What does the U.S. court ruling on Trump’s tariffs mean for Canada?

U.S. President Donald Trump vowed to use alternative ways to carry out his economic agenda on Friday after the U.S. Supreme Court struck down his use of global tariffs, and experts say Canada will likely continue to experience trade uncertainty with its southern neighbour.

Trump used the International Emergency Economic Powers Act (IEEPA) to justify imposing sweeping tariffs on several countries, including Canada and Mexico. On Friday, the top U.S. court ruled 6-3 that this emergency powers act does not give the president the power to impose what Trump called “reciprocal” tariffs.

In a press conference at the White House following the decision, Trump called it “deeply disappointing” and said he was ashamed of the six members of the court who sided against his administration.

Two of the justices who voted in the majority – Neil Gorsuch and Amy Coney Barrett – were appointed by Trump in his first administration.

Trump said he would sign an executive order Friday to charge a blanket 10 per cent global tariff under a U.S. trade law known as Section 122. However, the new levies can only be in place for a maximum of 150 days, barring congressional approval for their extension.

Trump had previously warned that catastrophic consequences would follow if the court ruled this way, The Canadian Press reported. He claimed these consequences could be to U.S. national security, foreign policy, and the American economy.

North of the border, the ruling had Canadians wondering about its impact.

‘New, blunter mechanisms’ could follow

The president of the Canadian Chamber of Commerce said Friday that the ruling is “not the last chapter of this never-ending story.”

“Canada should prepare now for new, blunter mechanisms to be used to reassert trade pressure, potentially with broader and more disruptive effects,” chamber president and CEO Candace Laing is quoted as saying in a media statement.

In a statement Friday, the president of Canada’s largest private sector union warned against viewing the ruling as a “victory.”

“The risk to Canadian jobs remains severe, with the potential to even increase if Trump looks for new ways to impose tariffs or target Canadian jobs and investment,” Unifor national president Lana Payne said.

Matthew Holmes, executive vice-president and chief of public policy at the Canadian Chamber of Commerce, spoke to CTV News Channel Friday about the uncertainty surrounding the decision.

“What does this mean? What will the administration do next in the United States?” he said. “It’s pretty clear from the signals so far that they have a number of other mechanisms, and the intent to continue on this tariff journey they’re on.”

But, Holmes said, the “good news for Canada” is that most trade into the U.S. is tariff-free under CUSMA, and that continues to be in place.

While Canadians might have seen the ruling and assumed they’d reap rewards, “actually the rest of the world gains more from this than Canada” because of CUSMA, said Frank McKenna, former Canadian ambassador to the U.S. McKenna is now the U.S. deputy chair of wholesale banking for TD Bank Group.

Still, McKenna said in an interview with CTV News Channel Friday that the ruling combined with a recent U.S. congressional vote signifying opposition to tariffs are strong signals to the Trump administration.

Former foreign affairs minister Peter MacKay called the ruling a “major blow to the president,” telling CTV News Channel from Kings Head, N.S., that it comes at a time of “growing resistance” to Trump’s punitive tariffs even within his own party.

“The cracks are starting to form” in the Republican party, he said, “and I think as Canada prepares to enter into (CUSMA negotiations), this is a positive development.”

Possible impacts of court ruling

Earlier this year, Canadian trade experts told CTV News the ruling would mean certain tariffs imposed on countries including Canada earlier in the trade war would be eliminated, and that sweeping refunds may be possible.

This particular ruling mainly impacts sectors not protected under the Canada-United States-Mexico Agreement (CUSMA), which is up for review and covers most goods covered between Canada and the U.S.

Additionally, the decision does not affect Trump’s targeting of a number of Canadian sectors, including steel, aluminum, auto, lumber and others, CP reported Friday. These industries have been targeted in recent months, but by duties separate from those involving use of the IEEPA.

In a statement posted on social media, Canada-U.S. Trade Minister Dominic LeBlanc said “critical work lies ahead” to support those industries, which are instead affected by tariffs under Section 232 of the U.S. Trade Expansion Act.

Conservative Leader Pierre Poilievre called the ruling “a step in the right direction” in a message on X Friday, but also noted the impact of Section 232 tariffs as greater on Canadians.

Holmes on Friday described these as the tariffs that are most pressuring the Canadian economy.

Randall Bartlett, deputy chief economist with Desjardins, said in January that he expected the impact to be “unambiguously positive for the Canadian economy, but it’s not really clear that it’s going to have any substantive magnitude of an impact.”

Experts who spoke with CTV News last month about the possible outcome said the ruling could also mean that the U.S. is tasked with issuing what Reuters estimates to be as much as US$150 billion in refunds to companies impacted by IEEPA-justified tariffs.

The ruling itself did not address whether companies impacted by tariffs should get refunds, CP reported Friday.

“It’s going to be an administrative nightmare,” said NorthStar Public Affairs’ Adam Taylor in a January interview. “You’ll see manufacturers, retailers and customers all saying, ‘These were collected illegally, I should see some money back.’”

Consumers, however, are unlikely to get money back, Taylor said, describing possible refunds to manufacturers as a “best-case scenario.”

Pellerin, similarly, said it will be “messy” as companies wait to see if they’ll get back any of the tariffs they’ve paid.

Tariff regime could continue in other ways

Holmes said Friday that what is significant to note about the ruling is IEEPA doesn’t make reference to tariffs, and had previously never been used to implement tariffs, and this seemed to be the focus of the court’s decision. What that means is that the impact of the ruling is isolated to use of IEEPA and doesn’t impact far-reaching tariffs that could be implemented in another way, if Trump was able to get buy-in from U.S. Congress.

And the ruling does not mean the U.S. can’t use “a whole range” of other tools at its disposal to continue to impose tariffs, Holmes said.

Similarly, international trade lawyer William Pellerin said in January that he expects a “continued use” of the tactic.

Still, he said, the case going to court “really does send a big message to the U.S. administration and to President Trump that these tariffs really were not permissible.”

‘Unjustified’ tariffs, and work ahead

LeBlanc said the IEEPA decision Friday “reinforces Canada’s position” that Trump’s sweeping tariffs are “unjustified.”

He did not speak to the impact of the ruling in his statement, but made reference to the upcoming review of CUSMA, saying in part that “we are working to create growth and opportunities on both sides of the border.”

LeBlanc added that Canada is also working to strengthen trade agreements with its “reliable trading partners and allies” elsewhere in the world.

Holmes offered advice Friday for Canadian businesses: “What this means is you need to be complaint with (CUSMA) if you’re trading with the United States or Mexico. We also need to really talk seriously about our diversification, because we see from this administration a commitment to the tariff policies.

“What form those take, that changes by the day, but we know the ultimate direction they’re headed in.”

While Holmes said the U.S. is likely to remain Canada’s No. 1 trading partner, risk reduction through expanded trade is needed.

Trump invoked the IEEPA after declaring an emergency last year related to fentanyl at the U.S.-Canada border. He used the IEEPA to hit Canada with 35 per cent tariffs, which applied to goods outside of CUSMA.

With files from CTV News’ Rachel Aiello and Jeremie Charron, The Canadian Press, and The Associated Press