Donald Trump is pursuing a sweeping expansion of executive trade powers, utilizing little-known historical statutes to impose tariffs at will after the US Supreme Court struck down his previous levies.
The Collapse of IEEPA and the Search for New Tariff Authorities
The White House has actively sought alternative mechanisms to penalize foreign trading partners since February, when a 6-3 majority on the Supreme Court ruled against the administration’s use of the International Economic Emergency Powers Act (IEEPA). The high court, which included two justices appointed by Trump, determined that the executive branch could not unilaterally impose broad tariffs under the guise of declared national emergencies, reserving taxation powers strictly for Congress. Despite this setback, Trump’s legal team and administration officials have scoured historical statutes for alternative avenues to enact punitive duties.
Invoking Section 338 of the Smoot-Hawley Tariff Act
The most alarming precedent emerged when the administration imposed a 50% tariff on imports from Canada, invoking Section 338 of the Smoot-Hawley Tariff Act of 1930. Section 338 is the same statute that severely choked global commerce during the Great Depression. The law grants the president sweeping authority to retaliate against any country deemed to place United States commerce at a disadvantage compared to other foreign nations. Historically used primarily as leverage to secure “most favored nation” treatment rather than as an active weapon for blanket levies, Section 338 provides the semantic flexibility Trump needs to sustain his ongoing trade war.
Did You Know? Section 338 of the Smoot-Hawley Tariff Act of 1930 had never actually been invoked to impose tariffs prior to the current administration’s actions, serving instead as a diplomatic leverage tool to prevent trade discrimination.
Alternative Statutory Tools: Section 122 and Section 301
Beyond Smoot-Hawley, the administration has tested various other legislative levers with mixed legal grounding. Fresh from his Supreme Court defeat, Trump imposed a 10% tariff on all imports by invoking Section 122 of the Trade Act of 1974, a provision designed to address balance of payments crises. However, Section 122 applies to fixed exchange rate systems from the 1970s—where trade deficits required government asset sales to maintain currency pegs—rather than today’s floating exchange rate environment. Additionally, the administration deployed Section 301 to levy round-robin tariffs under the argument that global trading partners unfairly benefit from forced labor, though legal analysts caution that a blanket accusation across all foreign nations is highly vulnerable to federal court challenges.
Frequently Asked Questions
Why did the Supreme Court strike down Trump’s original tariffs?
The Supreme Court ruled 6-3 that the executive branch overstepped its bounds by using the International Economic Emergency Powers Act (IEEPA) to levy taxes, noting that taxation authority belongs exclusively to Congress.
What makes Section 338 of the Smoot-Hawley Tariff Act so dangerous?
Section 338 grants the president broad, unchecked discretion to slap retaliatory duties on any nation under hazy arguments regarding commercial disadvantages, offering a much wider mandate than modern targeted trade statutes.
Can businesses challenge these new tariffs in court?
Yes. The strategy can be challenged as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or as “unsupported by substantial evidence”.
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