U.S. Senators Move to Strip Trump’s Authority for 50% Canada Tariffs — and Refund the Duties

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A new push in Washington is targeting more than President Donald Trump’s 50% tariffs on Canadian goods. It is aimed at eliminating the decades-old legal authority the White House used to impose them in the first place.

Senators Kirsten Gillibrand and Peter Welch formally introduced the BAD DEAL Act on September 15, joined by a House effort led by Representative Brad Schneider and Senate cosponsors including Jacky Rosen and Amy Klobuchar. The proposal would repeal Section 338 of the Tariff Act of 1930, nullify presidential actions based on that provision and require refunds of duties already collected. The move comes as Canada has imposed retaliatory tariffs of its own and the administration is preparing additional restrictions on some Canadian imports later in September.

The Bill Would Eliminate the Tariff Power, Not Simply Lower the Rate

The Banning Antiquated Duties and Delivering Equitable American Levies Act, or BAD DEAL Act, takes a relatively direct approach. Rather than giving the president a lower tariff ceiling or creating additional congressional review requirements, its published text repeals Section 338 altogether. It also states that presidential proclamations issued wholly or partly under the provision would have no force or effect. Gillibrand and Welch formally introduced the Senate measure on September 15 after announcing the proposal in August. Rosen and Klobuchar were identified as Senate cosponsors.

That distinction matters because the proposal reaches beyond the immediate dispute with Canada. Section 338 is a permanent delegation of trade authority that can potentially be invoked against foreign countries the president determines are discriminating against U.S. commerce. Repealing it would therefore remove the tool from future presidents as well as Trump. Schneider introduced the House counterpart, H.R. 10175, on August 27. Government records show that version was referred to the House Ways and Means Committee. The Senate effort consequently forms part of a bicameral attempt to alter the underlying statute rather than merely criticize a particular tariff decision.

Section 338 Is a 1930 Law With an Unusually High Tariff Ceiling

Section 338 dates to the Tariff Act of 1930. The law allows the president, after finding that another country discriminates against U.S. commerce or imposes certain unequal restrictions, to proclaim additional duties designed to offset that disadvantage. The statutory ceiling is striking: the additional tariff can reach 50% of the value of the imported goods. The provision can also support exclusion of specified imports when the statutory conditions are met. Sponsors of the BAD DEAL Act describe Section 338 as an authority that had not previously been applied before the current Canada dispute.

The Trump administration argues that the law provides explicit congressional authorization for its action. U.S. Trade Representative Jamieson Greer said in July that Canadian policies affecting American automobiles, dairy products and alcoholic beverages treated U.S. commerce unfairly compared with competitors. Canada disputes the characterization underpinning the escalation and has described the American tariffs as unjustified. The disagreement therefore involves two separate questions: whether Canada’s trade measures discriminate against American products and whether Congress should continue giving presidents the sweeping retaliatory authority contained in a law enacted nearly a century ago.

The 50% Tariffs Cover Nearly US$20 Billion in Canadian Imports

Trump signed three Section 338 proclamations on July 20 covering disputes involving motor vehicles, dairy and alcoholic beverages. The U.S. Trade Representative said the measures imposed 50% additional tariffs on nearly US$20 billion in Canadian imports. The White House’s own fact sheet showed that the tariff schedules reached well beyond products immediately associated with the three disputes, citing goods ranging from wine to hockey sticks and cement. Energy, potash and several other categories were excluded, while some products covered by separate national-security tariffs received different treatment.

The duties were originally scheduled to begin August 19. The White House then suspended them for three days while negotiations continued, moving their effective date to August 22. That escalation occurred inside an enormous commercial relationship. USTR estimates that U.S.-Canada trade in goods and services totaled roughly US$872.3 billion in 2025, including US$333.6 billion in American goods exports to Canada and US$381.9 billion in goods imported from Canada. Even tariffs aimed at a comparatively small portion of that total can affect deeply integrated supply chains in border states and manufacturing regions.

Refunds Are a Central Part of the Proposal

The BAD DEAL Act does not stop with prospective repeal. Its second section contains a retroactive provision requiring the president to take whatever actions are necessary to provide refunds for tariffs or other duties collected because of Section 338 actions. The language covers amounts collected before, on or after enactment. That makes the refund provision potentially important for importers that have already paid the additional Canada duties since they became effective in August.

