Trade & Tariff Update #40: Key Issues Impacting US-Canada Relations & More

Canada: Untested Tariff Authority and a Renamed Body of Water 

The standoff between the United States and Canada continues.  President Trump’s 50% tariffs on about $20 billion worth of Canadian goods are in effect, and Canada’s dollar-for-dollar retaliatory duties are scheduled to go into effect on September 8.  Perhaps to further underscore the relationship’s decline, President Trump also issued an order last week renaming Lake Ontario Lake America.  

The Administration invoked Section 338 of the Tariff Act of 1930 as the primary authority for the new tariffs on certain Canadian imports, including auto parts, hockey sticks, and cheese.  The rarely mentioned provision allows the president to respond to "unequal impositions or discriminations" against American goods, but it has never been invoked to impose tariffs, nor has it been tested in court.  The lack of judicial precedent, along with questions about whether later trade laws may have superseded Section 338, could make these measures vulnerable to legal challenges. A good overview of the situation can be found here.

Section 301 Forced Labor Litigation  

Litigation is underway from various plaintiffs who argue that the Office of the U.S. Trade Representative (USTR) illegally “predetermined” the outcome of its forced-labor investigations into 60 foreign economies to pave the way for broad tariffs in violation of both Section 301 of the Trade Act of 1974 and the broader Administrative Procedure Act. A good summary of those actions before the Court of International Trade may be found here. 

Where’s the Beef  

Even as it ramps up tariff actions against Canada, the Administration has reacted to affordability concerns by temporarily easing tariffs on beef products to allow more beef to enter the country.  Some prominent Senate Republicans have reportedly pushed back from opposite sides, with some warning that higher tariffs on Canada will raise prices and others arguing that temporarily relaxing beef tariffs will hurt American ranchers.  All of this demonstrates the Administration’s continued divergent approach to trade and a lack of appreciation for the benefits of consistency and predictability for businesses. 

IEEPA Refunds Paused  

United States. Customs and Border Protection has "temporarily delayed" the rollout of the Consolidated Administration and Processing of Entries (CAPE) refund tool Phase 3 for refunds of invalidated global tariffs to ensure the system does not inadvertently affect other paid duties.  The launch was originally scheduled for August 20 and is now delayed until further notice. 

New Association Health Plan Rule  

Additional information has been reported regarding the Department of Labor’s anticipated proposal to expand access to healthcare coverage through association health plans.  Depending on the specifics of the proposal — which has not yet been made public — it could help provide lower-cost insurance for millions of self-employed workers, such as those in the gig economy , or for small businesses.  Similar efforts during President Trump’s first term were met with court challenges.  Judicial dynamics have changed since then, but it remains to be seen how this attempt will fare. 

Oregon Extended Producer Responsibility (EPR) Law Upheld 

United States District Court Judge Michael H. Simon ruled last Friday that Oregon’s law does not violate either the Constitution’s dormant Commerce Clause or the Due Process Clause.  Plaintiffs are expected to appeal the decision, which likely will have broad implications for EPR programs nationwide. 

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