In “Trump to Impose 50% Tariff on Many Canadian Goods,” Ana Swanson and Ian Austen report for the New York Times:

President Trump on Monday signed orders to impose a 50 percent tariff on a wide range of Canadian goods, claiming that Canada had discriminated against the United States in key industries.

The tariffs, which go into effect in 30 days, would be imposed on a range of Canadian exports, including wine, hockey sticks, cement, dairy products, plywood, paper and furniture. Administration officials said the taxes were punishment for Canadian discrimination against three U.S. industries: motor vehicles, dairy and alcohol.

The new tariffs will be imposed under an obscure legal provision, Section 338 of the Tariff Act of 1930, which Congress wrote as the Great Depression deepened. The law allows the president to put tariffs of up to 50 percent on imports from countries that discriminate against U.S. commerce uniquely, as compared to other countries.

While no lawsuit has yet been filed, legal challenges seem likely. For a preview of one possible avenue of challenge, Jed Rubenfeld (Yale) published a piece in The Free Press, partially excerpted in The Volokh Conspiracy, when Rubenfeld argued that the tariffs imposed under the auspices of IEEPA could find firmer ground under section 338. (Rubenfeld represented the America First Policy Institute in making similar arguments in amicus briefs before the Supreme Court and the Federal Circuit in support of the government’s position during the IEEPA tariff litigation.) Here’s Rubenfeld (as excerpted in The Volokh Conspiracy):

If Congress had intended to give the president the power to impose tariffs of up to 50 percent on countries all over the world in response to what the president believes is unfair discrimination against U.S. commerce, Congress would have said so explicitly.

That’s not a crazy position. But both courts—and, it seems, the administration’s lawyers—have overlooked something important.

Congress has expressly and precisely given the president the power to impose worldwide tariffs of up to 50 percent on countries he finds to be discriminating against U.S. commerce. Congress didn’t do so in the IEEPA, but it did in the Tariff Act of 1930, also called the Smoot-Hawley Tariff Act.According to a provision in that 1930 statute titled “duties to Offset Commercial Disadvantages”:

Whenever the President shall find as a fact that any foreign country places any burden or disadvantage upon the commerce of the United States [through any discrimination in duties or regulations], he shall, when he finds that the public interest will be served thereby, by proclamation specify and declare such new or additional rate or rates of duty as he shall determine will offset such burden or disadvantage, not to exceed 50 per cent… on any products of… such foreign country.

Okay, apparently no president has ever invoked this statutory provision and imposed a tariff under it, and admittedly the name “Smoot Hawley” is not exactly covered in glory these days. But the provision quoted above remains in the United States Code, unrepealed and unamended, and appears to fit Trump’s trade policy like a glove. In his China tariffs, Trump temporarily exceeded the 50 percent limit, before bringing them down to below that threshold.

Also in The Volokh Conspiracy, here’s Philip Zelikow (Hoover Institution, Virginia) in response:

There is a straightforward answer to the question of why Trump’s lawyers didn’t mention [section 338 in the IEEPA litigation]. Well, no one cites it because this part of Smoot-Hawley was superseded long ago. The issue has never been litigated because this section has never been used to impose a tariff. The office of the U.S. Trade Representative presumably knows this.

Professor Rubenfeld had staked out a position on the legality of the tariffs right away . . . , arguing that the tariffs were probably legal. He now wishes to offer this argument for why he wasn’t mistaken in that initial judgment.

The legal standard for a superseding statute (also called ‘implied repeal’) is well known. There are two situations. The first is “irreconcilable conflict.” The second situation, as the Supreme Court explained in Posadas v. National City Bank, 296 U.S. 497 (1936), is “if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate similarly as a repeal of the earlier act.” 296 U.S. at 503.

The original Smoot-Hawley language that Rubenfeld cites was in section 338(d) of the Tariff Act of 1930 [19 U.S.C. §1338(d)], which granted the President this broad tariff power if a foreign country “places any burden or disadvantage upon the commerce of the United States.” Similar language had been used in the Fordney-McCumber tariff act of 1922.

