The Trump administration has invoked a little-known provision of the Tariff Act of 1930 to impose a 50% tariff on $20 billion worth of Canadian imports, a move that has sparked retaliation from Canada and strained bilateral relations. The specific authority used, Section 338, has never been previously utilized or tested in court, leading to uncertainty about its legal standing.
Legal experts suggest that the Depression-era law may have been superseded by more recent trade legislation that outlines specific circumstances and procedural requirements for presidential tariff authority, such as national security threats or foreign currency crises. Without these established procedures, the Section 338 tariffs could be vulnerable to legal challenges. Some argue that the law itself is obsolete given the passage of subsequent trade acts like the Trade Expansion Act of 1962 and the Trade Act of 1974, which grant presidents powers under more defined conditions.
Further complicating the legal standing of the tariffs, critics note that the administration did not calculate the specific dollar amount of harm caused by alleged discrimination against U.S. dairy, auto, and alcoholic beverage exports. The tariffs were also applied to goods like hockey sticks and cement, which are not directly linked to the sectors cited as discriminatory. Additionally, the U.S. agreed to the dairy import quota system with Canada in a trade pact negotiated by the Trump administration itself, making the current challenge appear incongruous.
However, some legal professionals maintain that the Section 338 tariffs are a straightforward response to discriminatory practices by other countries. They argue that courts will be obligated to assess whether the statutory requirements are met, regardless of broader contextual issues. The administration has faced previous legal setbacks with tariffs, including the Supreme Court striking down broad tariffs imposed under a national security law and a trade court rejecting new tariffs intended to replace lost revenue.
As of now, no lawsuit has been filed challenging the Section 338 tariffs on Canada. The Liberty Justice Center, a libertarian advocacy group, is seeking businesses willing to pursue legal action. However, the relatively smaller scale of these tariffs compared to previous measures means fewer companies are directly affected, potentially reducing the number of plaintiffs. There remains a possibility that both nations could resume negotiations and reach a compromise to de-escalate the trade dispute.