The U.S. Supreme Court has invalidated several tariffs imposed by President Donald Trump since he resumed office. Some tariffs on Canada have been lifted following the court’s decision, but others are still in effect. Trump has announced plans to introduce a 15 percent global tariff to replace the invalidated ones.
The court invalidated tariffs implemented by Trump under the International Emergency Economic Powers Act (IEEPA) of 1977. This law grants the U.S. president extensive powers in cases of a “national emergency” and an “unusual and extraordinary threat.” Trump utilized a section of this act to impose tariffs on Canada, Mexico, and other nations, citing reasons such as a perceived national emergency due to illicit drug imports.
Additionally, the court also struck down Trump’s “liberation day” tariffs that excluded Canada. However, specific sectoral tariffs imposed under Section 232 of the U.S. Trade Expansion Act, targeting Canadian steel, aluminum, copper, automotive parts, lumber, and wood products, remain in effect. These tariffs were not addressed in the recent court ruling.
In response to the court’s decision, Trump has threatened to impose a new 15 percent global tariff using a different U.S. law. The tariff, authorized under Section 122 of the U.S. Trade Act, can be temporary and must be approved by Congress for extension beyond 150 days. The new tariff is set to include Canada but will exempt CUSMA-compliant goods and those already covered by Section 232 tariffs.
CIBC chief economist Avery Shenfeld noted that Canada may have been worse off if Trump had imposed a blanket tariff without CUSMA exemptions. The temporary nature of these tariffs, requiring Congressional approval for extension, adds uncertainty to the situation. The U.S. House of Representatives recently voted against the IEEPA tariffs on Canada, indicating ongoing policy shifts.
