Canadian counter-tariffs could weaken arguments in U.S. legal challenge to Trump’s Section 338 tariffs, says MEI
- 57 per cent of Americans oppose tariffs on Canadian goods
Montreal, September 23, 2026 – Canada’s counter-tariffs could complicate U.S. legal proceedings aiming to invalidate the most recent tariffs imposed by President Trump. So says Ilya Somin, Professor of Law at George Mason University and co-counsel for the plaintiffs in the VOS Selections, Inc. v. Trump case that led to the invalidation of certain tariffs, in an Economic Note published this morning by the MEI.
“It’s probably only a question of time before the tariffs against Canadian goods are challenged in court,” points out Professor Somin. “Unfortunately, by increasing its own tariffs on U.S. goods, the Canadian government could give the president’s lawyers ammunition against one argument challenging Trump’s tariffs.”
U.S. tariffs on shaky legal ground
Since his return to the Oval Office in January 2025, U.S. President Donald Trump has tried on numerous occasions to invoke old laws to impose his tariff agenda.
He first invoked provisions of the 1977 International Emergency Economic Powers Act. The U.S. Supreme Court subsequently concluded, in the VOS Selections, Inc. v. Trump case, that this law does not authorize the imposition of tariffs, and that this power belongs to Congress. The court also emphasized that the President cannot have unlimited tariff authority.
Trump then tried to use Section 122 of the 1974 Trade Act. This attempt was also invalidated, this time by the Court of International Trade, which argued that this law can only be invoked in the context of a balance-of-payments crisis.
Section 301 of the same law, used to impose tariffs of from 10 to 12.5 per cent on goods from 60 countries, is currently the object of three distinct lawsuits, one of which was filed by 25 American state governments.
In the most recent tariff salvo targeting Canadian products, the president is relying on Section 338 of the 1930 Tariff Act, also known as the Smoot-Hawley tariff.
Canadian counter-tariffs are counterproductive
By imposing tariffs in response to those imposed by President Trump, Canada’s federal government is undermining one legal argument that could be used to invalidate these most recent tariffs, explains the law professor.
Section 338 of Smoot-Hawley stipulates that the section can only be used to counter discriminatory customs duties imposed on U.S. goods by a trading partner.
The new counter-tariffs necessarily do discriminate against the importation of U.S. goods.
The legal action could still succeed on the basis that there were few or no discriminatory Canadian tariffs when the Section 338 levies were imposed by Trump, or via other legal arguments.
“While Canada’s counter-tariffs were imposed after President Trump’s tariffs, it is not clear how the courts will see this argument,” explains Professor Somin. “The Canadian government should keep in mind that all or most of the new Trump tariffs could be invalidated by the courts.”
Tariffs very unpopular among Americans
U.S. tariffs are far from garnering unanimous support among our neighbours to the south. According to a recent Ipsos poll published September 1st, 57 per cent of Americans are opposed to the tariffs, while only 20 per cent support them.
Another poll by the same firm showed that in March, 55 per cent of Americans had a favourable opinion of Canada, versus just 10 per cent with an unfavourable one.
“Not only are U.S. tariffs struggling to pass the legal test in the courts, but they are coming up against even stronger opposition among the general public,” says Professor Somin. “This unpopularity bolsters the arguments of American groups contesting the tariffs before the courts.”
You can read the MEI Economic Note here.
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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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