S.338 of the Tariff Act of 1930 allows significant duties to be imposed on discrimination grounds
US president Donald Trump has activated a 1930 US law to justify his imposition of a 50 percent tariff on Canadian goods, reported NPR.
On Monday July 20, the president made three tariff proclamations under s.338 of the Tariff Act of 1930 that are set to take effect in 30 days on August 19. The law permits the US president to impose up to 50 percent in duties on a foreign country’s imports on the grounds of “unequal imposition on or discrimination against the commerce of the United States,” per a statement by the Office of the US Trade Representative.
Per the proclamations, s.338 also allows the president to “suspend, revoke, supplement, or amend any proclamation under section 338 whenever the President deems that the public interests require such action.”
“Further, section 338 authorizes the President to exclude articles of the foreign country if the foreign country maintains or increases the discrimination against the commerce of the United States and the President deems the exclusion to be consistent with the public interests and the interests of the United States,” the proclamations stated.
Trump also raised s.604 of the Trade Act of 1974, which empowered the president to “embody in the Harmonized Tariff Schedule of the United States (HTSUS) the substance of statutes affecting import treatment, and actions thereunder, including the removal, modification, continuance, or imposition of any rate of duty or other import restriction.”
The proclamations cover products like wine, hockey sticks, and cement, as well as products once shielded from import taxes under the United States-Mexico-Canada Agreement – an agreement the US did not renew because per the White House, the agreement’s current form was “not sufficiently beneficial for the United States.” According to NPR, Democratic US lawmakers had sought s.338’s repeal on the grounds that it could destabilize US economy if used by Trump.
US trade representative Jamieson Greer said in his statement that the tariffs were being imposed in response to Canada’s treatment of US imports like motor vehicles, alcoholic beverages, and dairy products.
“Canada has taken U.S. alcohol products off Canadian shelves, given better market access to dairy products from the European Union, and has put a cap on U.S. vehicle exports to Canada from companies reshoring to the United States,” Greer said.
Per a White House fact sheet, Canada’s importation of US motor vehicles declined by about 22 percent between April 2025 and March 2026, amounting to a US$5.6 billion drop. The majority of Canadian provinces and territories also reportedly stopped buying, distributing, and retailing alcoholic beverages from the US, with imports nosediving by about 81 percent between March 2025 and February 2026.
Canada also reportedly set “tariff-rate quotas” on US cheese that the White House said were “much more restrictive” than imports from the EU.
The tariffs under s.338 do not affect energy, potash, fish, critical minerals, and products under s.232 tariffs, which include steel, aluminum, copper, trucks and automobiles, timber, lumber, and pharmaceuticals.
Scott Lincicome, vice president of general economics at think tank Cato Institute, suggested that the tariffs could be imposed on US trading partner other than Canada, causing “massive uncertainty” in the global economy.
“We crossed the Rubicon. The invocation of 338 is the nuclear option for Trump tariffs,” Lincicome said in a statement published by NPR.
Democratic Congressional Campaign Committee chair Suzan DelBene added in a statement published by NPR that the tariffs would jack up taxes on American families and “likely lead to retaliation against the very industries Trump purportedly wants to protect.”
