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Yesterday, Donald Trump imposed massive 50% tariffs on numerous Canadian imports after trade negotiations with Canada broke down, largely due to the Trump administration’s insistence on maintaining earlier 50% tariffs on Canadian aluminum products and other goods.
Section 338 was a part of the notorious Smoot-Hawley Tariff Act of 1930, which gravely exacerbated the Great Depression. In a previous post, I summarized the reasons why Section 338 tariffs are an illegal usurpation of congressional authority by the president.
As Philip Zelikow of the conservative Hoover Institution explained in a guest post here at the VC blog, last year, Section 338 was superseded by new legislation enacted in 1962 and 1974, and is therefore defunct. For that reason, it has not been used to impose tariffs since at least the 1940s.
In a more recent guest post, Georgetown University trade law specialist Peter Harrell explained why the then-planned Canada tariffs are illegal even if Section 338 is not defunct. Trump’s tariffs don’t meet various requirements for invoking the law. I expect there will be legal challenges to these tariffs, and those challenges will deserve to prevail.
This is the latest of a series of efforts by Trump to usurp congressional tariff authority and impose harmful and dangerous trade restrictions that damage the US economy and poison relations with key allies and trading partners, of which Canada is one of the most important. These usurpations include the International Emergency Economic Powers Act (IEEPA) tariffs struck down by the Supreme Court in February, in a case I helped bring, the Section 122 tariffs invalidated by the US Court of International Trade in April (the case has been appealed, and his massive new Section 301 tariffs imposed on the bogus pretext of combating “forced labor.”
Courts should continue to strike down these power grabs. And, as I explained in my recent Dispatch article on the Section 301 tariffs, they should learn from previous mistakes, and refuse to stay injunctions imposed against illegal tariffs:
Judges can reduce the damage caused by illegal tariffs if they refuse to stay initial rulings blocking them.
The Federal Circuit’s stay of the initial ruling against the IEEPA tariffs enabled the Trump administration to collect some $166 billion in illegal tariff payments, greatly increasing the harm caused by the policy. Much of the harm caused by illegal tariffs—including lost sales, investment opportunities, and higher prices paid by consumers—cannot be fixed by giving tariff refunds later. Neither can the damage to the U.S. economy. And, as the IEEPA experience shows, even the refunds themselves are not a given. Billions remained unpaid five months after the Supreme Court’s decision, and the Trump administration is trying to avoid refunding some of the money.
Blocking illegal tariffs quickly can also help reduce the damage to US credibility and relations with trading partners.
I would add that Trump’s ridiculous trade war with Canada has poisoned relations with one of America’s closest and most important allies, and made traditionally friendly Canadian public opinion overwhelmingly hostile to the US. Damaging our economy and undermining our alliances isn’t Making American Great Again. Very much the opposite. The main “winners” of this trade war will be America’s adversaries, such as China, Russia, and Iran.
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