The majority of Canadian exports will remain exempted from Donald Trump’s new 10 per cent global levy, as the U.S. president pivots after the Supreme Court dealt a blow to his plans to realign global trade.
A fact sheet from the White House said the latest tariff will not hit goods compliant under the Canada-U.S.-Mexico agreement on trade, known as CUSMA.
The duty will also not be applied on top of sector-specific tariffs like steel, aluminum and automobiles.
Trump signed an executive order Friday to enact the worldwide tariff beginning on Tuesday using Section 122 of the 1974 Trade Act. That duty can only stay in place for 150 days, unless Congress votes to extend it.
“Those members of the Supreme Court who voted against our very acceptable and proper method of TARIFFS should be ashamed of themselves,” Trump posted on social media.
“Their decision was ridiculous but, now the adjustment process begins, and we will do everything possible to take in even more money than we were taking in before!”
Earlier Friday, the U.S. Supreme Court concluded it was not legal for Trump to use the International Emergency Economic Powers Act, better known as IEEPA, for his “Liberation Day” tariffs and fentanyl-related duties on Canada, Mexico and China.
Trump declared an emergency at the northern border related to the flow of fentanyl in order to use IEEPA to hit Canada with 35 per cent tariffs. Those duties did not apply to goods compliant under CUSMA.
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In a 6-3 ruling, the court said the U.S. Constitution “very clearly” gives Congress power over taxes and tariffs. Chief Justice John Roberts wrote “the Framers did not vest any part of the taxing power in the Executive Branch.”
The ruling did not say whether companies hammered by those tariffs should get refunds. As of December, federal data showed US$133 billion had been collected.
The court’s decision “reinforces Canada’s position that the IEEPA tariffs imposed by the United States are unjustified,” said Canada-U.S. Trade Minister Dominic LeBlanc in a post on social media.
“While Canada has the best trade deal with the United States of any trading partner, we recognize that critical work lies ahead to support Canadian businesses and workers who remain affected by Section 232 tariffs on steel, aluminum and automotive sectors,” LeBlanc said.
During a 40-minute press conference Friday afternoon, Trump lashed out at the Supreme Court justices and said the decision was “incorrect.” Trump also denigrated Europe as too “woke” and took aim at Canada, saying the country ripped off the U.S. and stole car plants.
Trump claimed that Canada said it hoped he would win at the Supreme Court “because if you don’t win you’ll actually be able to charge us, with additional work, higher tariffs.”
LeBlanc spoke with U.S. Trade Representative Jamieson Greer by phone recently. When asked for comment on Trump’s claim about Canada, LeBlanc’s office referred to his social media statement.
Greer told “Fox News” Friday that while the 10 per cent tariff is in place, the Trump administration will begin investigations of countries under Section 301 of the Trade Act of 1974.
That allows a president to take trade actions if the investigation finds a trading partner’s policies are unreasonable and discriminatory, but it would take months and include a period for public comment.
Friday’s ruling will have little effect on the Canadian economy since most of its exports to the U.S. are shielded by the CUSMA carveout, said CIBC chief economist Avery Shenfeld.
Candace Laing, president and CEO of the Canadian Chamber of Commerce, said it’s “not the last chapter of this never-ending story.” She cautioned that Canada should prepare for “new, blunter mechanisms to be used to reassert trade pressure.”
Trump’s tariffs and threats of annexation have rattled Canada ahead of a mandatory review of the CUSMA trilateral trade pact later this year. Trump has called the trade agreement “irrelevant” and said it may have served its purpose.
A successful CUSMA review must see Trump’s separate sectoral tariffs dropped, said Conservative Leader Pierre Poilievre in a social media post.
Poilievre criticized Prime Minister Mark Carney for not securing a deal with the Trump administration.
“The truth is no one can control what President Trump will say or do and so we must instead focus on what we can control,” Poilievre said. “We must unblock our energy and minerals, unleash our economy, and bolster our military and self-reliance for leverage to fight for tariff-free trade with the U.S.”
The Supreme Court’s decision is a win for U.S. separation of powers and the American and Canadian economies, said George Mason University law professor Ilya Somin, who represented small businesses pushing back on the tariffs.
“But also for the rule of law,” Somin told The Canadian Press. “The rule of law is at odds with a system under which the president can impose any tariffs he wants on any country for any reason at any time.”
—With files from Craig Lord, Kyle Duggan and The Associated Press
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