WASHINGTON — US President Donald Trump is likely to dust off a 1930 trade law, largely forgotten for decades, to back his new reciprocal tariffs that will match other countries’ higher import taxes, trade and legal experts say.
The order is expected to be signed sometime on Thursday, Washington time.
Trump has said the new US tariff rates would take effect “almost immediately”, and Section 338 of the Trade Act of 1930 would give him a quick path to imposing them.
The law, threatened but never used to impose tariffs, appears only sporadically in US government records. It allows the president to impose duties of up to 50% against imports from countries that are found to discriminate against US commerce.
This authority could be triggered when the president finds that a country has imposed an “unreasonable charge, exaction, regulation or limitation”, that is not equally enforced upon all countries.
It also can be triggered by discrimination in custom duties or other fees, regulations or other restrictions that “disadvantage” US commerce.
It is unclear whether Trump’s action will be broad or targeted to a few sectors or countries. Thailand and India are seen as the two countries in Asia that could be affected the most, analysts have said.
The United States was the largest export market for Thailand in 2024, with the Thai trade surplus with the US rising to $35.4 billion from $29 billion the year before. The US accounts for 17% of all Thailand’s exports.
The core of Trump’s tariff action will be aimed at bringing US tariffs into line with the often higher rates of other countries.
The US trade-weighted average Most Favoured Nation tariff rate is about 2.2%, according to World Trade Organization data, compared to 11.5% for Thailand, 12% for India, 6.7% for Brazil, 5.1% for Vietnam and 2.7% for European Union countries.
Trump has long complained about the US charging lower tariff rates than most other countries. The European Union’s 10% tariff on automobiles, for example, is four times the 2.5% US rate for passenger cars, and is a particular sore spot for the president.
“I think that is exactly the path that they’re going to follow,” Dan Cannistra, a partner in the law firm Crowell & Moring law firm, said of Section 338.
“They’re going to tell the EU: ‘You’re giving Korea zero percent on cars, you’re giving 10% to the US You’re discriminating against us.”
Fast-acting
Trade tools that Trump used in his first term would take longer to impose tariffs, including the Section 232 national security statute for steel and aluminium and the Section 301 unfair trade practices law for Chinese imports. These require investigations and public comment, which can take months.
So far in his new term, Trump has favoured tools that allowed immediate action on tariffs. These included a first-ever use of the International Emergency Economic Powers Act to impose tariffs — 10% on Chinese goods and a March deadline for 25% tariffs on Mexican and Canadian goods over fentanyl and border security.
On Monday, Trump simply modified his previous Section 232 metals proclamation to quickly raise aluminium tariffs to 25% — matching steel tariffs — and to cancel all exemptions from steel and aluminium duties, effective from March 12.
Section 338 is in that same category of fast-acting remedies, allowing the president to act unilaterally and impose tariffs in 30 days, said Nazak Nikakhtar, a former senior Commerce Department official during Trump’s first term.
Nikakhtar said Trump’s first-term trade team researched scenarios for using Section 338 but went with more familiar tools.
“The conclusion was that it was a valid law. Congress could have repealed it, but it didn’t, he said. “Its benefit is that it’s more immediate.”
Great Depression factor
The Trade Act of 1930 that includes Section 338 is better known for massive US tariff increases and subsequent retaliation that economic historians say worsened the 1930s Great Depression.
After World War II, countries sought to standardise global tariff rates to avoid a return of the pre-war “beggar-thy-neighbour” economic policies marked by competitive trade restrictions and currency devaluations.
The resulting mutually agreed Most Favoured Nation (MFN) tariff rates formed the basis of the 1947 General Agreement on Tariffs and Trade and its 1995 successor, the World Trade Organization.
John Veroneau, whose 2016 research helped renew interest in Section 338, said a unilateral move by Trump to impose such tariffs would effectively blow up the MFN system.
“It would be an earthquake in Geneva to announce US intentions to move away from unconditional MFN and negotiate our tariff schedules on a bilateral basis,” said Veroneau, a former deputy US trade representative during the George W Bush administration.
He said the Franklin Roosevelt administration had threatened to impose Section 338 tariffs in the 1930s against France, Germany, Spain and Japan, but never did so.
As communist forces consolidated control of China in 1949, a telegram from then-Secretary of State Dean Acheson mentioned Section 338 as a potential remedy against Chinese “Commie commercial policy” discriminating against US commerce. Acheson noted the president could exclude Chinese imports altogether.
The telegram is the last-known official US government reference to the law, Veroneau said.