What Importers Need to Know About Section 338 Tariffs

Section 338 of the Tariff Act of 1930 is a retaliatory trade provision that allows the U.S. president to impose tariffs on imports from countries that discriminate against U.S. commerce. For importers, the main concern is that Section 338 could raise duties on goods from a specific country if the president determines that country’s trade practices are unfair and acting would serve the public interest.

What is Section 338 of the Tariff Act of 1930?

Section 338 of the Smoot-Hawley Tariff Act is a statutory trade enforcement provision that authorizes the President of the United States to impose additional or retaliatory tariffs on imports from foreign countries that discriminate against U.S. commerce or impose unequal trade restrictions, when such action is determined to be in the public interest.

Like Section 301 tariffs, any tariffs assessed via Section 338 would be on a country-by-country basis rather than being levied on trade partners as a whole. This contrasts with Section 122 tariffs, which must be applied uniformly to all U.S. trade partners when invoked.

What Tariffs Does Section 338 Allow the President to Set?

Section 338 allows the president to set duties “...not to exceed 50 per centum ad valorem or its equivalent” on countries engaged in unfair trade practices with the U.S. 

According to the statutes in the act, Section 338 can be invoked when:

• A trade partner makes unreasonable charges on U.S. goods, or restricts their importation 
• There is clear, demonstrable evidence that the aforementioned actions took place
• The president finds it in the public interest to invoke the article

Legal analysts have opined that Section 338 offers significant latitude to the president for regulating trade. Per an analysis by John K. Veroneau and Catherine H. Gibson from Law 360, “…presidential authority under Section 338 appears less dependent on factfinding or investigations of government agencies or commissions, and instead lies at the discretion of the president alone.” 

Like any act under which tariffs may be enacted, importers in the U.S. should be aware of how Section 338 tariffs could impact their businesses.

When Can the President Use Section 338 to Raise Tariffs?

The president can levy tariffs of up to 50% against countries deemed to be participating in unfair trade practices against the U.S. using Section 338. While the section has not been used in that capacity as of April 10, 2026, the invocation of Section 122 to levy tariffs for the first time highlights importers’ need to be aware of dated mechanisms for executive changes to tariffs and international trade regulations.

The circumstances under which Section 338 can be used are best illustrated by example.

Section 338 Use Case Scenario: Transshipment Hub

Assume Ho Chi Minh City in Vietnam is a massive textile transshipment hub for the rest of Southeast Asia. Over the course of three months, U.S. exporters report that their shipments have been subject to vaguely defined “port administration fees” of 15% ad valorem that don’t apply to shipments from other countries. Exporters also report more holds and delays than those experienced by other foreign suppliers and manufacturers.

This scenario pulls both statutory triggers for Section 338:

• The 15% port fee isn’t applied to all countries evenly
• Delays create administrative issues that hurt American businesses

Helping American businesses is in the public interest, so the president proclaims a 20% tariff on textiles imported from Vietnam to the United States. This makes it less attractive for U.S. importers to source textiles from Vietnam. Retaliation via Section 338 therefore sets the stage for negotiations between the two countries.

Has Section 338 Been Invoked in the Past?

As of July 15, 2026, no presidential proclamation appears to have used 19 U.S.C. § 1338 to impose retaliatory tariffs. Legal commentary has instead described Section 338 as a dormant enforcement authority with historical relevance but little modern use. 

Its application so far has been limited to a leverage tool in trade negotiations with France, Japan, Spain, and China. As such, it can be considered a largely dormant trade tool.

However, given the new avenues for raising tariffs that have been used since early 2025, importers should prepare for the possibility of new tariffs by recognizing what situations could trigger Section 338.

How Do Section 338 Tariffs Differ From Section 301 and Section 122?

Notably, the president can invoke Section 338 tariffs without congressional approval or a preliminary investigation by the U.S. Trade Representative (USTR). Further distinctions between Section 338, 122, and 301 are listed below.

Importers who are unfamiliar with Section 338 can prepare for the possibility of its use by knowing what foreign trade practices it was designed to address.

How Should Importers Prepare for Section 338 Tariffs?

For importers, preparing for Section 338 tariffs comes down to recognizing scenarios under which the section may be invoked and having contingencies in place if one of your supplying countries suddenly gets hit with double-digit tariff increases.

Since Section 338 is meant to be invoked on a per-country basis, worldwide market adjustments are not likely to be a basis for using this section of the act. What importers should look out for is specifically anti-U.S. trade policies enacted by trade partners with whom they do business. 

Unfair trade policies include but aren’t limited to:

• Exorbitant port fees on U.S.-flagged vessels
• High country-specific tariffs
• Non-tariff trade barriers such as regulations that favor sources other than the U.S.

Importers need to be able to adapt when tariff uncertainty threatens their bottom line. Recognizing the potential for Section 338 tariffs is one thing: reacting to them requires importers to have strategies in place before the tariffs are proclaimed.

• Maintain Business Relationships With Sources in Multiple Countries: When one country is threatened by high, selective tariffs, importers with vendors in multiple countries have options to avoid losing money to increased duties.
• Consider Bonded Storage: Sometimes tariffs are temporary and may be invalidated once a trade agreement is reached. Storing goods in a bonded warehouse allows importers to defer duty payments until they withdraw merchandise for consumption, which means lower duties if tariffs go down between the date of importation and warehouse entry.
• Manufacture in a Foreign Trade Zone (FTZ): If an importer sources raw materials from a country and manufactures a final product from those materials in an FTZ, the materials may undergo a tariff shift. This allows the importer to pay the lower of the two duty rates (those on the materials or those on the finished goods) once the products are withdrawn for sale or consumption. 

Because Section 338 actions would likely affect sourcing decisions, landed-cost planning, and customs strategy, importers should review their exposure before any country-specific tariff action occurs. If you have questions about how Section 338 tariffs could raise duties you owe on imported goods, call us at (855) 912-0406 or contact our team through the site today. 

Sources

19 U.S. Code § 1338 - Discrimination by foreign countries, Cornell Law School, June 17, 1930

The President’s Long-Forgotten Power To Raise Tariffs, Law 360, John Veroneau and Catherine Gibson, December 14, 2016