The rule reads 38" >side wall to sidewall<...which does mean tire...and some people run a little wider than that on the actual rim flange...(if you run wider rims than tire rating)
But some LCs run a "Go/No Go" gauge...top to bottom either fits or you don't run...
I don't care to stand in line and argue about a 1/4" one way or the other...so I'd set up to clear the "gauge"...