The New Tariff Landscape: President Invokes Section 338 of the Tariff Act of 1930
On July 20, 2026, President Donald Trump signed three proclamations imposing additional 50% tariffs on designated Canadian goods under Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338)—a statute that no president has previously used to impose duties. The tariffs take effect August 19, 2026, and apply regardless of USMCA origin, and target Canadian motor vehicles, alcohol, and dairy.
What Section 338 Authorizes
Section 338 permits the President, by proclamation, to impose new or additional duties of up to 50% on products of a foreign country that the President determines has discriminated against U.S. commerce, effective 30 days later. If the President determines that the discrimination continues or escalates, he may exclude the country’s products from importation entirely—an embargo power backed by forfeiture of goods imported in violation of the embargo. Proclamations may be suspended, revoked, or amended by the president at any time.
The trigger under Section 338 is a presidential finding that a foreign country imposes unreasonable or unequal burdens on U.S. products or otherwise discriminates against U.S. commerce relative to other countries, and that the tariff imposition will offset those burdens. Unlike tariffs imposed under Section 301 of the Trade Act of 1974 [1] or Section 232 of the Trade Expansion Act of 1962, [2] the President can levy Section 338 tariffs without any investigation, hearing or agency report. Because the 10% global tariff imposed under Section 122 Trade Act of 1974 [3] expires on July 24, 2026, and several Section 301 investigations and Section 232 reports are still pending and incomplete, it appears the Administration is invoking Section 338 to bridge the gap.
Legal Vulnerabilities?
Litigation seems likely, as the statute is untested. But in contrast to the tariffs imposed under International Emergency Economic Powers Act (IEEPA), which the Supreme Court recently ruled were illegal in Learning Resources, Inc. v. Trump [4], Section 338 expressly authorizes the President to impose tariffs.
The tariffs also breach the USMCA on their face and exceed U.S. bound rates and most-favored-nation commitments under the General Agreement on Tariffs and Trade (GATT); but there is no real recourse. The USMCA Implementation Act gives importers no private right of action and an appeal to the World Trade Organization would take years. The only realistic remedies are political.
What to Do Now
There may be a narrow window to realize some relief As the Section 122 tariffs expire, it will likely take some time for new Section 301 and Section 232 tariffs to be implemented, and any Section 388 tariffs require a 30-day notice. That could leave some time to try to get goods imported into the U.S. before new Section 338 tariffs take effect.
[1] 19 U.S.C. § 2411
[2] 19 U.S.C. § 1862
[3] The Section 122 global tariff was imposed shortly after the Supreme Court ruled the tariffs imposed under the International Emergency Economic Powers Act (50 U.S.C. §§ 1701–1710) in Learning Resources v. Trump (607 U.S. 229 (2026).
[4] Learning Resources v. Trump (607 U.S. 229 (2026).
