President Donald Trump is dramatically expanding his trade agenda despite a Supreme Court decision that appeared to limit his tariff authority earlier this year. By turning to a nearly century-old law that has never been used before, the administration is signaling that aggressive tariffs remain a centerpiece of U.S. economic policy.
The move could have significant implications for investors, businesses, supply chains, and America’s largest trading partners as markets brace for another wave of global trade uncertainty.
Trump Revives a 95-Year-Old Tariff Law
After the Supreme Court ruled in February that the International Emergency Economic Powers Act (IEEPA) did not give the president unlimited authority to impose tariffs, many analysts believed the White House’s most aggressive trade strategy had reached its limit.
Instead, the administration quickly pivoted.
President Trump announced plans to invoke Section 338 of the Smoot-Hawley Tariff Act of 1930, a rarely discussed provision that authorizes tariffs against countries found to discriminate against U.S. commerce.
The law has existed for nearly a century but has reportedly never been used by any previous president.
Trump’s first target is Canada, with the administration proposing a 50% tariff under the statute.
A Growing List of New Tariffs
The Section 338 action is only one part of a much broader trade offensive.
Over the past two weeks, the administration has proposed or announced:
- 50% tariffs on certain Canadian goods
- 25% tariffs targeting Brazil
- Up to 200% tariffs on generic pharmaceutical imports
- New tariffs ranging from 10% to 12.5% affecting as many as 60 trading partners
The strategy demonstrates that even after the Supreme Court limited one legal pathway, the administration intends to continue pursuing tariffs through numerous other statutes already on the books.
Why the Supreme Court Didn’t Stop Trump’s Trade Agenda
The Supreme Court concluded earlier this year that Congress never explicitly authorized the president to impose broad tariffs under IEEPA.
Rather than ending Trump’s trade agenda, the ruling effectively redirected it.
The administration has increasingly relied on several existing trade laws, including:
- Section 122 for temporary universal tariffs
- Section 232 for national security-related tariffs
- Section 301 targeting unfair foreign trade practices
- Section 338, the newly revived Depression-era authority
Trade experts note that while some of these statutes require lengthy investigations, Section 338 allows the administration to move far more quickly.
That flexibility could make it one of the administration’s preferred tools moving forward.
Trade Experts Warn More Countries Could Be Targeted
Several trade analysts believe Canada may only be the beginning.
Sarah Bianchi, a former Biden administration trade official now with Evercore ISI, suggested the European Union could be among the next major targets if the White House successfully uses Section 338 as leverage.
Meanwhile, veteran trade attorney John Veroneau questioned whether the law even fits today’s circumstances.
Under the U.S.-Mexico-Canada Agreement (USMCA), Canada already grants the United States preferential treatment compared with many other countries. Critics argue that using Section 338 under those conditions stretches the original purpose of the statute well beyond what Congress envisioned.
Tariff Revenue Could Still Reach Historic Levels
Although Trump can no longer rely on IEEPA for sweeping tariffs, analysts believe the financial impact may remain enormous.
Evercore ISI estimates the latest combination of tariffs could generate approximately $240 billion to $260 billion annually in federal revenue.
While that is below earlier projections before the Supreme Court ruling, it would still represent roughly three times the tariff revenue collected before Trump’s return to office.
The administration has repeatedly argued that tariffs can reduce trade deficits, encourage domestic manufacturing, and generate government revenue without raising income taxes.
Critics counter that import duties ultimately increase costs for businesses and consumers while creating uncertainty throughout global supply chains.
Congress Pushes Back on Expanding Presidential Trade Powers
Lawmakers on both sides of the aisle have increasingly questioned how much tariff authority Congress has delegated to the executive branch.
Sen. Ron Wyden said Congress should reclaim a larger role in setting U.S. trade policy, arguing that tariff decisions have become too concentrated within the White House.
At the same time, Congress is considering legislation that would grant the president additional tariff authority involving Russia and countries purchasing Russian energy.
Some trade policy experts warn the legislation could unintentionally give future administrations even broader flexibility to impose tariffs for geopolitical purposes.
What Investors Should Watch
Markets have become increasingly sensitive to tariff announcements as investors evaluate the potential impact on inflation, corporate earnings, and global growth.
Key sectors that could see increased volatility include:
- Manufacturing
- Automotive companies
- Pharmaceuticals
- Industrial exporters
- Retailers dependent on imported goods
Investors will also be watching whether additional trading partners, including the European Union, become targets under Section 338 or other existing trade laws.
With multiple legal avenues still available, the Supreme Court’s ruling appears to have changed the legal strategy behind Trump’s tariffs—but not the administration’s broader commitment to using them as a central economic and geopolitical tool.
Frequently Asked Questions
Why is Trump using Section 338?
Section 338 of the Smoot-Hawley Tariff Act allows the president to impose tariffs against countries that discriminate against U.S. commerce. Although it has existed since 1930, it has reportedly never been used before.
Didn’t the Supreme Court block Trump’s tariffs?
The Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not provide broad authority for tariffs. However, it did not prohibit the use of other trade laws, allowing the administration to pursue different legal authorities.
Which countries could face additional tariffs?
Canada has already been targeted under the new strategy. Trade analysts believe additional actions could eventually include the European Union and other major U.S. trading partners.
How could the new tariffs affect investors?
Higher tariffs can influence inflation, corporate profits, supply chains, and global trade flows. Companies that rely heavily on imported materials or international manufacturing may face greater cost pressures if additional tariffs are implemented.
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