Trump's Canada Tariffs Rest on Untested 1930 Law

A 96-year-old statute nobody had used

The legal basis for President Donald Trump's trade war with Canada is a Depression-era provision that no president has ever invoked and no court has ever reviewed.

AP wrote that the statute is "so obscure that many trade lawyers didn't even know it was still on the books," and that Trump's Section 338 authority "has never been used, let alone tested in court." Ryan Majerus, a partner at King & Spalding and a former U.S. trade official, told AP: "This law is literally a blank canvas because it's never been litigated."

The case that it no longer works

The central legal argument against the tariffs is that Congress replaced Section 338 without repealing it. "There is a very strong argument that (Section 338) was superseded," Sara Albrecht, chief executive of the Liberty Justice Center, told AP. Her group represented the businesses that beat Trump's earlier tariffs at the Supreme Court.

If Congress meant the president to keep that power, Albrecht asked, why pass the Trade Expansion Act of 1962 for national-security tariffs and the Trade Act of 1974 for unfair trade practices — both of which require investigations and procedural steps that Section 338 does not.

Harrell and Hillman raise a second problem. Section 338, they write, authorizes only tariffs that "offset" the harm a foreign country's practices do to American firms — and the administration made no attempt to calculate the dollar damage from Canada's treatment of U.S. dairy farmers, automakers and alcohol exporters. It then taxed Canadian goods with no connection to those disputes, including hockey sticks and cement.

They also argue Canada's dairy quota system does not single out Americans, since the same rules apply to other trading partners, and that the United States agreed to that system in the North American trade pact Trump himself negotiated in his first term. Calling the terms discriminatory now, they write, is "incongruous, to say the least."