This particular section was effectively repealed and superseded by section 252 of the Trade Expansion Act of 1962. (One can quibble about the effect of the 1934 Reciprocal Trade Act, but no need.)

And here’s Rubenfeld, again in The Volokh Conspiracy, responding to Zelikow:

Rather, Prof. Zelikow claims that Section 338, which remains on the books today at 19 U.S.C. § 1338, was implicitly repealed by subsequent tariff statutes. Or at least that Section 338(d)—a provision I quoted—has been so repealed.

But “repeals by implication,” as Justice Scalia once wrote, “are disfavored—’very much disfavored.’” Here’s the Supreme Court’s 2020 pronouncement on implicit repeals:

“[R]epeals by implication are not favored” and are a “rarity.” Presented with two statutes, the Court will “regard each as effective” unless Congress’ intention to repeal is “clear and manifest,” or the two laws are “irreconcilable.” “[W]hen two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.”

Maine Community Health Options v. United States, 590 U.S. 296, 315 (2020) (citations omitted).

None of the statutes Prof. Zelikow cites expressly repeals Section 338 or any part of Section 338 of the Tariff Act of 1930. None is in conflict with Section 338, much less “irreconcilable” with it. And Prof. Zelikow cites no language from those statutes’ legislative history expressing a “clear and manifest” intent to repeal Section 338. The latter is fully “capable of co-existence” with the later statutes and hence, under Maine Community, “it is the duty of the courts … to regard [it] as effective.”

And (later in the same piece), Zelikow’s response to Rubenfeld:

The issue is not whether there was an implied repeal of all of section 338 of Smoot-Hawley by the Trade Acts of 1962 and 1974. The issue is whether there was an implied repeal of section 338(d).

* * *

Yes, implied repeal faces a burden of proof. But examination of the relevant statutory sections meets that burden, under the standard I mentioned that was set out in Posadas. It might also meet a standard of “irreconcilable conflict,” since if section 338(d) authority was available, why would anyone have bothered with section 252 of the 1962 Act or bother with the requirements of section 301 of the 1974 Act. Those well established trade laws could become nullities.

Peter Harrell (Georgetown) had quick reactions to the section 338 tariff announcement. From the post:

6. This represents the first use of Section 338 since the 1930s or 1940s, and the statute may not in fact have actually been used to impose tariffs before. In 1935 for example the President made a finding of discrimination under 338 but did not impose tariffs. . . .

7. Assuming the tariffs do in fact come into force (e.g., there is not a negotiated resolution with Canada), this will make for interesting legal challenges. There are a variety of arguments that could be made about whether 338 might require an ITC investigation prior to a Presidential finding; about whether it has been implicitly repealed by later statutes; and about what its discrimination requirements actually mean. Yet another new one for the courts….

About ten years ago, John K. Veroneau & Catherine H. Gibson, lawyers at Covington & Burling , published a practitioner piece on section 338 which was later expanded and published as “Presidential Tariff Authority” in the American Journal of International Law. From the piece:

Although no president has ever directly applied Section 338 to impose tariffs on a U.S. trading partner, this provision was used for years in other contexts, forming the basis of general monitoring of trade relations and the investigation of individual complaints. Separately, this provision also provided leverage in treaty negotiations and in combating discriminatory behavior by trading partners and achieving equality of treatment for U.S. producers. Today, despite long years of dormancy, it appears that Section 338 remains available to modern U.S. presidents seeking to address unfair trade practices or carry out an “America First” trade agenda. A direct application of Section 338 to impose tariffs today would certainly invite challenges in the World Trade Organization, however, perhaps along the lines of a prior challenge to Section 301 of the Trade Act of 1974.

The sections that follow set out the history of Section 338, which may prove instructive in any contemplated modern use of the statute. Part I sets forth the statutory background of Section 338, discussing both this provision and its predecessor statute, Section 317 of the Tariff Act of 1922. Part II discusses the various uses of both Section 317 and Section 338 during their respective times in force. Part III describes recent references to Section 338 and suggests lessons that may be gleaned from the history of the statute. Finally, Part IV discusses a potential challenge that could be launched in response to a direct application of Section 338.