There is an important practical distinction, however. Tariffs are normally paid to U.S. Customs and Border Protection by importers of record, so repeal would not automatically mean individual shoppers receive government refund cheques. The two-page Senate draft also does not contain the detailed refund timetable found in some other tariff legislation introduced this year. It directs the president to arrange repayment but does not specify a 30-day or 180-day processing deadline in the published text. How refunds would be administered, documented and ultimately reflected in prices or business finances would therefore depend heavily on implementation if Congress passed the measure.

Canada Has Already Answered With Tariffs of Its Own

Ottawa responded by announcing counter-tariffs covering C$27.6 billion of U.S. imports, approximately matching the value of Canadian trade affected by the American Section 338 measures. Those countermeasures took effect September 8. Instead of imposing one universal rate, Canada applied tariffs of 15%, 25% or 50%, with the rate on individual products designed to correspond to the U.S. treatment of comparable Canadian goods.

The Canadian list includes products in steel, dairy, household appliances, agricultural equipment, pulp and paper, plastics and electronics. That makes the dispute tangible far away from negotiating rooms in Washington and Ottawa. A farm equipment dealer, food producer or manufacturer buying specialized inputs can encounter the trade fight through a higher landed cost even when the company has no direct role in the policy dispute. Canada also announced C$7.5 billion in new and expanded measures intended to assist workers and companies exposed to the tariffs, on top of support programs Ottawa says had already been put in place during the broader trade confrontation.

Small Businesses Illustrate How Quickly Tariff Policy Reaches the Ground

Recent reporting has shown the pressure appearing in individual companies on both sides of the border. The Associated Press documented businesses dealing with cancelled orders, changing customer sentiment and significantly higher import costs. Vermont cheesemaker Jasper Hill Farm, for example, reported cross-border commercial disruption, while a Vancouver Island spirits-related business described the difficulty of operating when imported inputs or products can suddenly face a 50% charge. For smaller firms, even uncertainty over whether a shipment will be tariffed can complicate contracts, inventories and pricing decisions.

Economic research helps explain why businesses pay close attention to those changes. A 2026 study in the American Economic Association’s Journal of Economic Perspectives estimated that tariff pass-through into U.S. import prices during the 2025 tariff increases reached about 92%. Federal Reserve research has also found substantial pass-through from recent American tariff increases into consumer prices over time. Those studies do not measure the specific Canada duties now being challenged, and effects differ by sector, but they show why a nominally border-focused tax can eventually influence wholesalers, manufacturers, retailers and households.

The Fight Follows a Major Supreme Court Limit on Presidential Tariffs

Congress is debating Section 338 against the backdrop of a major Supreme Court decision earlier this year. On February 20, the court ruled 6-3 that the International Emergency Economic Powers Act, or IEEPA, did not authorize the president to impose the broad tariffs challenged in Learning Resources v. Trump and its companion case. Chief Justice John Roberts’ opinion emphasized that when Congress grants tariff authority, it does so through statutes that clearly provide and constrain that power.

Section 338 presents a different legal situation because it expressly discusses duties and specifies a maximum rate of 50%. The BAD DEAL Act therefore does not depend on convincing a court that Section 338 lacks tariff authority. Congress would instead be exercising its own legislative power to withdraw the delegation. The distinction helps explain why the current battle is as much about the long-term balance between Congress and the executive branch as it is about Canadian trade. Other Senate proposals this year have likewise sought broader congressional control over presidential tariff actions.

The Next Flashpoint Arrives Before the End of September

The legislation enters the debate as the administration prepares another step under Section 338. September 8 proclamations announced plans to exclude certain Canadian dairy, alcoholic beverage and motor-vehicle-related products from importation beginning September 29 if the specified conditions remain in place. Some goods that would fall under those exclusions remain subject to the 50% duty until the import restrictions take effect. Repealing Section 338 would invalidate presidential proclamations based on that authority if the BAD DEAL Act became law.

For now, however, introduction is only the beginning of the congressional process. The House companion remains at the committee stage, and legislation would have to clear both chambers in identical form before reaching the president. A presidential veto could be overridden only with the constitutionally required two-thirds majorities in both chambers. The proposal therefore does not itself cancel the tariffs today. What it does is turn a bilateral tariff confrontation into a broader congressional test over how much unilateral trade authority presidents should continue to possess—and whether businesses that already paid Section 338 duties should get that money back.

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