In order to impose the tariffs on Canada, President Donald Trump used an obscure provision of the 1930 Smoot-Hawley Tariff Act that, it appears, no president had previously used to impose tariffs.
While regulating trade is a power reserved by the Constitution for Congress, Section 338 of Smoot-Hawley gives the president the power to impose tariffs on imports from countries that treat U.S. goods less favorably than goods from other countries. The law predates the modern international trade system and gives the president broad authority to use tariffs to counter what the U.S. considers discriminatory trade practices.
Previous administrations came close to using it a handful of times. Here’s a look at a few of those moments, according to Globaltradealert.org.
France, 1932: The Hoover administration threatened Section 338 after France gave Belgian goods preferential treatment and imposed discriminatory taxes/quotas affecting American products. The threat became leverage in negotiations; the U.S. did not ultimately impose Section 338 tariffs.
Spain, early 1930s: U.S. officials considered Section 338 while negotiating over Spain's treatment of American goods and most-favored-nation status. Again, it was leverage, not an actual tariff action.
Germany and Australia, 1935: This is the closest historical precedent. The U.S. Tariff Commission found that both countries discriminated against American commerce, and President Franklin D. Roosevelt made findings to that effect. But instead of imposing Section 338 tariffs, the administration withdrew trade benefits using authority under the Trade Agreements Act.
Japan, late 1930s: State Department officials seriously considered Section 338 in response to Japan’s efforts to reshape China’s trade relationships to favor Japanese commerce. A 1939 State Department document explicitly discusses imposing additional duties of up to 50% on Japanese imports under Section 338(e). It wasn’t done.
China, 1949: Secretary of State Dean Acheson discussed Section 338 as a possible response to discrimination against American trade in China. Officials noted that the statute potentially allowed not just higher tariffs but complete exclusion of Chinese products. Again, there appears to have been no action.
