US supreme court strikes down Trump’s emergency tariff powers while section 232 duties remain
US President Donald Trump just lost his biggest emergency tariff weapon at the US Supreme Court – but for Canadian exporters and long‑term investors, the real story is that the pressure has shifted to narrower, more strategic sectors that matter for jobs, growth and returns.
Court kills IEEPA tariffs, but not Canada’s main problem
The US Supreme Court ruled 6–3 that the International Emergency Economic Powers Act (IEEPA) “does not authorize the President to impose tariffs,” striking down Trump’s use of that 1977 law to justify sweeping “global tariffs” on imports from Canada, Mexico and other countries, as BNN Bloomberg reported.
Trump had used IEEPA to defend broad levies on several countries, including Canada and Mexico, describing them as “reciprocal” tariffs.
CBC News reported that he declared a national emergency over “a flood of fentanyl and other illicit drugs across our northern border” and announced a 25 percent tariff on all Canadian goods, later narrowed to non‑CUSMA‑compliant goods, then raised to 35 percent.
As of Friday’s ruling, those IEEPA‑based tariffs are void.
The New York Times said a 35 percent tariff on most Canadian exports imposed last year has now been struck down.
But because Trump quickly excluded anything that qualified under the Canada‑US‑Mexico Agreement (CUSMA), the Royal Bank of Canada estimated that 89 percent of Canadian exports to the US still moved tariff‑free, and Prime Minister Mark Carney put the effective tariff rate at 5.5 percent, with some estimates as low as 3.1 percent.
Earlier this year, Canadian trade experts told CTV News that the ruling could mean certain tariffs imposed during the trade war would be eliminated and that sweeping refunds might be possible, and experts quoted by CTV News said Reuters estimated potential refunds at up to US$150bn.
BNN Bloomberg reported that the ruling did not decide whether companies will get money back, and Adam Taylor of NorthStar Public Affairs told CTV News it will be “an administrative nightmare,” with any “best‑case scenario” refunds likely going to manufacturers rather than consumers.
Trump pivots to a new global tariff and leans on other tools
Trump reacted by promising new tariffs through other statutes.
According to BNN Bloomberg, he said he would sign an executive order imposing a blanket 10 percent global tariff under Section 122 of US trade law.
CNBC reported that these “Section 122” tariffs will take effect “almost immediately.”
CBC News later said Trump announced he would raise that global rate to 15 percent after a “thorough, detailed, and complete review” of the court decision.
Section 122 allows temporary tariffs of up to 15 percent for a maximum of 150 days unless Congress approves an extension.
A White House fact sheet reported by BNN Bloomberg said CUSMA‑compliant goods will be exempt and the new levy will not stack on top of current sector‑specific tariffs.
CBC News also noted that the US House of Representatives voted against the IEEPA tariffs on Canada just last week.
On CNN’s State of the Union, US Treasury Secretary Scott Bessent said the new global tariff is “likely a five‑month bridge” while Section 232 and Section 301 tariff studies are conducted.
He told host Dana Bash it is “highly likely” those tariffs “will rise up” and that the Section 122 duties could disappear after five months, CBC News reported.
Section 232 now defines Canada’s real exposure
The sector‑specific tariffs that matter most for Canada sit outside the IEEPA ruling.
According to BNN Bloomberg, Trump has used Section 232 of the US Trade Expansion Act of 1962, citing national security, to impose or raise tariffs on:
- Steel: duties started at 25 percent and increased to 50 percent last June; coverage expanded to steel content in products such as dishwashers, refrigerators, washing machines and freezers.
- Aluminum: tariffs set at 25 percent and raised to 50 percent last June.
- Automobiles: 25 percent tariffs on finished automobiles, with a CUSMA exemption so only non‑American components face duties; Canada was never hit with Section 232 tariffs on auto parts that comply with CUSMA.
- Copper: 50 percent tariffs starting last August, with Canadian relief on raw materials, which are exempt.
- Softwood timber and lumber: 10 percent tariffs imposed last October, alongside US countervailing and anti‑dumping duties on Canadian lumber that the Commerce Department increased from 14.5 percent to 35 percent earlier this year.
- Upholstered wooden furniture, cabinets and vanities: 25 percent tariffs since last October; a planned increase in January was paused.
- Medium‑ and heavy‑duty trucks: 25 percent tariffs since November, with a CUSMA carve‑out so only non‑American components face duties.
- A narrow set of semiconductor imports: 25 percent tariffs since January.
