President Donald Trump announced a new round of retaliatory tariffs on July 20 against Canada, invoking the Depression-era Smoot-Hawley Tariff Act in a game of **** for tat that can have no winner.
The administration argues that the new tariffs are necessary to address Canada's harmful discrimination against the United States auto industry, and are justified by Section 338 of Smoot-Hawley. But Section 338 has never been used to impose tariffs before this year. Section 338 was designed to deter foreign retaliation by allowing the President to increase tariffs against a country that had discriminatory tariffs or trade restrictions on American goods.
While there can be no doubt that Canada's 25% tariffs on U.S. autos are discriminatory because they target American goods without putting similar burdens on goods from other countries, the administration's evidence supporting the tariffs is weak at best.
In its Proclamation announcing the new tariffs, the administration claimed that Canada's 25% tariff on U.S. autos and auto parts—enacted days after Trump's April 2, 2025 "Liberation Day" Executive Order announcing new U.S. tariffs on Canada and virtually every other country in the world—unfairly discriminates against the American auto industry, thus "disadvantaging the commerce of the United States compared to the commerce of other countries."
In support of this view, the administration claims that Canadian imports of U.S. autos "fell precipitously" by more than $5 billion, or "approximately 22%," while Canada's imports from Mexico, **** an, Korea, and Germany increased by nearly $3 billion.
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The administration argues that the new tariffs are necessary to address Canada's harmful discrimination against the United States auto industry, and are justified by Section 338 of Smoot-Hawley. But Section 338 has never been used to impose tariffs before this year. Section 338 was designed to deter foreign retaliation by allowing the President to increase tariffs against a country that had discriminatory tariffs or trade restrictions on American goods.
While there can be no doubt that Canada's 25% tariffs on U.S. autos are discriminatory because they target American goods without putting similar burdens on goods from other countries, the administration's evidence supporting the tariffs is weak at best.
In its Proclamation announcing the new tariffs, the administration claimed that Canada's 25% tariff on U.S. autos and auto parts—enacted days after Trump's April 2, 2025 "Liberation Day" Executive Order announcing new U.S. tariffs on Canada and virtually every other country in the world—unfairly discriminates against the American auto industry, thus "disadvantaging the commerce of the United States compared to the commerce of other countries."
In support of this view, the administration claims that Canadian imports of U.S. autos "fell precipitously" by more than $5 billion, or "approximately 22%," while Canada's imports from Mexico, **** an, Korea, and Germany increased by nearly $3 billion.
#section
19 hours ago
