After Supreme Court Tariff Ruling, Trump Invokes 1930 Law for 50% Canada Tariffs

President Donald Trump has imposed 50% tariffs on roughly $20 billion in Canadian imports under a 96-year-old trade law, six months after the Supreme Court rejected his use of emergency economic powers for sweeping duties on foreign goods.

The new tariffs rely on Section 338 of the Tariff Act of 1930, which expressly allows the president to impose additional duties when another country discriminates against U.S. commerce. Canada responded Tuesday with retaliatory tariffs on roughly $20 billion in U.S. goods scheduled to take effect Sept. 8.

The U.S. duties took effect Aug. 22 after trade negotiations with Canada collapsed. The administration had initially scheduled them to begin Aug. 19 before delaying collection for three days while talks continued.

Trump issued three proclamations on July 20 accusing Canada of disadvantaging American automobiles, dairy products and alcoholic beverages. The move was part of the administration’s broader shift to older trade laws after the Supreme Court rejected Trump’s emergency tariff program.

Section 338 permits additional tariffs of up to 50% after the president finds that a foreign country has discriminated against U.S. commerce and determines that action is in the public interest. At least 30 days must generally pass between the presidential proclamation and collection of the duties.

The Supreme Court’s 6-3 ruling in February found that the International Emergency Economic Powers Act, known as IEEPA, did not authorize the broad tariffs Trump imposed after declaring national emergencies involving drug trafficking and U.S. trade deficits.

Under the Constitution, Congress has the power to impose taxes and duties. The administration acknowledged during the case that presidents do not have independent authority to impose tariffs during peacetime, arguing instead that Congress had delegated that power through IEEPA.

In rejecting that argument, the Court noted that IEEPA allows presidents to regulate certain international economic transactions during national emergencies but does not mention tariffs or duties. Other federal trade laws expressly authorize presidential tariffs and place limits on their use.

Section 338 does both. It allows additional duties when another country places unreasonable restrictions on American products or otherwise discriminates against U.S. commerce. The duties are intended to offset the disadvantage and cannot exceed 50%.

That express tariff authority addresses the problem the Court found with IEEPA, while leaving separate questions about whether the administration complied with the limits of the 1930 law.

Despite its age, Section 338 has virtually no modern judicial history. No previous president is known to have imposed tariffs under the provision during the 96 years since Congress enacted it, although earlier administrations considered using the law during trade disputes.

One potential challenge involves the requirement that additional duties offset the disadvantage imposed on American commerce.

Georgetown Law scholars Peter Harrell and Jennifer Hillman have argued that Trump’s tariffs extend well beyond the Canadian products involved in the alleged discrimination. The administration identified disputes involving automobiles, dairy and alcohol, while the duties reach a broader range of imports, including hockey equipment and cement.

That breadth could prompt courts to consider how closely the products subject to tariffs must relate to the trade practices identified by the administration. Section 338 also allows the president to impose additional duties on “any products” from the foreign country after making the required findings, language that could support a broader interpretation of presidential authority.

Courts could also be asked whether Canada’s trade practices qualify as discrimination under the 1930 law.

Canada’s treatment of dairy products is one example. The administration says some European products receive more favorable treatment than comparable American goods, while those preferences stem from Canada’s separate trade agreement with the European Union.

Separate disputes involve automobiles and alcohol. Some Canadian auto measures followed earlier U.S. trade actions, while the alcohol proclamation challenges restrictions imposed by provincial and territorial liquor systems on American products.

Procedure presents another possible issue. Section 338 gives the president authority to find that discrimination exists, while another part of the law directs the U.S. International Trade Commission to monitor discriminatory foreign practices and bring them to the president’s attention with recommendations.

Harrell and Hillman have questioned whether the commission was given the fact-finding role contemplated by the law before the July proclamations. The administration can point to separate language expressly giving the president authority to make the required finding.

The United States-Mexico-Canada Agreement adds another point of dispute. Canada has argued that the new tariffs conflict with USMCA, while Trump’s proclamations provide that covered Canadian goods can face Section 338 duties even when they would otherwise qualify for preferential treatment under the agreement.

Trade tensions are also increasing ahead of Canada’s response. The government announced Tuesday that it will impose tariffs ranging from 15% to 50% on roughly 700 U.S. products beginning Sept. 8, including steel, aluminum, cheese, electronics, machinery, clothing and furniture.

Any new court fight would turn on whether the administration stayed within the limits Congress placed on Section 338. For now, the 50% duties are being collected on Canadian imports, while Canada’s retaliatory tariffs are scheduled to take effect Sept. 8.