US President Donald Trump’s latest tariffs against Canada rest on an obscure provision of a nearly century-old law that has never before been used to impose tariffs and could face a serious legal challenge, according to Georgetown University trade law professor Jennifer Hillman.
Trump has invoked Section 338 of the Tariff Act of 1930 to impose additional 50 per cent tariffs on nearly $20 billion of Canadian imports beginning Aug. 19. The White House says Canadian policies affecting US dairy, alcohol and automobiles discriminate against American commerce.
Hillman says the administration may struggle to prove that claim.
“The only time that you can invoke this is when you can show again that a country has discriminated against the United States compared to how it treats everybody else in the world,” she told Energi Media.
Canada’s treatment of American dairy products illustrates the problem. The administration argues European exporters receive better access to Canadian cheese quotas than American exporters. Hillman noted that Canada treats imports from countries such as New Zealand similarly to those from the United States.
“So again, it’s not clear that they can meet this basic term of the statute,” she said.
The second legal vulnerability is the scale and design of the tariffs.
Section 338 allows tariffs intended to offset discrimination against American commerce. The Trump administration’s complaints concern dairy, alcohol and automobiles, but the tariffs extend across a much broader range of Canadian products.
Hillman estimates the disputed trade amounts to roughly $5 billion to $6 billion, while Trump’s tariffs cover nearly $20 billion in Canadian imports.
“They’re putting tariffs on everything from hockey sticks to consumer goods to furniture to electrical equipment,” she said. “They’re not offsetting the discrimination in the way that this act requires.”
The administration’s turn to Section 338 follows its defeat at the US Supreme Court over Trump’s use of the International Emergency Economic Powers Act, or IEEPA, to impose tariffs. The court ruled that IEEPA did not give the president tariff authority.
Hillman said the ruling sent the administration searching through other statutes for presidential tariff powers, eventually leading it to Section 338, a provision that had effectively disappeared from trade policy for decades.
The broader constitutional issue is whether Congress actually delegated the authority Trump claims.
“The United States Constitution is very, very clear. Congress alone has the power to impose tariffs and taxes,” Hillman said.
She argues Trump has repeatedly stretched delegated trade powers beyond what Congress authorized, often avoiding the investigations, hearings and evidence-based findings required before tariffs can be imposed.
A challenge to the Section 338 tariffs would likely begin at the US Court of International Trade before moving through appeals and potentially reaching the Supreme Court.
Negotiations could intervene first. Hillman said Washington and Ottawa remain in discussions, and the tariffs may ultimately be intended to strengthen the US bargaining position in negotiations over the Canada-United States-Mexico Agreement.
Whatever happens, the dispute raises a larger question about presidential power over American trade policy.
Section 338 has been dormant for generations. Trump is now testing whether it can become another instrument for imposing tariffs after the Supreme Court closed off IEEPA.
Be the first to comment