The New York Times said these sectoral tariffs strike at “key job‑creating sectors” of Canada’s economy, including cars, trucks, buses, steel, aluminum and lumber, and noted that trade statistics do not capture goods that no longer ship to the US because tariffs make them uneconomic.
Dominic LeBlanc, Canada’s minister for US–Canadian trade relations, told CBC News that “what’s hurting the Canadian economy are the sectoral tariffs under a different American law,” and said this “reminds us again of the importance of diversifying our trading relationships.”
In a statement reported by BNN Bloomberg, LeBlanc said the decision “reinforces Canada’s position” that IEEPA tariffs were “unjustified” and pointed to “critical work” ahead to support steel, aluminum, auto, lumber and other sectors affected by Section 232.
Matthew Holmes, executive vice‑president and chief of public policy at the Canadian Chamber of Commerce, told CTV News Channel that these are the tariffs “most pressuring the Canadian economy,” according to BNN Bloomberg, even though most Canadian trade into the US remains tariff‑free under CUSMA.
From blanket national threat to targeted provincial and sector risk
Carlo Dade, director of International Policy at the University of Calgary’s School of Public Policy, told BNN Bloomberg that under IEEPA, Trump could “impose tariffs on all Canadian exports at once,” so “every province faced the same risk.”
He said the ruling will not end Canada’s “tariff angst,” because “the President has other powers,” and argued that if Trump loses one tool “he’s going to look at the next best thing he has, and that’s Section 232,” since “he’s not going to give up tariffs.”
Dade said the shift is from “anytime, any amount, any reason” to specific products, after investigations that typically take four to 10 months, as Section 232 requires the US Department of Commerce to examine whether imports threaten national security.
CBC News reported that Section 232 investigations must produce recommendations to the president within about 270 days.
According to Dade’s analysis cited by BNN Bloomberg, existing or ongoing Section 232 investigations cover 58 percent of Ontario’s exports to the US, 55 percent of Quebec’s, 44 percent of Nova Scotia’s, 43 percent of Manitoba’s and 35 percent of British Columbia’s, with those five provinces accounting for roughly 95 percent of Canada’s exports in sectors currently targeted or under review.
He said investigations are expected to take 153 to 300 days before final decisions, creating a window for governments and businesses to prepare.
Dade warned that policy‑makers should not see the IEEPA ruling as the end of tariff pressure and said Canada needs to “change our focus from worrying about a 2 am tweet to looking at what’s under Section 232 investigations and start taking proactive measures,” as BNN Bloomberg reported.
CUSMA review and diversification
The coming CUSMA review adds another layer of uncertainty.
Former foreign affairs minister Peter MacKay told CTV News Channel that the ruling is a “major blow to the president” and comes amid “growing resistance” to Trump’s punitive tariffs “even within his own party.”
He said “the cracks are starting to form” in the Republican Party as Canada prepares for CUSMA negotiations, according to BNN Bloomberg.
Dade told BNN Bloomberg the ruling “raises questions” for the CUSMA review and said Canada should prioritise “meaningful protection from Section 232 tariffs.”
He warned that “if we sign something and the president can just turn around and impose Section 232 tariffs anyway, then we haven’t solved the problem.”
The New York Times reported that two Canadian officials involved in US trade discussions said expectations in Ottawa for a full renewal of the agreement are “very low,” and that US trade representative Jamieson Greer said there is no “natural reason” the pact must include all three countries.
The Times also said Trump has suggested separate deals with Canada and Mexico, which both countries oppose, and noted that the review is scheduled to end on Canada Day, with any party able to quit the pact with six months’ notice.
According to The New York Times, Carney’s response is to ally with other nations to reduce Canada’s “overwhelming economic dependence on the United States,” including a mission to India to forge new trade alliances.
Business and labour caution: this is not a “victory”
Business and labour leaders have urged Canada not to treat the court decision as a clean win.
Canadian Chamber of Commerce president and CEO Candace Laing said the ruling is “not the last chapter of this never‑ending story” and warned that “Canada should prepare now for new, blunter mechanisms to be used to reassert trade pressure, potentially with broader and more disruptive effects,” according to BNN Bloomberg.
Unifor national president Lana Payne said in a statement that the ruling is not a “victory,” warning that “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.”
Holmes told CTV News Channel that Canadian businesses need to be compliant with CUSMA when trading with the US or Mexico and “really talk seriously about our diversification,” saying that “we see from this administration a commitment to the tariff policies,” even if “what form those take… changes by the day,” as BNN Bloomberg reported.
He added that while the US is likely to remain Canada’s No. 1 trading partner, risk reduction through expanded trade is needed.
