U.S. President Donald Trump takes questions during a meeting in the Oval Office on Tuesday.Kevin Dietsch/Getty Images
Section 338 of the Tariff Act of 1930 – yes, that tariff act, aka the Smoot-Hawley Tariff Act, the law that famously turned a stock market crash into a worldwide depression – authorizes the President of the United States to impose tariffs on imports from foreign countries that impose “any unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like articles of every foreign country,” or that otherwise discriminate “against the commerce of the United States.” The tariff can be anything up to 50 per cent.
Virtually every country on Earth could be said to impose some sort of “unreasonable” or discriminatory restriction on the trade of one country or another. I daresay the United States harbours a few. The power is so open-ended, and the economic consequences, for America and the world, so damaging, that no president, not even Herbert Hoover, has used the section until now. Not even Donald Trump had used it. Until now.
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Section 338 is, as Scott Lincicome of the Cato Institute has put it, “the nuclear option for Trump tariffs.” And ground zero is Canada. Mr. Trump has imposed tariffs of the maximum 50 per cent across a range of Canadian goods, including cement, textiles, jewellery, furniture, paper, machinery – and hockey sticks – but excluding things like potash, oil and gas, and critical minerals. Significantly, it applies to articles that are fully compliant with the Canada-United States-Mexico trade agreement, which had been exempt in previous rounds of Trumpian trade mayhem.
The conventional wisdom is to see this as another round of brinksmanship, a shot across Canada’s bow as negotiations on whether to renew the agreement begin to get serious. But that is to attribute to Mr. Trump a rationality he does not possess. And it’s not even clear it’s all that rational.
The tariffs, if implemented (they’re not scheduled to take effect until Aug. 19), would impose massive additional costs on American industry and consumers, just as Americans prepare to vote in the 2026 mid-term elections. They’re not just economically suicidal, but politically.
If the notion is that this will induce Canada to make concessions at the bargaining table, it is as likely to have the opposite effect. A concession on Canada’s part in return for a reciprocal concession by the United States might be seen as a political win for the Carney government. But a concession in the face of such a crude threat would only be seen as weakness – and so is less likely to be made.
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As it is, the Prime Minister is already under pressure. He has tried making concessions before, like eliminating the digital services tax, or the recent revisions to the Gordie Howe Bridge agreement. And he has tried taking a harder line, like the 25-per-cent retaliatory tariff he imposed on U.S. cars. The response from the Trump administration is always the same. More tariffs. More demands. No concessions.
Prime Minister Mark Carney makes a statement outside the Office of the Prime Minister and Privy Council in Ottawa, on Tuesday.Justin Tang/The Canadian Press
The combination of approaches exposes Mark Carney to conflicting criticisms. When he’s tough he’s derided as confrontational. When he’s conciliatory he’s dismissed as weak. And when the Trump administration responds in the same belligerent way to either approach, he’s called a failure.
There’s a reason neither strategy has worked. It’s because nothing can. There is no appeasing Mr. Trump, and there is no deterring him. Appeasement and deterrence each depend on the same premise, that we are dealing with a rational actor on the other side: one with a predictable or at least understandable set of responses to any given action. But Mr. Trump does not behave according to any rational calculus.
It isn’t just that he has no understanding of policy, nor any knowledge of history to guide him; or that he conforms to none of the norms of custom, morality or law. It is that, even understood as a wholly self-involved, self-serving bundle of id, one whose only motive is self-aggrandizement and self-enrichment, Mr. Trump is incomprehensible. His actions make no sense even in terms of rational self-interest. It’s all just random impulses, fleeting grudges, synaptic burps, based on who spoke to him last, what he saw on TV or what he had for breakfast, for all I know.
But there’s an upside to all this. If there’s nothing we can do – if we lose no matter what – then we might as well do what we want. When nothing you can do will improve your fortunes, when the outcome is the same regardless of which option you choose, the stakes converge on zero.
The President will do what he will do. Nothing we can do will change that. So we might as well not try. There’s liberation in that.