The United States is facing a constitutional challenge to the 25 per cent steel tariffs it imposed on Canada, Mexico the European Union and many other countries earlier this month.

The American Institute for International Steel (AIIS) said Wednesday that it would challenge the constitutionality of the statute that President Donald Trump used to impose the tariffs because it improperly delegates legislative power to the president.

The AIIS, an organization representing the steel supply chain, and two of its member companies filed the lawsuit in the United States Court of International Trade in New York City.

Section 232 of the Trade Expansion Act of 1962 allows a U.S. president to create trade barriers, including unlimited tariffs, if he believes actions are needed so imports “will not threaten to impair the national security,” which the section does not define – giving the president plenty of leeway to determine what constitutes a threat.

“In addition to the totally open-ended choice of how to counter any threat that imports may present, Section 232 allows the President to consider virtually any effect on the U.S. economy as part of ‘national security,’” Richard Chriss, the president of AIIS, said in a news release.

The Institute is arguing that because there is no limit to the president’s discretion in the statute it violates the constitutional prohibition against Congress delegating its legislative powers to the president.

The country’s constitution does not allow Congress to assign any of its legislative power to another entity, similar to how Canadian provinces and the federal government cannot delegate their own lawmaking powers to each other.

However, a 1928 Supreme Court of the United States case ruled that Congress can delegate its legislative authority to the executive branch – the president, vice-president, cabinet and federal agencies – as long as it clearly outlines and limits the assistance it needs, which is referred to as providing an “intelligible principle.”

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The AIIS’s complaint also asserts that the law violates the doctrine of separation of powers and the system of checks and balances because it has no option for judicial review of the president’s responses to import-related national security threats.

The U.S. system of checks and balances requires the powers of each branch of government to be limited by another branch, thus preventing any one branch from having too much control.

According to a fact sheet from the AIIS, if the court rules in its favour, all tariffs in effect under the statute would be eliminated and any companies who paid them would be entitled to refunds.

Thomas Gibson, the president and CEO of the American Iron and Steel Institute, a steel industry group, said in a statement Wednesday that “we believe this case is without merit and we are confident the court will reject this challenge.

“Congress acted within its constitutional authority when it authorized the president to take action to adjust imports when the Secretary of Commerce has determined such imports threaten to impair the national security.”

The steel tariffs, imposed on June 1, have already begun to hit Canadian companies hard. Janco Steel, a producer based in Hamilton, Ontario – the country’s largest steel manufacturing city – told a parliamentary committee on Tuesday that the company’s U.S. business dropped by 60 per cent this month, compared to April and May.

Stephen Young, a senior sales manager at the company, said Janco has frozen hiring, is considering layoffs and has struggled with its cash flow because it must pay the tariffs faster than it receives payment from its customers.