WASHINGTON — President Trump has dusted off a nearly century-old trade law to launch a new round of tariffs against Canada, announcing 50% taxes on a broad range of Canadian goods in a move that experts warn could push prices higher for everyday Americans.
The tariffs, announced Monday, target Canadian products ranging from hockey sticks to beer. Trump justified the action by invoking Section 338 of the Tariff Act of 1930, claiming that Canada has been discriminating against American exports of automobiles, alcohol, and cheese.
The president has been at odds with Canada for some time, accusing the country of not doing enough to stop fentanyl from crossing the border — a claim he used to justify an earlier round of tariffs. Canada responded by retaliating with its own tariffs on U.S. goods, which in turn angered Trump. Most Canadian provinces have since banned the sale of American alcoholic beverages.
Tariffs are essentially taxes on imported goods. American importers pay them and typically pass the added cost on to consumers through higher prices at the store.
The law Trump cited — the Tariff Act of 1930 — is the same legislation behind the infamous Smoot-Hawley tariffs, which economists and historians widely blame for deepening the Great Depression by strangling global trade. The law even made a memorable appearance in the 1986 film “Ferris Bueller’s Day Off.”
Section 338 of that law gives the president authority to impose tariffs of up to 50% on imports from countries found to be discriminating against U.S. businesses. It requires no formal investigation and places no time limit on how long the tariffs can remain in effect.
Notably, this provision has never actually been used. “It’s completely untested,” said trade lawyer Ryan Majerus, a partner at King & Spalding and a former U.S. trade official. “It’s kind of hard to believe it’s been on the books for 100 years.”
Canada is the second-largest trading partner of the United States, behind only Mexico. Last year, the U.S. imported $389 billion worth of Canadian goods — primarily crude oil and automobiles — compared to $541 billion from Mexico. Canada, for its part, relies heavily on the American market, with nearly 72% of its goods exports heading to the United States last year, down from about 76% in 2024.
However, the economic impact may be more limited than the headline number suggests. Stephen Brown, chief North America economist at Capital Economics, estimates the Section 338 tariffs will affect only about $20 billion worth of Canadian imports. He says they “will not have any major implications for U.S. (economic) growth or inflation … The consequences for Canada will be greater, but manageable.” Brown calculates the new tariffs would raise the overall U.S. tariff rate on Canadian imports from 3.1% to 5.6%.
Some major import categories are excluded from the 50% tariffs — energy products and motor vehicles, which are already covered by separate tariffs, are not included. But a wide variety of other goods will be affected, including building materials like cement and wood, as well as agricultural products such as dairy and honey.
Notably, the new tariffs do not spare products that qualify for duty-free status under the US-Mexico-Canada Agreement, or USMCA — a departure from Trump’s previous tariff actions. “Anything that got exempted before is basically going to be covered now,” said Barry Appleton, a law professor and co-director of New York Law School’s Center for International Law. “So where American consumers were shielded from the costs earlier because of the USMCA exemption, this tariff is going to remove it.”
That removal of protections adds to a financial burden that consumers are already feeling. In 2025, tariffs imposed by Trump cost U.S. households an average of $1,000, according to the nonprofit Tax Foundation.
“Even with the significant carve-outs, you’re still going to be hitting a fair amount of goods, and those costs are going to be passed onto U.S. consumers at a time when the U.S. consumer is telling people pretty consistently that they feel tapped out by inflation,” said Greg Husisian, partner and chair of law firm Foley & Lardner’s international trade and national security practice.
The announcement also comes amid significant uncertainty surrounding Trump’s broader tariff agenda. The Supreme Court struck down a separate set of tariffs in February, ruling that Trump had exceeded his authority when he declared America’s trade deficit a national emergency to justify them. That decision forced the administration to refund tariff payments already collected.
Trump then turned to a different legal authority — Section 122 of the Trade Act of 1974 — to impose 10% worldwide tariffs, but those are set to expire this Friday. He is expected to replace them with yet another set of tariffs under Section 301 of the same law, though that has not yet happened.
Legal experts are already questioning whether the new Section 338 tariffs will hold up in court. Peter Harrell, a visiting scholar at Georgetown University’s law school, flagged potential weaknesses, including uncertainty over whether the U.S. International Trade Commission should conduct an investigation before the president can act, and whether Section 338 has effectively been superseded by newer laws.
“The legal case for 338 is weaker than IEEPA,” Majerus said. “There’s at least a fair probability it will get overturned.”
The new tariffs are set to take effect on August 19. The U.S. is also currently renegotiating the USMCA trade agreement with Canada and Mexico, and the threat of the Section 338 tariffs could be used as leverage to extract concessions from Ottawa during those talks.
