crude oil and various oil products. It seems likely that this was the example Congress had in mind in 1962 when it copied the “derivatives” language over into Section 232.

The courts could establish a simple, straightforward standard for derivatives that would match both the common-sense understanding of “derivative” and the legislative history. For example, a court could hold that a derivative product has to contain some large quantity of the underlying Section 232 product, such as 50 percent or more. (Indeed, this seemed to be the approach Trump took during his first term, in which he stipulated that steel and aluminum should comprise at least two-thirds of the materials value of any derivative product—far above the 15 percent threshold he set this year.) A minimum content requirement of 50 percent or more would still accord the president wide latitude in his use of Section 232: If he thought air conditioner imports might be a national security threat, he could ask the Commerce Department to investigate U.S. imports of them. But he could not simply tariff any product he wished simply on the basis that it contains some metal or other material that was itself subject to Section 232.

The Pharma Tariffs: Trumpian Transnationalism Comes to the Drug Sector

Trump’s new pharmaceutical tariffs, while relying on the same legal basis as the metals tariffs, have a very different structure—one that seems to be designed to encourage deal-making with the administration.

The Commerce Department launched a Section 232 investigation into pharmaceutical imports last April, and while the administration has not released the full findings, the proclamation Trump used to impose tariffs noted that more than half of U.S. drugs still under patent are made outside the country and that 85 percent of ingredients for those drugs are made abroad. In addition, national security experts and members of Congress have long warned that the U.S. is vulnerable with respect to its dependence on China as well as India for many generic drugs, which include the antibiotics and other routine medicines that benefit millions of Americans every year. A study last year, for example, found that 700 medicines have at least one ingredient that is sourced solely from China, including common antibiotics, heart medications, and oncology drugs.

Trump’s pharma tariffs, however, appear to be structured to address not only national security concerns but also other objectives, such as keeping costs low for U.S. consumers. This goal is clear from the way in which Trump structured them.

First, despite the U.S. reliance on China for generic drugs, Trump mostly exempted generics from his tariffs, focusing the tariffs instead on on-patent medications. For those, Trump set a new baseline tariff of 100 percent, but then proceeded to enact a variety of exemptions:

• Tariffs on imported on-patent drugs from the European Union, Japan, South Korea, and Switzerland, which signed trade deals with Trump last year, are set at 15 percent.
• Companies that have signed deals with the Department of Commerce to onshore production to the United States over the next several years and that have agreed with the Trump Administration to provide so-called MFN pricing in the U.S.—a scheme Trump introduced last fall to try to get drug companies to reduce prices for medications and to sell their drugs on his TrumpRx website—can import drugs tariff free through Jan. 20, 2029. (A company that has a deal to onshore production but does not have a deal to participate in the MFN scheme faces a tariff of 20 percent unless it is making the drugs in a trade deal country, in which case the rate would be 15 percent.)
• Various specialty pharmaceutical products can be exempted from the tariffs.

The upshot of this structure will be to put enormous pressure on on-patent drug firms to pursue and implement deals with the Trump administration to onshore production and sell on his TrumpRx platform in order to get an exemption from the tariffs. Many companies have already entered into deals with the administration, attracting criticism and at least one lawsuit given that neither the administration nor the companies involved have released many details about them. Now, failing to comply with those deals or, for companies that have not entered into them, failing to negotiate them, will have real costs—even a 15 percent tariff on many patented drugs would be a significant financial hit, given their cost. Trump appears to be using the threat of tariffs on individual drug companies to encourage deal-making with his administration, much as he has used novel government equity investments in companies such as Intel and even export controls to pressure companies into striking deals with his administration.

A company that did not want to strike a deal with Trump could conceivably file suit arguing that the deals—or, at least, deals focused on prices and sales on the TrumpRx website, rather than onshoring actual production—are not sufficiently related to the national security concerns to be within the bounds of the statute. The statute itself, however, appears to give the president vast flexibility in determining the actions to take, at least with respect to products that fit within an investigation’s scope. Section 232 tasks the president with determining “the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.” That language is highly deferential to the president. While there is no intelligible connection between selling drugs on TrumpRx and U.S. national security (suggesting that the president is using 232 for purposes well outside Section 232’s national security purpose) and a court challenge arguing that the president cannot use 232 to impose measures with no connection to U.S. national security at all would be valuable, a plaintiff considering such a suit will also have to contend with the fact that the caselaw suggests the president’s actions will receive substantial deference.

As Section 232 Expands, Congress Needs to Reassert Itself

Trump’s 232 tariffs on metals and pharmaceuticals are just two of a growing array of Section 232 investigations that Trump has directed. Indeed, across his two terms, Trump has now launched a total of 19 Section 232 investigations, more than the 15 investigations that other presidents have launched since the Commerce Department started administering the statute in 1980. While, as noted above, the courts have been deferential to the president and Commerce Department in their use of Section 232, other legal challenges against other Section 232 investigations may be possible. In its 2023 opinion upholding the president’s authority to modify Section 232 tariffs outside of the initial statutory timetable, for example, the Federal Circuit noted in dicta that if an “investigation has become substantively stale”—if, for example, it relies on facts about imports that are just no longer true—there might be limits to the president’s authority to impose tariffs based on the investigation.

Depending on the outcome of still-pending Section 232 actions, other legal challenges might be available as well. Section 232 requires, for example, a finding that the “article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” While existing caselaw is quite deferential to the Commerce Department on the factual findings the Department makes in 232 investigations, the plain text of Section 232 does clearly require that imports actually threaten U.S. national security. A court might be persuaded in the future to cast a skeptical eye on an investigation that failed to draw a minimally compelling linkage between the quality of goods imported and U.S. national security.

Trump has also relied on Section 232 as the legal basis for his export tax on AI semiconductor sales to China. In order to avoid the Constitution’s prohibition on export tax, Trump has technically structured the export tax as a tariff on imports of semiconductors from Taiwan where those semiconductors will be re-exported to China. (Trump has forbidden exports of AI semiconductors containing U.S. technology directly from Taiwan to China, so they have to be imported into the U.S., tariffed, and then re-exported before then can be sold to China). This action could also potentially be subject to legal challenge.

More broadly, however, the Section 232 actions drive home the need for Congress to reassert itself in trade law if it does not want to see the president continue to arrogate to himself the power, in Article I of the Constitution, to “regulate commerce with foreign nations.” The Supreme Court’s ruling in February that the International Emergency Economic Powers Act (IEEPA)—the 1977 statute that Trump used last year for his “reciprocal” and “universal tariffs”—does not contain a tariff power has forced Trump to rely on other statutes that directly authorize the president to impose tariffs under specific circumstances.

But as Trump’s actions under Section 232 illustrate, those powers are themselves broad—and courts have traditionally been deferential to the president in his exercise of them. The rise of “economic security” as a major paradigm in U.S. international policy has raised important new questions about the separation of powers. If Congress does not want to see Trump deploy ever-expanding powers to regulate trade, it will need to end its delinquency and instead assert its prerogatives over trade.