Trump Expands Illegal Section 338 Tariffs Against Canadian Imports

Yesterday, Donald Trump further expanded his illegal Section 338 tariffs against Canadian imports and banned importation of some Canadian products entirely. The pretext for the move is Canada’s predictable imposition of counter-tariffs in response to Trump’s initial Section 338 moves. Georgetown University trade policy expert Peter Harrell has a helpful summary of the new restrictions Twitter/X:

1. Trump signed a variety of proclamations this evening retaliating against Canada’s retaliation against Trump’s initial Section 338 tariffs, now that the Canadian retaliatory tariffs have come into force. Trump’s action includes outright bans on a handful for products as well as modifications of the 50% tariff list to reduce the impact on certain U.S. industries while adding new products to the tariff list to avoid an overall reduction in U.S. tariffs.

2. The bans: In a spate of bad news for American aficionados of Canadian booze, Trump has banned import of Canadian beer, wine, and distilled spirits, effective Sept. 29. He also banned whey and molasses, and motorcycles. (This last item presumably includes the three wheel “Can-Am” made by a subsidiary of Bombardier, the airplane manufacturer Trump has been targeting on social media).

3. Section 338 authorizes the President to ban imports if, following the imposition of Section 338 tariffs, the President finds as “a fact that any foreign country has not only discriminated against the commerce of the United States….but has, after the issuance of a [tariff action], maintained or increased its said discriminations against the commerce of the United States…” While Trump appears to be the first President to impose tariffs under Section 338 (since Congress passed it in 1930), the language of 338 does seem to authorize the import bans *if/assuming the underlying Section 338 tariff actions are lawful.* (As I have written elsewhere, I think there are good legal arguments against the underlying Section 338 tariff actions, but so far, no one has brought a suit).

4. Trump also modified the products impacted by the original 50% Section 338 tariffs to remove certain products where the tariffs had proved economically painful to the U.S., such as salt, cement, toilet paper, and fishing rod parts, while adding other products, such as various paper products, metals, motorboats, and cheeses. (This highlights that while the Administration does seem committed to the trade war with Canada, it is monitoring potential adverse economic consequences). The tariff modifications are effective Sept. 15.

As Peter notes, the legality of these new actions largely depends on the legality of the original Section 338 tariffs against Canada. And for reasons I summarized in a previous post, those original tariffs are illegal for multiple reasons, both because Section 338 itself has been superseded by later laws, and because the Trump tariffs against Canada don’t meet the requirements of Section 338 itself. For an extensive discussion of the latter issue, see this excellent guest post  by Peter Harrell and Jennifer Hillman.

Last night’s expansion of the Section 338 tariffs and imposition of unprecedented categorical bans on some imports may help strengthen the legal case against Trump’s actions, by underscoring the vast scope of the authority he is claiming. This, in turn, strengthens the potential argument that these tariffs run afoul of the “major questions” and nondelegation doctrines, which restrict executive branch claims to sweeping delegated authority, and played a key role in the Supreme Court’s ruling against Trump’s earlier IEEPA tariffs.

Like the earlier Section 338 tariffs, this expansion, will harm the US economy, raise prices for consumers, undermine the separation of powers, and further poison relations with a key ally. Other than that, it’s a great idea!