President Trump is escalating his trade war with Canada, doubling down on a 95-year-old law to potentially ban Canadian dairy products, most alcoholic beverages, and motorcycles.
“It seemed inevitable that Trump would need to have the last word,” Capital Economics said in a note, “and the administration has responded by leaning on another part of Section 338.”
That’s a provision from the Tariff Act of 1930, which was signed by President Herbert Hoover. Trump has cited that authority for his latest actions, though the law is often cited as the literal textbook example of tariffs gone wrong.
More widely known as the Smoot-Hawley Tariff Act, it raised effective US tariff rates in the early 1930s into the double digits, leading to a trade war with Canada and others and a fall in imports, which economists agree worsened the Great Depression a few years later.
But beyond the inconvenient historical parallel — Trump has often recoiled at being compared to Hoover — a more pressing concern for the president will likely be whether the authority is legal.
President Trump is seen after speaking during a “Steel Across America” event near the White House on Tuesday. (Andrew Harnik/Getty Images) · Andrew Harnik via Getty Images
Some legal experts think that this presidential authority was superseded by subsequent laws and could therefore be nullified in the courts.
Trump has invoked a “zombie statute,” said Alan Wolff of the Peterson Institute of International Economics, setting “a new record for lack of credibility.”
“The courts should reject these tariffs as patently illegal,” he added.
Philip Zelikow, an attorney and former career diplomat now at the Hoover Institution, has similarly argued that this tariff authority isn’t legal because the law is “long dead” and was intended to be replaced by subsequent tariff laws.
It was “effectively repealed and superseded by section 252 of the Trade Expansion Act of 1962,” he recently argued.
These legal questions have led to a widespread assumption in trade circles that Trump’s authority could be in for legal scrutiny in the months ahead, especially given the Trump administration’s mixed tariff record in the courts.
The centerpiece of Trump’s previous tariffs relied on the International Economic Powers Act of 1977 and was struck down by the Supreme Court in February. His follow-up move to temporarily impose tariffs under Section 122 of the Trade Act of 1974 led the US Court of International Trade to rule that Trump’s team misinterpreted that law and ordered that those tariffs “shall be refunded with interest as provided by law.”
That ruling was paused and remains under appeal.
Read more: 5 ways to tariff-proof your finances