How do Section 301 and Section 338 differ in tariff application?

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Section 301 and Section 338 Differ in Their Legal Basis and Application for Tariffs

The application of tariffs under Section 301 of the Trade Act of 1974 and Section 338 of the Tariff Act of 1930 exhibit notable differences in their legal underpinnings, the justifications for their use, and the procedural timelines involved. While both sections have been employed to impose import duties, Section 301 is generally considered more established in legal precedent for tariff imposition, whereas Section 338 represents a less tested justification.
Section 301 Utilises Established Legal Authority for Tariff Imposition

Section 301 of the Trade Act of 1974 has been used to impose tariffs following investigations into concerns such as forced labour. For instance, tariffs were applied to goods from 60 economies after probes into such issues. A key characteristic of Section 301 tariffs is their perceived lower likelihood of being overturned by courts. This is attributed to the careful navigation of procedural requirements by trade officials prior to their imposition, as noted by Asia Society Policy Institute senior vice president Wendy Cutler. Investigations under this section, such as those preceding the recent tariffs on 60 economies, spanned a period of four months.
Section 338 is an Untested Justification for Tariffs

In contrast, Section 338 of the Tariff Act of 1930 has been described as an untested justification for tariffs, functioning more as a "tariff-as-punishment" tool. The Atlantic Council's Josh Lipsky highlighted its use in imposing 50-per cent tariffs on many Canadian goods due to alleged discriminatory treatment of US exports. Unlike the more extensive investigation period associated with Section 301, tariffs under Section 338 on Canadian goods became effective after a shorter period of approximately one month. The use of such less conventional tools introduces uncertainty into international trade relationships, as suggested by Scott Lincicome of the Cato Institute.
Legal Challenges and Durability of Tariffs Differ

The durability of tariffs imposed under these two sections may also differ in the face of legal challenges. Arguments against tariffs under Section 301 are likely to focus on the official findings that justified the action, a realm where courts are typically reluctant to intervene. However, the recent investigations leading to Section 301 tariffs were notably shorter, spanning four months for 60 economies, compared to past investigations, such as the year-long probe into China during Trump's first term, which may raise different legal questions. The untested nature of Section 338 means that legal arguments against its application could explore different avenues, although the specific nature of these arguments remains less defined due to its limited prior use.

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How do Section 301 and Section 338 differ in tariff application?

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