Invest1 distinct publisher3 min readPublished
Section 338 of the 1930 Tariff Act lets a president tariff at up to 50%. Trump has now used it on $20 billion of Canadian goods. Importers are paying a rate no court has ever been asked to approve.
The Investor · Invest desk
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Half of $20 billion is $10 billion, which is the run-rate duty this order creates if Canadian shipments hold at their pre-tariff level [1][1], about $27 million for each day it stands [2] and something near $190 million banked in its first week [3]. Read that as a ceiling rather than a forecast. A 50% wedge suppresses the volume it taxes, and the covered goods include cement and hockey sticks [8], freight substitutable enough to stop crossing a border once the landed price moves by half.
The attraction of a 96-year-old clause is procedural. The trade statutes Congress passed afterwards hand the president tariff power but confine it to defined circumstances, national security threats and foreign currency crises among them, and they oblige the government to investigate and clear other requirements first [9]; Section 338 as invoked arrived with no calculation of the dollar damage at all [8]. That is the speed the administration bought, and it is also the exposure it now carries, because Peter Harrell and Jennifer Hillman of Georgetown read the section to permit only tariffs that offset measured harm [7]. (Trump's own reading of Smoot-Hawley is that its levies came too late to rescue the American economy [15].)
Two respectable positions sit inside the same reporting. Ryan Majerus of King & Spalding, a former US trade official, calls the law a blank canvas precisely because nobody has ever litigated it [2]; Sara Albrecht, whose Liberty Justice Center already carried an earlier set of Trump tariffs to a win at the Supreme Court, says the strong argument is that the 1962 and 1974 trade acts superseded it [11][12][10]. This is probably wrong, but I would price supersession below the offset problem: implied repeal asks a court to find that Congress quietly killed a provision it never amended, while the offset defect is already on the face of the record, in a missing dollar figure and in a target list reaching goods with no connection to the dairy, auto and beverage complaints the order was built on [5][8].
The administration has skipped the investigative work those later statutes require [9], which is both the return on reaching for Section 338 and the reason a loss is survivable: void the order and much of the same duty can be rebuilt under the 1962 or 1974 authorities [10] with the paperwork attached, months later and probably narrower. The thing that would show I have this backwards is a published injury calculation tying the statute's 50% ceiling [3] to a measured loss for American dairy and auto exporters, alongside alcohol exporters [5]. Put a credible number on the harm and the offset argument stops doing any work.
Ranked by verification strength, evidence, and original report placement.
It is unclear whether Trump's latest Canada tariffs could survive a legal challenge, and some lawyers argue the Depression-era law has been rendered obsolete by more recent trade laws.
A week before the August 29, 2026 report, Trump invoked Section 338 of the Tariff Act of 1930 to impose a 50% tax on $20 billion worth of Canadian imports.
Trump's Section 338 tariff authority has never been used, let alone tested in court; Ryan Majerus, a partner at King & Spalding and a former US trade official, said: 'This law is literally a blank canvas because it's never been litigated.'
Section 338 authorizes presidential tariffs of up to 50% on imports from countries that have discriminated against US businesses.
The move prompted dollar-for-dollar retaliation from Ottawa and strained already-tense relations between the two countries.
The tariffs were imposed to sanction Canada for allegedly discriminating against US dairy, auto and alcoholic beverage exports this summer.
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Evidence-backed comparisons of source perspectives and observed adoption signals. Read the methodology
Which Builder, Operator, and Investor concerns the observed source mix emphasized—not a truth score.
Evidence, demonstrated adoption, hype gap, incentives, and confidence are assessed independently, each on its own current evidence. How these are measured.
One newsroom, four lawyers on the record
Everything traces to Fortune, which is a real limit, but the sourcing inside that single account is better than most single-source stories: Majerus, Albrecht and Veroneau are quoted by name with their affiliations, and the Harrell–Hillman argument is a published essay in Reason readers can check. The soft spot is factual, not legal — no collection figure, no importer, no document from the administration setting out its own reasoning.
Live at the border, unchallenged
This is not a pilot. The duty is being collected, Ottawa has already answered in kind, and the statute has moved from a footnote to an operative instrument. What keeps the number from going higher is breadth: one country, one action, and — per Fortune — no plaintiff has surfaced to test it, so there is no second data point on how far the authority stretches.
The money figure runs ahead of the record
The gap sits in our own framing more than in Fortune's. Ten billion a year and $190 million accrued are multiplication on two reported inputs; nobody has published what the Treasury has actually taken in, and volumes will move under a 50% rate. On the law, the piece leans toward the obsolescence case — two scholars and a group that already beat these tariffs once — while Veroneau's flatter reading, that courts will just check the statutory boxes 'however ludicrous the broader context,' gets a fraction of the space and may be the better predictor.
Nobody quoted here is a bystander
Read the affiliations and the story reorganizes itself. The Liberty Justice Center is not commenting on this litigation; it is the outfit that won the last one and would plausibly bring the next. The obsolescence essay ran in a libertarian magazine. Majerus practises trade law at a firm that gets busier as tariff authority multiplies. Fortune discloses all of it, which is the right call, but the lineup skews toward voices whose interests point one way — and the administration's own account of why $20 billion and why hockey sticks appears nowhere.
Solid on the facts, thin on the outcome
We are fairly confident about what happened — a 50% duty on $20 billion of Canadian goods under a clause never litigated, with matching retaliation. We are much less confident about anything downstream. The legal question is genuinely open, the experts in this reporting disagree on first principles, and with no case filed there is no docket to track. Any second outlet with a collections number or a named importer would move this materially.