In Focus delivers deeper coverage of the political, cultural, and ideological issues shaping America. Published daily by senior writers and experts, these in-depth pieces go beyond the headlines to give readers the full picture. You can find our full list of In Focus pieces here.The Smoot-Hawley Tariff Act of 1930 did not generate much revenue for the federal government or succeed at protecting American producers from foreign competition. Instead, it sank the United States deeper into the Great Depression and has long been effectively superseded by legislation that shifted the focus of trade policymaking into international agreements. Yet, as we predicted one year ago, the White House considers Section 338 of the Smoot-Hawley Tariff Act its “Plan B,” which, when used by the administration, may once again cause serious harm to our economy.
Under the Constitution, the tariff power belongs exclusively to the legislative branch. Under Section 338, Congress authorized the president to impose tariffs of up to 50% on countries that engaged in discriminatory trade practices against the U.S. Although this section has sat dormant for 95 years, the White House invoked it for the first time on July 20 to impose a new 50% tariff on Canadian imports, ranging from wine to hockey sticks, without regard for the U.S.-Mexico-Canada Agreement’s protections.Since “Liberation Day” on April 2, 2025, the administration has pivoted from statute to statute for its tariff-of-the-month club to prolong its illegal regime of taxing imports. Many of its claims have been inconsistent and contrary to well-established economic history.Under penalty of perjury, Commerce Secretary Howard Lutnick told the Federal Circuit that “without the viability of [International Emergency Economic Powers Act] tariffs, the United States would be weakened and lose the essential tool to address this national emergency most efficiently” (emphasis added).Because of such claims, the courts allowed the government to collect tariff revenue while litigation continued. But the Supreme Court ultimately rejected Lutnick’s claims in February.Yet, within hours of the Supreme Court’s decision striking down the IEEPA tariffs, the administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974. Several states and small businesses are currently challenging the Section 122 tariffs and the government’s attempts to conflate two technical terms that are not the same: a “balance of payments deficit” and a “trade deficit.” The solicitor general, representing the government, even argued in Learning Resources v. Trump that “trade deficits” are “conceptually distinct from balance-of-payments deficits.”Section 122’s “balance of payments deficit” has never been used because the provision became obsolete in 1976 when the U.S. abandoned the Bretton Woods exchange rate system. A “balance of payments deficit” was a natural consequence of fixed exchange rates, when the value of the dollar was pegged to gold and when other foreign currencies were pegged to the dollar.Now, not waiting for a final ruling on its Section 122 tariffs, the White House attempts to resurrect a dormant clause from the long-buried Smoot-Hawley Tariff Act, Section 338. The consequences of the administration’s tariff regime have already been similar to those of Smoot-Hawley in the Great Depression: an explosion of new or ramped-up lobbying contracts, job losses for families, and increased prices for many goods. Smoot-Hawley was disastrous then and is leading to the same problems now.President Donald Trump speaks during an event to announce new tariffs on April 2, 2025, in the Rose Garden at the White House in Washington. (AP Photo/Mark Schiefelbein)
