Untested 1930 Law Powers New US Tariffs on Canada
Trump's use of a never-used 1930 tariff law against Canada raises legal questions and prompts retaliation.
President Donald Trump has escalated trade tensions with Canada by invoking a 96-year-old statute that has never been used or tested in court. The move, which imposes a 50% tax on $20 billion worth of Canadian imports, has drawn immediate dollar-for-dollar retaliation from Ottawa and further strained relations between the longtime allies.
The authority in question is Section 338 of the Tariff Act of 1930, a Depression-era law that allows the president to impose tariffs of up to 50% on imports from countries that discriminate against U.S. businesses. Legal experts note that the provision is largely a blank slate. "This law is literally a blank canvas because it's never been litigated," said Ryan Majerus, a partner at King & Spalding and a former U.S. trade official.
The administration's action targets Canada over alleged discrimination against U.S. dairy, auto, and alcoholic beverage exports. However, the tariffs also apply to Canadian goods unrelated to those disputes, including hockey sticks and cement. Critics argue the administration has not calculated the specific harm caused by Canada's practices, a step they say the law requires.
Some legal scholars contend that Section 338 has been superseded by more recent trade legislation, such as the Trade Expansion Act of 1962 and the Trade Act of 1974, which impose procedural requirements and limit presidential tariff powers to specific circumstances. "There is a very strong argument that it was superseded," said Sara Albrecht, CEO of the Liberty Justice Center, which has represented businesses in successful challenges to earlier Trump tariffs.
Others point to an irony in the dispute: the U.S. agreed to Canada's dairy quota system in a trade pact negotiated by Trump himself. "It is incongruous, to say the least, for the United States to denounce as discriminatory the very terms it agreed to," wrote legal scholars Peter Harrell and Jennifer Hillman.
Supporters of the tariffs argue the law is clear. John Veroneau, former general counsel for the U.S. Trade Representative, noted that Canada's retaliatory tariffs on U.S. goods last year could themselves be seen as discriminatory, justifying the current action.
No legal challenge has been filed yet, but the Liberty Justice Center is seeking plaintiffs. The tariffs affect a smaller share of Canadian imports than Trump's earlier worldwide levies, which may limit the pool of companies with standing to sue. There remains a possibility that talks between the two countries could resume and resolve the standoff. "I'm hopeful that somebody blinks, that they come to some agreement and it all goes away," Albrecht said.