Why Canada-Targeted Tariffs Are Vulnerable to Legal Challenges
Donald Trump’s latest 50 per cent tariffs against Canada would likely be shot down in any court challenge, trade law experts say.
Even though he’s theoretically on firmer legal ground than he was with so-called ‘Liberation Day’ tariffs which were rejected by the U.S. Supreme Court in February, Trump still needs to prove that Canada is “discriminating” against American trade, said veteran international trade lawyer Barry Appleton.
But the Canada-U.S.-Mexico Agreement on trade — negotiated and signed by the U.S. during Trump’s first term in office — includes the things he’s now complaining about, including Canada’s auto sector and supply managed dairy industry, Appleton noted.
“It’s a hard thing to walk into court and call your own trade deal discrimination,” said Appleton, co-director of the Center for International Law at New York University, and a fellow at the University of Waterloo’s Balsillie School of International Affairs. “It’s harder still when that same deal has a dispute-settlement process built for exactly this kind of complaint, and Washington is choosing to skip it and go straight to tariffs.”
Trump issued 50 per cent tariffs against a wide range of Canadian goods earlier this week using Section 338 of 1930s Tariff Act, a Depression-era piece of legislation which has yet to be tested in court.
The levies, on everything from hockey sticks to wine, dairy products, flower bulbs and horsehair, are set to be applied on Aug. 19. According to estimates from several economists the list accounts for roughly five per cent of Canadian goods exported to the U.S., and is valued at roughly $28 billion per year.
On paper, Trump has at least one legal argument going for him
Unlike the International Emergency Economic Powers Act, which Trump used to issue his Liberation Day tariffs against dozens of countries, Section 338 explicitly gives the U.S. president power to levy tariffs. But that authority isn’t unfettered, meaning the latest tariffs would almost certainly get struck down too, said D.C.-based trade lawyer Marc Wheat.
“At least tariffs are mentioned in this legislation. But he still has to jump over the hoop of whether it’s unreasonable … and has a disproportionate impact that puts the U.S. at a disadvantage compared to other nations,” said Wheat, general counsel at Advancing American Freedom, a free market think tank. “I just don’t think that that can be found.”
On paper, said Wheat, Trump’s administration has at least one legal argument in its favour with the latest round of tariffs.
“The strongest argument would be that Canada has set very high tariffs against U.S. goods and not other countries,” said Wheat. “The argument against that is that this was retaliatory, and the U.S. started it. The other point would be that none of this justification is factually true, and that Canada is being even-handed.”
The February ruling struck down the IEEPA tariffs, with the Supreme Court finding that tariffs are a tax, and that the power of taxation is held exclusively by the U.S. Congress.
Trade lawyer says SCOTUS likely to just pass on chiming in
Wheat said U.S. importers will soon challenge the Section 338 tariffs at the U.S. Court of International Trade, and will likely win. While the White House could keep appealing if the tariffs are struck down, Wheat doesn’t think the Supreme Court has any appetite to hear another case similar to IEEPA.
“The administration will lose at the Court of International Trade, they’ll lose at the Federal Circuit (appeals court), and they will very likely appeal it to the Supreme Court,” said Wheat, who filed a brief against the IEEPA tariffs to the Supreme Court.
“I think the Supreme Court is likely just to say ‘no, the lower courts got it right.’ It’s not the pressing national crisis that the White House made it out to be, we’ve seen this movie before, so I just don’t think it will be that big of a deal for the Supreme Court just to turn it down.”
This article was first reported by The Star
