Untested in court, Trump’s new tariffs on Canada raise legal questions
Trump Invokes 1930 Tariff Law to Hit Canada, Prompting Immediate Retaliation
WASHINGTON – President Donald J. Trump, in a move that has many trade lawyers stunned, announced a 50 % tariff on $20 billion of Canadian goods, citing the U.S. Dairy, Auto and Alcoholic Beverage trade disputes. The tariffs were announced on August 20, 2026 and were immediately met with dollar‑for‑dollar tariffs from Ottawa on U.S. imports.
The president’s authority comes from Section 338 of the Tariff Act of 1930, a clause buried in the legislation that has been in effect for 96 years. The provision—part of the Smoot‑Hawley tariff package that raised duties during the Great Depression—gave the president the power to impose tariffs up to 50 % on imports from countries that were found to be discriminating against U.S. businesses. No president had ever used the statute before Trump, and it has never been tested in court.
“This law is literally a blank canvas,” said Ryan Majerus, partner at King & Spalding and former U.S. trade official. “It’s never been litigated, so its limits are unknown.”
The tariff is being used to punish Canada for what Washington claims is unfair treatment of U.S. dairy, automobile, and alcoholic beverage exports. Trump’s administration says Canada’s dairy tariff regime discriminates against American farmers, even though the same tariff applies to many other trading partners. The U.S. also pointed to Canadian retaliatory tariffs imposed last year on U.S. goods, arguing that Canada was acting in the same way the president’s law intends to counter.
“The Section 338 tariffs are straightforward,” said John Veroneau, former general counsel for the U.S. Trade Representative and adjunct professor at the University of Maine Law School. “They’re justified when another country discriminates by taxing U.S. imports more heavily than it does imports from other countries.” Veroneau also noted the irony that Canada retaliated in kind when Trump imposed tariffs on Canadian products in 2025.
Legal scholars, however, have raised doubts about the statute’s validity. Peter Harrell and Jennifer Hillman of Georgetown University wrote in the libertarian magazine Reason that the law has likely been superseded by later trade statutes. The Trade Expansion Act of 1962 and the Trade Act of 1974 gave presidents more specific powers—such as national‑security tariffs—that could render Section 338 redundant.
Sara Albrecht, chief executive of the Liberty Justice Center, which
