President Donald Trump has adopted a controversial new legal approach to impose tariffs on imports to the United States, raising concerns among trade experts and international partners about the potential expansion of U.S. trade restrictions. The move comes as Trump seeks to circumvent a February Supreme Court ruling that invalidated his broad use of tariffs under the International Emergency Economic Powers Act (IEEPA), which the court found exceeded presidential authority.
On July 20, Trump invoked section 338 of the Smoot-Hawley Tariff Act of 1930 to impose a 50% tariff on imports from Canada, citing retaliatory trade measures taken by Canada against U.S. dairy, liquor, and automobile products. This law, historically linked to the trade protectionism that exacerbated the Great Depression, authorizes the president to retaliate against foreign countries whose actions put the U.S. at a commercial disadvantage compared to other nations. Unlike newer trade statutes, section 338 grants the president broad discretion to impose tariffs aimed at redressing perceived unfair trade practices.
Until now, section 338 had primarily been used to enforce the principle of “most favored nation” treatment, ensuring that the United States received the same trade advantages granted to other countries. However, the Trump administration’s application appears to depart from this limited scope, presenting an expansive rationale for unilateral tariff imposition with fewer legal constraints.
This development follows Trump’s broader efforts to maintain a tough trade posture despite judicial setbacks. In February, the Supreme Court, in a 6-3 decision that included two justices appointed by Trump, ruled that the president exceeded his constitutional authority by using IEEPA to impose tariffs broadly on almost all U.S. trading partners on the grounds of multiple national emergencies. The court expressed deference to the president’s claims of national emergencies but held that imposing taxes requires congressional approval.
Following the ruling, the administration activated various other legal frameworks to levy tariffs. Among them were the Trade Act of 1974’s section 301, which was used to justify tariffs on imports produced with forced labor, and section 232 of the Trade Expansion Act of 1962, focusing on national security concerns such as tariffs on steel and aluminum imports. Additionally, Trump invoked section 122 of the 1974 Trade Act to impose 10% tariffs aimed at addressing balance-of-payments concerns, though these tariffs were time-limited.
Trade analysts warn that the deployment of section 338 could grant the president unprecedented latitude to impose import duties, bypassing traditional checks and balances associated with trade policy. The measure represents a potential escalation in Trump’s ongoing trade wars, marking a shift toward broader unilateral trade action that many view as destabilizing for the global trading system.
Canada, among the countries targeted, has criticized the tariffs as unjustified and retaliatory, highlighting the tit-for-tat nature of the current trade tensions. The administration’s approach signals a willingness to leverage archaic trade laws to support its agenda, despite concerns about legality and repercussions for international trade relations.
As the Trump administration continues to search for effective legal bases to sustain its trade policies, the use of section 338 raises questions about the future scope of U.S. trade measures and the prospects for resolving mounting trade disputes.