The legal case against Section 338 tariffs against Canada is strengthening on two constitutional fronts: the major questions doctrine and the nondelegation doctrine. Both arguments deserve close attention now that the Trump administration has, for the first time in the provision’s 96-year history, put this dormant authority to work.
What Section 338 Actually Says
Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338) authorises the president to impose new or additional duties of not exceeding 50% ad valorem on goods from a foreign country upon a finding that the country places a burden or disadvantage on US commerce through discriminatory trade measures. The statute requires that any such duties be calibrated to ‘offset such burden or disadvantage,’ and that proclamations take effect no earlier than 30 days after issuance.
On 20 July 2026, President Trump invoked Section 338 for the first time, imposing a 50% tariff on a range of Canadian products, including alcohol and dairy, effective 19 August 2026. He has since expanded the action to include categorical import bans on some Canadian goods, using an escalation mechanism within the statute that permits exclusion of products if initial tariffs fail to produce a response.
A threshold difficulty is that Section 338 does not define the term ‘discrimination’, and there is no developed body of judicial or agency precedent explaining how it should be applied, according to analysis by Morrison Foerster. Whether Canadian trade measures clear any meaningful discriminatory threshold is therefore untested territory.
The Major Questions Case Against Section 338 Tariffs Against Canada
The major questions doctrine (MQD) requires Congress to ‘speak clearly’ when delegating to the executive a power of ‘vast economic and political significance.’ Under the administration’s construction of Section 338, the president can impose tariffs at the statutory maximum against goods from virtually any trading partner, so long as that government imposes any restriction on American imports. There is no requirement that the restrictions be meaningfully discriminatory, and no requirement that the tariff rate closely track the trading-partner measure it is meant to offset.
That is a sweeping reading of a provision that has never previously been used. The US Court of Appeals for the Federal Circuit and three Supreme Court justices have already invoked MQD against the administration’s International Emergency Economic Powers Act tariffs, treating that kind of open-ended presidential tariff authority as precisely the sort of consequential executive power that requires unambiguous congressional authorisation.
The new embargo powers compel the same analysis. A presidential authority to ban imports entirely, on the basis that a trading partner imposes ‘at least some constraints’ on US goods, reaches further still than tariff-setting. Canada is among the United States’ largest trading partners, and the two economies are deeply integrated. Measures at that scale raise an obvious major question.
Nondelegation: Floor, Ceiling, and the FCC Precedent
If courts find that Section 338 survives MQD scrutiny, the nondelegation doctrine offers a second ground for challenge. As the Supreme Court reaffirmed in the IEEPA tariff litigation, the power to impose tariffs is a congressional power, not an executive one, and is therefore subject to nondelegation limits.
The relevant precedent is the Supreme Court’s 6–3 ruling in FCC v. Consumers’ Research, No. 24-354, decided 27 June 2025. The Court upheld the delegation of authority to the FCC to manage the Universal Service Fund, finding that the word ‘sufficient’ in the statute ‘sets a floor and a ceiling alike’ on how much the FCC may raise, satisfying the intelligible-principle test. The majority rejected a heightened nondelegation standard for revenue-raising statutes.
That holding cuts both ways for Section 338. The Court confirmed that even a revenue-raising delegation must have some limiting principle, a floor and a ceiling, identifiable in the statutory text. Under the administration’s reading of Section 338, neither exists in any meaningful sense. There is no minimum threshold of discrimination that must be found, no maximum tariff beyond the statutory cap, and no calibration requirement that tethers the duty rate to the trading-partner measure it is supposed to counter. As the Supreme Court said in the IEEPA context, the president is not supposed to have the power to ‘impose tariffs on imports from any country, of any product, at any rate, for any amount of time.’ The administration’s Section 338 position would grant exactly that.
A Pattern of Attempted Power Grabs
Section 338 is the latest in a sequence. The US Court of International Trade struck down a 10% ad valorem surcharge imposed under Section 122 of the Trade Act of 1974 in a 2–1 ruling on 7 May 2026, though the permanent injunction was limited to three named plaintiffs: the State of Washington, Burlap and Barrel, Inc., and Basic Fun, Inc. The Federal Circuit issued an administrative stay of that ruling on 12 May 2026 pending its consideration of the government’s appeal.
That Section 122 action had itself been challenged by 24 states in the Court of International Trade on 5 March 2026. Litigation over Section 301 of the same Act continues. Section 338 represents the administration’s next attempt to secure broad tariff authority after prior vehicles have been limited or struck down.
No cases challenging the Section 338 tariffs have yet been filed. When they are, plaintiffs who include MQD and nondelegation arguments alongside the statutory textual points will have a formidable legal arsenal. The Federal Circuit’s treatment of the IEEPA tariffs suggests the court is receptive to both lines of argument.
