Small Businesses Sue Trump Over 50% Canada Tariffs Based on Untested 1930 Trade Law

A group of small businesses filed a federal lawsuit on October 20 challenging President Donald Trump's 50% tariffs on a range of Canadian goods, marking the latest legal test of his administration's trade powers. The tariffs were imposed under Section 338 of the Tariff Act of 1930, a Depression-era statute that has never previously been used or litigated, after trade negotiations with Canada collapsed.

The White House argues Section 338 empowers the president to impose tariffs when a foreign country disadvantages U.S. exporters relative to exporters from other nations. The administration cited specific Canadian practices including provincial bans on U.S. liquor, the country's supply-managed dairy system, and quotas on certain U.S. vehicles. Critics note that the administration made no attempt to calculate the dollar value of harm to American businesses and extended tariffs to Canadian imports such as hockey sticks and cement that have no connection to those disputes.

Legal experts describe Section 338 as untested ground, calling it "literally a blank canvas" with no case law to draw on. Some lawyers argue the 1930 law has been rendered obsolete by more modern trade statutes. The Liberty Justice Center, which previously challenged Trump's tariffs under the International Emergency Economic Powers Act before the Supreme Court invalidated that approach in February, is involved in the new litigation. Courts have repeatedly ruled against the administration's tariff authority, and the new case is expected to come before a court that has already rejected prior Trump trade actions.