Trump has found a new legal basis for tariffs, raising threat to global trade
After the Supreme Court limited his emergency tariff powers, Trump has turned to a rarely used provision of the 1930 Smoot-Hawley Tariff Act that could give him sweeping authority. The move heightens concerns that his trade war may become difficult to stop.
US President Donald Trump is trying to keep his tariff agenda alive after the Supreme Court in February struck down the duties he imposed under the International Emergency Economic Powers Act (IEEPA). The court said the president had overreached by using emergency powers to levy taxes, although it largely deferred to his ability to declare national emergencies.
Last Friday, Trump imposed a fresh round of tariffs on all trading partners, claiming they hurt US companies by relying on forced labor. The justification rests on Section 301 of the Trade Act of 1974, but that provision is designed to counter specific unfair practices, not a sweeping accusation against every country. Legal observers expect such a broad measure to be vulnerable in court.
A more ominous precedent came with Trump's decision to place a 50% tariff on Canadian imports. The White House cited Canadian discrimination against American dairy, alcohol and cars — retaliation for earlier US tariffs. Some commentators also recalled Trump's threat to punish Canada over smoke from its forest fires. The real danger lies in the legal tool: Section 338 of the Smoot-Hawley Tariff Act of 1930. That section allows the president to impose duties on any country that puts the US 'at a disadvantage compared with the commerce of any foreign country.' It has never been used to impose tariffs before; historically, it was leverage to ensure American goods received most-favored-nation treatment. Trump appears ready to interpret it as a blank check.
Trump has experimented with other legal routes, including Section 122 of the 1974 act for a universal 10% tariff on balance-of-payments grounds, but that authority was capped at 150 days. He has also used Section 232 to justify tariffs on steel, aluminum and other goods for national security reasons. None of these provides the open-ended power that Section 338 seems to grant. If the courts accept his reading, Trump will have found a way to pursue his trade war almost at will, with potentially damaging consequences for the global trading system.
