Obscure 1930s Statute Fuels Canada Trade War
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President Trump's invocation of Section 338 to impose tariffs on Canadian imports raises legal questions and creates instability for cross-border partnerships.
President Donald Trump has ignited a trade war with Canada by invoking Section 338 of the Tariff Act of 1930, as CityNews Toronto first reported. The 96-year-old statute was so obscure that many trade lawyers were unaware it remained active. The move imposed a 50% tax on $20 billion of Canadian imports, prompting dollar-for-dollar retaliation from Ottawa.
According to reporting from CityNews Toronto, the Trump administration used the law to sanction Canada over alleged discrimination against U.S. alcoholic beverage, auto, and dairy exports. However, the legal foundation is shaky; Ryan Majerus, a partner at King & Spalding, noted the law has never been litigated, describing it as a "blank canvas." Legal scholars Peter Harrell and Jennifer Hillman of Georgetown University wrote in Reason that the U.S. considered using the statute against China in 1949 and Spain in 1932 but never did.
Critics argue the law is obsolete. Sara Albrecht, CEO of the Liberty Justice Center, suggests the Trade Act of 1974 and the Trade Expansion Act of 1962 may have superseded Section 338. Furthermore, Harrell and Hillman point out that the administration failed to calculate the actual dollar damage caused by Canada, instead targeting unrelated imports like cement and hockey sticks.
Conversely, John Veroneau, a former general counsel for the U.S. Trade Representative and adjunct professor at the University of Maine Law School, argues the tariffs are justified if Canada taxes U.S. imports more than those from other nations.