Last July, President Donald Trump imposed tariffs of 50 percent on a range of Canadian products, later broadening the scope to cover additional imports, and in some cases prohibiting their entry altogether. He anchored his legal justification in Section 338 of the Smoot-Hawley Tariff Act, a provision enacted by Congress back in 1930. Section 338 allowed the levying of duties in response to discriminatory trade practices. Yet, in the ninety-six years since its enactment, no president had ever invoked it to impose tariffs.
Why has that happened? A lawsuit filed by the Liberty Justice Center (LJC) on Tuesday in the U.S. Court of International Trade (CIT) argues the reason is straightforward: Section 338 was displaced by later statutes that similarly aimed at curbing discriminatory trade barriers, beginning with the Reciprocal Trade Agreements Act of 1934 and culminating in Section 301 of the Trade Act of 1974. Section 301, the modern remedy, imposes processes such as investigations, public comment, and other safeguards—procedures that Trump seemingly attempted to bypass by leaning on a 1930 provision.
According to the LJC, that maneuver is unlawful. “Congress already provided the executive branch with a mechanism to address unfair foreign trade practices: Section 301, which requires an investigation, public commentary and additional safeguards,” states Jeffrey M. Schwab, the LJC’s director of litigation. “The administration cannot bypass these protections by turning to a 1930 statute that no president had ever employed to impose a tariff.”
Why not? “When two statutes are irreconcilably at odds, the later act, to the extent of the inconsistency, is deemed to implicitly repeal the earlier one,” the filing contends. “If a later statute addresses the entire subject of an earlier statute and clearly intends to replace it, it functions similarly to a repeal. And a particular policy embedded in a later federal law governs how an earlier statute should be interpreted, even without a formal amendment.”
Even if Section 338 endured the passage of conflicting laws, the LJC notes, the tariffs imposed under it exceed the authority the provision would grant. And should Trump’s reading of Section 338 be correct, the suit argues, the clause would breach the nondelegation doctrine, which forbids Congress from handing over its tariff power to the president without providing an intelligible principle to guide and constrain how he uses it.
In short, the Section 338 tariffs represent the administration’s latest effort to wield, through a statute not designed for this purpose, the tariff powers that the Constitution reserves to Congress. That pattern should be all too familiar by now.
Not long after assuming office in 2025, Trump asserted that he had found a previously overlooked grant of extensive tariff authority within the International Emergency Economic Powers Act (IEEPA), a 1977 law that makes no mention of import taxes and had never been used to impose them. That claim was rejected by every court that considered it, and in February the Supreme Court ruled that IEEPA does not authorize tariffs at all.
Trump answered that ruling by promptly announcing similarly broad tariffs under Section 122 of the 1974 Trade Act, which addresses “fundamental international payments problems” caused by “serious United States balance-of-payments deficits.” In May, the CIT held that the new tariffs were illegal because Trump had failed to “identify balance-of-payments deficits within the meaning of Section 122.”
Trump then pivoted to Plan C, invoking Section 301 of the Trade Act, which authorizes tariffs in response to a foreign “act, policy, or practice” that is “unreasonable or discriminatory” and “burdens or restricts” U.S. commerce. He claimed that provision justified tariffs on 86 trading partners, accounting for nearly all U.S. imports, because they had failed to “impose and effectively enforce a prohibition on the importation of goods produced with forced labor.” The CIT is currently weighing challenges to those tariffs, including an LJC lawsuit.
Trump’s Section 338 tariffs have now added to the CIT’s caseload. The LJC represents Gellert Global Group, an importer that was hit hard by those taxes after Trump added cheese to the list of disfavored Canadian goods. The lawsuit asks the CIT to certify a class of importers, numbering in “the hundreds, if not the thousands,” that likewise have been clobbered by Trump’s 50 percent tariffs.
Since Trump obviously is aware of Section 301, why did he resort to a never-used, seemingly obsolete provision to justify the tariffs on imports from Canada? As the LJC notes, Section 301 requires an investigation by the Office of the U.S. Trade Representative, “consultation with the foreign country concerned, notice, public comment, a hearing, and determinations within statutory deadlines.” It also requires “that action be equivalent in value to the burden imposed, that duties be preferred over other import restrictions, and that actions terminate after four years absent a request for continuation and review.”
Can Trump avoid those constraints by invoking Section 338 instead? The LJC thinks not: “Congress did not intend to leave in place a parallel authority that would allow the President to impose the same remedies, for the same conduct, free of every one of those safeguards.”
Section 338 has been “impliedly repealed,” the LJC argues. “At a minimum, Section 301 controls where, as here, the President seeks to respond to foreign practices within Section 301’s scope, and the President may not impose duties in response to such practices while disregarding the procedures and limits Section 301 imposes. Because the President did not proceed under Section 301, the Section 338 Tariffs are unlawful whether or not Section 338 survives.”
Even if you ignore subsequent legislation, the LJC argues, the Canadian policies that Trump cited when he announced the tariffs do not qualify as “discrimination” under Section 338. “Canada’s motor vehicle surtax and its provinces’ alcohol purchasing decisions are responses to tariffs that the United States imposed on Canada, not discrimination by Canada against the United States,” it says. Trump also complained that Canada treats European cheese imports more favorably than U.S. cheese imports. But “when Congress enacted Section 338, a preference granted under a reciprocal agreement was not ‘discrimination.'”
Section 338 “addresses discrimination: measures that single out United States commerce for worse treatment than the commerce of the world at large,” the lawsuit says. “It is not a general authorization to impose tariffs whenever the President disagrees with a trading partner’s policies, or whenever a trading partner responds to tariffs the United States has imposed on it.”
Trump also was unfazed by Section 338’s requirement that the president set duties to “offset” the costs imposed by discriminatory practices, which implies proportionality. Rather than attempt that, the LJC notes, Trump imposed “the statutory maximum rate of 50 percent without tying it to any measured burden.”
As interpreted by Trump, the lawsuit warns, Section 338 authorizes the president to “impose tariffs of up to 50 percent on any products of any country that extends better treatment to any other country in any respect—including through any of the hundreds of preferential trade agreements to which the United States is not a party—or that responds to tariffs the United States has imposed on it.” Yet Section 338 “contains no clear statement authorizing that power,” contrary to the “major questions” doctrine, which applies to assertions of executive authority with “vast economic and political significance.”
If Section 338 conferred the sort of unfettered authority that Trump is claiming, the LJC says, it “would supply no intelligible principle constraining the exercise of Congress’s power to lay duties.” His reading “would convert a narrow, fact-dependent provision into an effectively unrestricted delegation of Congress’s tariff power,” which would be “an unconstitutional delegation of legislative power.”
This case “is not about the president,” says LJC CEO Sara Albrecht. “It is about the presidency. No president should have the power to pull a dormant statute off the shelf and use it to impose sweeping tariffs or import bans without the limits Congress required.”
