According to a report from Reuters, trade and legal experts suggest that President Donald Trump may revive a long-forgotten “1930 Tariff Act” to support his new tariff plan, aligning U.S. tariff rates with higher import duties of other countries.
Trump has indicated that the new U.S. tariffs will take effect “almost immediately,” with Section 338 of the 1930 Tariff Act providing him with the legal basis for swift implementation.
While the law has been proposed as a leverage tool before, it has never been actively enforced and is rarely mentioned in government records. This law allows the president to impose up to a 50% tariff on goods imported from countries deemed to discriminate against American businesses.
If the president finds that a country imposes “unreasonable costs, duties, regulations, or restrictions” on American goods and does not treat all countries equally, he can invoke this law. Additionally, if a country’s tariffs or other costs, regulations, or restrictions negatively impact U.S. businesses, this power can be triggered.
Trump has long complained that U.S. tariff rates are lower than those of most countries. For example, the EU imposes a 10% tariff on imported cars, while the U.S. only applies a 2.5% tariff on imported passenger vehicles, a disparity that particularly irks Trump.
Dan Cannistra, a partner at law firm Crowell & Moring, stated, “I think this (Section 338) is the path they are going to take. They will say to the EU, ‘You impose a 0% tariff on cars imported from Korea, but 10% on cars from the U.S., which is discrimination against us.'”
During his first term, Trump typically relied on trade tools that took longer to impose tariffs, such as Section 232 of the Trade Expansion Act for steel and aluminum products, and Section 301 of the 1974 Trade Act for investigating unfair trade practices by China. These processes involve investigations and public input, which can take several months.
However, in his new term, Trump is more inclined to use trade tools that can be swiftly implemented. This includes utilizing the International Emergency Economic Powers Act for the first time to impose a 10% tariff on Chinese goods and setting a deadline from March onwards to impose a 25% tariff on Mexican and Canadian goods to address fentanyl and border security issues.
Earlier this week, Trump directly modified a previous metal tariff announcement under Section 232, quickly raising the aluminum tariff to 25%, matching the steel tariff, and eliminating all exemptions for steel and aluminum products. This measure will take effect on March 4.
Nazak Nikakhtar, a former senior official at the U.S. Department of Commerce and current partner at Wiley Rein law firm, stated that Section 338, like the aforementioned measures, is a rapid-response trade tool that enables the president to unilaterally impose tariffs within 30 days.
Nikakhtar noted that Trump’s trade team in his first term had explored the feasibility of using Section 338 but ultimately chose more familiar tools. “The bottom line is, it’s an effective law. Congress could have repealed it, but it didn’t,” she added, emphasizing, “Its advantage lies in swift execution.”
The White House spokesperson did not respond to Reuters’ request for comment on the potential use of Section 338.
It is currently unclear whether Trump’s actions will target a wide range of goods or specific industries or countries, but the core objective is to align U.S. tariffs with the generally higher rates of other countries.
White House economic advisor Kevin Hassett stated on Monday that India’s high tariffs essentially block imported goods.
According to WTO data, the U.S. weighted average Most Favoured Nation (MFN) tariff is around 2.2%, while India’s is 12%, Brazil’s is 6.7%, Vietnam’s is 5.1%, and EU countries have a 2.7% average.
Although U.S. tariff levels are the result of negotiations with various countries over the years, Cannistra believes that Trump’s use of Section 338 may still have legal validity due to the “inconsistency prevalent in the current global tariff regime,” with countries negotiating based on their own economic interests.
“There is no other conclusion except ‘discrimination does exist.’ And you might find evidence of it in just 30 seconds on various countries’ tariff schedules,” Cannistra said, adding that aside from tariff disparities, Trump may also consider other countries’ regulatory measures as discriminatory against American businesses, such as the EU and Japan’s restrictions on genetically modified crops and automotive safety or emission standards.