The United States Supreme Court ruled Friday that President Donald Trump exceeded his authority by imposing tariffs on Canada, Mexico and other countries using emergency powers, invalidating a key component of his trade strategy.A majority of justices upheld lower court decisions finding Trump improperly relied on the International Emergency Economic Powers Act (IEEPA) to impose tariffs tied to national emergencies declared over fentanyl trafficking and persistent trade deficits.Chief Justice John Roberts, writing for the majority, stated the law “does not authorize the President to impose tariffs.” Roberts was joined by Justices Amy Coney Barrett, Neil Gorsuch and the court’s three liberal members.The decision represents a setback for Trump, who has described rapid tariff imposition as a vital negotiating tool in trade and foreign policy discussions. However, the full implications of the ruling remain unclear..Constitutional limits citedThe case centred on whether IEEPA — a 1977 law allowing presidents to regulate economic transactions during emergencies — permits tariff measures. Trump first invoked the statute in February to declare a fentanyl-related emergency and apply broad tariffs on Canada, Mexico and China. A second declaration in April citing trade deficits led to additional “reciprocal” tariffs affecting dozens of countries.Plaintiffs argued the statute does not mention tariffs and that the emergencies cited did not justify such measures. The court agreed, emphasizing that the U.S. Constitution assigns authority over tariffs and taxation to Congress.The Trump administration had argued that IEEPA language allowing regulation of imports encompassed tariffs, a position rejected by the majority..Alternative tariff powers remainThe ruling does not affect tariffs imposed under other authorities, including Section 232 of the Trade Expansion Act of 1962, which permits industry-specific tariffs on national security grounds. Levies on products such as steel, aluminum, lumber and automobiles remain in force.Questions also remain about potential refunds for tariffs already collected from importers. A coalition of businesses involved in the litigation has estimated presidential tariffs generated roughly US$175 billion between March and October of last year..Canadian implications and responseCanada’s trade minister said the decision supports Canada’s longstanding position that IEEPA tariffs were unjustified, while noting ongoing efforts to remove remaining tariffs through negotiations and the upcoming review of the Canada–United States–Mexico Agreement (CUSMA).Industry groups warned the decision does not mark an end to trade tensions, with some cautioning that alternative U.S. measures could be used to exert trade pressure.The Montreal Economic Institute (MEI means Montreal Economic Institute) said the ruling represents a win for consumers and trade partners but does not eliminate key risks for Canada.“While today’s ruling is great news for free trade around the world, its impact on Canada remains limited; we’re not out of the woods yet,” said Gabriel Giguère, senior policy analyst at the MEI. “The court’s ruling doesn’t affect products such as steel, aluminum, or softwood lumber, which are subject to tariffs under a different mechanism.”Giguère added that the upcoming CUSMA review and continued U.S. protectionist measures contribute to uncertainty around market access.The think tank noted that tariffs imposed under Section 232 — including increased duties on Canadian steel, aluminum, softwood lumber and some auto-related products — remain unchanged by the court decision..Trade outlook uncertainThe United States remains Canada’s largest export market, particularly for aluminum, with combined steel and aluminum exports to the U.S. valued at $35 billion in 2024. Approximately 98 per cent of Canadian exports to the U.S. are currently covered by CUSMA, which is scheduled for mandatory review on July 1, 2026.MEI also argued Canada could strengthen its economic position by reducing its own trade barriers with other partners.