Fifty percent tariffs on a range of imports from Canada are set to take effect on August 19. President Trump announced the tariffs, which would be levied under Section 338 of the Tariff Act of 1930, on July 20 as a means to address discrimination by Canada and its provinces against American exports of dairy products, alcoholic beverages, and motor vehicles. Though the announcement of these duties—given their limited scope and the foreign practices they are aimed at—appeared to amount to a negotiating tactic ahead of bilateral talks with Canada on extending the US-Mexico-Canada Agreement (USMCA), their forthcoming imposition carries significant risks for the future of US trade policy that extend beyond these specific duties. In a worst-case scenario, Section 338 could become the next presidential “tariff button,” wielded much as the International Emergency Economic Powers Act (IEEPA) was in 2025 and early 2026, before the Supreme Court’s decision invalidating its use to tax imports. Congress should quickly step in and repeal this outdated statute.
Section 338 authorizes the president to impose tariffs of up to 50 percent on imports from a country that: a) imposes “any unreasonable charge, exaction, regulation, or limitation” on a product from the United States that is not equally enforced on like products from every foreign country, or b) discriminates, through its laws, regulations, and/or practices against the commerce of the United States and, thereby, places it at a disadvantage vis-à-vis the commerce of any other foreign country. On the latter precondition, the statute’s definition of what may constitute a discriminatory practice is broad, citing “any customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction, or prohibition” as instances thereof. As he has done with previous tariffs imposed through other statutes, President Trump is using the broad language in Section 338 to justify this next round of duties.