President Donald Trump’s 50% U.S. tariffs on Canada, which have set off a trade war between the two neighboring countries, could face legal challenges, though most U.S. companies caught in the crosshairs have remained silent.
The details: The legal measure used by the president to impose the levies—Section 338 of the Tariff Act of 1930—rests on uncertain legal ground, according to experts, reported AP News.
The president’s Section 338 tariff authority has never been used or tested in court, making the law essentially “a blank canvas” for litigation,’’ said Ryan Majerus, a partner at King & Spalding and a former U.S. trade official.
Some lawyers argue that the law, known as the Smoot-Hawley Act—enacted during the Great Depression to protect American farmers and manufacturers—has been rendered obsolete by more recent trade laws.
What they’re saying: “There is a very strong argument that (Section 338) was superseded,’’ said Sara Albrecht, CEO of the Liberty Justice Center, a libertarian advocacy group that represented businesses that successfully challenged the earlier Trump tariffs with the Supreme Court, per AP News.
Why it matters: A successful legal challenge to the tariffs could provide relief from higher costs on Canadian vehicles and parts, potentially easing pressure on automakers and dealers navigating pricing, inventory and affordability concerns stemming from the escalating trade dispute.
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Between the lines: The biggest hurdle to a legal challenge against President Trump’s use of Section 338 of the Tariff Act of 1930—targeting $20 billion worth of Canadian exports, with autos at the center of the tensions—is finding plaintiffs willing to come forward.
No one had filed suit challenging Trump’s use of Section 338 as of press time, even as the Liberty Justice Center sought businesses willing to sue the government over the levies.
“Anytime you want to sue the government, it’s a hard proposition,’’ said the advocacy group’s CEO, Albrecht, per AP News.
Automakers that stand to be impacted by the trade tensions have remained mostly quiet amid the standoff between Canadian and U.S. officials, despite the potential fallout for manufacturing and production costs, reported Politico.
Trade talks between the U.S. and Canada have all but ceased as political leaders from both countries continue to trade words publicly, fueling further uncertainty about the fate of the United States-Mexico-Canada Agreement.
What they’re saying: “We’re kind of regrouping,” said an auto industry official regarding the tension, per Politico. “We just need to let both sides go back to their corners for a bit, and then figure out how to come back together.”
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