Congress must close this tariff loophole

President Trump’s most recent tariffs are headed to court. On Oct. 20, the Liberty Justice Center filed a lawsuit on behalf of Gellert Global Group, an American food importer, challenging his use of Section 338 of the Tariff Act of 1930 to impose tariffs on Canadian goods.

The case exposes a loophole in U.S. trade law that the courts may not be able to close, but that Congress can no longer afford to ignore.

One of the complaint’s main arguments is that Section 301 of the Trade Act of 1974 effectively replaced Section 338. That will be a difficult legal argument to win. But it raises a compelling question: Can Congress meaningfully constrain presidential tariff authority when an older, less restrictive statute offers an alternative route to achieve the same goal?

Section 338 addresses discrimination against American commerce. It authorizes additional duties of up to 50 percent when a foreign country subjects U.S. products or commerce to specified forms of unequal treatment. Those duties must “offset” the resulting burden or disadvantage.

Section 301 casts a wider net. It addresses foreign practices that are unreasonable, unjustifiable or discriminatory that burden or restrict U.S. commerce. Discrimination is one form of unfair trade practice, but Section 301 reaches considerably further.

The statutes are therefore not interchangeable. Yet they overlap when foreign discrimination becomes the basis for American retaliation. That’s what is happening with the Canada tariffs.

Congress........

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