The Peninsula

The Beef with Tariffs (III): Will Trump Revive Section 338 to Enforce Reciprocal Tariffs?

On May 28, 2025, the U.S. Court of International Trade (CIT) issued a permanent injunction against wide-sweeping tariffs imposed by the Donald Trump administration using the International Emergency Economic Powers Act (IEEPA), which included universal and reciprocal tariffs announced on “Liberation Day” as well as fentanyl-related tariffs. The CIT’s three-judge panel held that the U.S. Constitution’s Commerce Clause gives Congress, not the president, the power to set import duties and that the IEEPA “does not confer such unbounded authority.”

The ruling ordered the U.S. Customs and Border Protection to stop collecting sweeping IEEPA tariffs within ten days. The Trump administration appealed, and on May 29, the U.S. Court of Appeals for the Federal Circuit granted a short administrative stay—meaning the duties technically remain in effect while the appeal is briefed. Whether importers must pay the tariffs after July 31 now depends on the appellate timetable.

The IEEPA is just one of many statutes at Trump’s disposal to skirt conventional checks and balances on executive power. Notable examples include Section 232 of the Trade Expansion Act of 1962, which was used for imposing tariffs on steel and aluminum imports, and Section 301 of the Trade Act of 1974, which the U.S. Trade Representative (USTR) routinely invokes to counter unfair trade practices. However, less widely recognized is Section 338 of the Tariff Act of 1930.

Overview of Section 338

Section 338 authorizes the president to impose “new or additional duties” of up to 50 percent on products from countries that “discriminate against commerce of the United States.” Moreover, Section 338 also allows the president to block imports from any country that increases their discrimination against U.S. products. Although overshadowed by more recent laws, it remains on the statute books as 19 U.S.C. §1338.

There are four central elements of Section 338. First, the president can invoke this upon determining that a foreign government imposes an “unreasonable” measure against U.S. exports, such that it puts U.S. goods at a disadvantage relative to those from other countries.

Second, discrimination can manifest through differing tariffs, extra fees, and regulations or other policies favoring foreign competitors over U.S. products.

Third, a formal investigation may commence via governmental channels or a petition from private stakeholders to the U.S. International Trade Commission (ITC). However, the statute imposes no specific timeline, leaving ample room for executive discretion. Due to limited precedence, it is also unclear whether a formal investigation by the ITC is required to impose tariffs under Section 338.

Finally, if the president finds that a foreign country is imposing discriminatory duties, fees, regulations, or other practices that disadvantage U.S. commerce compared to other countries, the president has the sole power—as it does not require any agency investigation or determination of the conditions to enforce the tariffs—to raise tariffs up to 50 percent ad valorem on targeted goods.

While tariffs have never been imposed using Section 338, President Trump recently invoked Section 232 to levy tariffs on steel and aluminum imports. Below is a brief comparison between Section 232 and Section 338.

Dimension	Section 232	Section 338
Primary Focus	National security threat from specific imports.	Alleged discrimination against U.S. commerce.
Trigger/Investigation	Formal probe by the Department of Commerce; public report required.	Initiated by the president or ITC petition; no fixed timeline or hearings.
Tariff Range	Discretionary; recent actions ranged between 10 and 25 percent on steel and aluminum imports.	Up to 50 percent ad valorem, with the potential to block imports if needed.
Historical Usage	Imposed in 2018 against steel and aluminum.	Largely dormant since World War II; mentioned by then President Franklin Roosevelt against France, Germany, Spain, and Japan but never used since its introduction in 1930s.
Compliance with WTO and Other Trade Agreements	Often disputed under national security exceptions.	Broad concept of “unreasonable” measures; uncertain WTO alignment.

Tariffs can only be introduced under Section 338 in response to one of two conditions. The first is whether there is an “unreasonable charge, exaction, regulation, or limitation” against U.S. goods “not equally enforced upon the like articles of every foreign country.” The second is whether U.S. commerce is at a disadvantage compared to other countries by in-fact discrimination with “respect to customs, tonnage, or port duty, fee, charge, exaction, classification, regulation, condition, restriction or prohibition.” Although predating the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), these requirements seem to draw on the same concept of reciprocity as the Most Favored Nation (MFN) principle.

In the case of South Korea, the United States enjoys preferential market access through the U.S.-Korea Free Trade Agreement (KORUS FTA). Given that the KORUS FTA will eliminate almost all South Korean tariffs against the United States by 2026, it seems that President Trump would be better positioned to argue that South Korean regulations and other non-tariff barriers hurt U.S. commerce more than exports from other nations rather than basing his arguments on South Korea’s tariffs.

Moreover, duties have never been imposed under Section 338. In 1935, the Roosevelt administration occasionally threatened to use Section 338 measures against Germany, France, Spain, and Japan,  but since the establishment of GATT and the WTO, there is no modern example that provides clarity on how U.S. courts or the WTO might respond if Section 338 were suddenly revived. On the one hand, this lack of precedent grants wide latitude to an executive branch seeking quick leverage. On the other hand, questions loom about potential countermeasures from trading partners and WTO compliance, especially with how deeply intertwined global supply chains have become.

As the Liberation-Day tariffs encounter mounting judicial headwinds, it is possible that the White House may turn to Section 338. Yet, as trade experts have noted, the statute’s very malleability could invite the same questions and nondelegation challenges currently undermining the IEEPA tariffs. Reviving Section 338 might deliver short-term leverage, but it would also trigger fresh litigation, possible WTO disputes, and a new round of retaliation—perpetuating, rather than resolving, the policy uncertainty that is already chilling investments and commerce.

Yohan Moon is a Research Intern at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

 Photo from The White House via Flickr.

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