“The Carney government rightly recognizes that salvaging our trade relationship with the United States will be a key determinant of Canada’s prosperity, but we could certainly do more,” said Giguère. “Lowering those could also help improve the prosperity of our workers and businesses.”A previous MEI report estimated unilateral trade liberalization could increase Canada’s GDP by 1.7 per cent while reducing overall prices by about 1.5 per cent.Despite the Supreme Court decision, analysts and industry groups indicate that ongoing tariffs, future U.S. policy changes and the CUSMA review will continue to shape Canada–U.S. trade relations in the months ahead. Supreme Court strikes down Trump emergency tariffs, impact on Canada limitedThe United States Supreme Court ruled Friday that President Donald Trump exceeded his authority by imposing tariffs on Canada, Mexico and other countries using emergency powers, invalidating a key component of his trade strategy.A majority of justices upheld lower court decisions finding Trump improperly relied on the International Emergency Economic Powers Act (IEEPA) to impose tariffs tied to national emergencies declared over fentanyl trafficking and persistent trade deficits.Chief Justice John Roberts, writing for the majority, stated the law “does not authorize the President to impose tariffs.” Roberts was joined by Justices Amy Coney Barrett, Neil Gorsuch and the court’s three liberal members.The decision represents a setback for Trump, who has described rapid tariff imposition as a vital negotiating tool in trade and foreign policy discussions. However, the full implications of the ruling remain unclear..Constitutional limits citedThe case centred on whether IEEPA — a 1977 law allowing presidents to regulate economic transactions during emergencies — permits tariff measures. Trump first invoked the statute in February to declare a fentanyl-related emergency and apply broad tariffs on Canada, Mexico and China. A second declaration in April citing trade deficits led to additional “reciprocal” tariffs affecting dozens of countries.Plaintiffs argued the statute does not mention tariffs and that the emergencies cited did not justify such measures. The court agreed, emphasizing that the U.S. Constitution assigns authority over tariffs and taxation to Congress.The Trump administration had argued that IEEPA language allowing regulation of imports encompassed tariffs, a position rejected by the majority.Alternative tariff powers remainThe ruling does not affect tariffs imposed under other authorities, including Section 232 of the Trade Expansion Act of 1962, which permits industry-specific tariffs on national security grounds. Levies on products such as steel, aluminum, lumber and automobiles remain in force.Questions also remain about potential refunds for tariffs already collected from importers. A coalition of businesses involved in the litigation has estimated presidential tariffs generated roughly US$175 billion between March and October of last year.Canadian implications and responseCanada’s trade minister said the decision supports Canada’s longstanding position that IEEPA tariffs were unjustified, while noting ongoing efforts to remove remaining tariffs through negotiations and the upcoming review of the Canada–United States–Mexico Agreement (CUSMA).Industry groups warned the decision does not mark an end to trade tensions, with some cautioning that alternative U.S. measures could be used to exert trade pressure.The Montreal Economic Institute said the ruling represents a win for consumers and trade partners but does not eliminate key risks for Canada.“While today’s ruling is great news for free trade around the world, its impact on Canada remains limited; we’re not out of the woods yet,” said Gabriel Giguère, senior policy analyst at the Montreal Economic Institute. “The court’s ruling doesn’t affect products such as steel, aluminum, or softwood lumber, which are subject to tariffs under a different mechanism.”Giguère added that the upcoming CUSMA review and continued U.S. protectionist measures contribute to uncertainty around market access.The think tank noted that tariffs imposed under Section 232 — including increased duties on Canadian steel, aluminum, softwood lumber and some auto-related products — remain unchanged by the court decision.Trade outlook uncertainThe United States remains Canada’s largest export market, particularly for aluminum, with combined steel and aluminum exports to the U.S. valued at $35 billion in 2024. Approximately 98% of Canadian exports to the U.S. are currently covered by CUSMA, which is scheduled for mandatory review on July 1, 2026.MEI also argued Canada could strengthen its economic position by reducing its own trade barriers with other partners.“The Carney government rightly recognizes that salvaging our trade relationship with the United States will be a key determinant of Canada’s prosperity, but we could certainly do more,” said Giguère. “Lowering those could also help improve the prosperity of our workers and businesses.”A previous MEI report estimated unilateral trade liberalization could increase Canada’s GDP by 1.7% while reducing overall prices by about 1.5%.Despite the Supreme Court decision, analysts and industry groups indicate that ongoing tariffs, future U.S. policy changes and the CUSMA review will continue to shape Canada–U.S. trade relations in the months ahead.
