Court Ruling Redirects Canada’s Tariff Leverage to Provincial Frontlines
Even with U.S President Donald Trump global tariffs deemed illegal, Canada’s threat is not eliminated. It’s just redirected explains a trade expert.
On Friday, the U.S. Supreme Court struck down Trump’s International Emergency Economic Powers Act (IEEPA), saying he exceeded his executive authority by bypassing congress.
Under IEEPA, Trump could impose tariffs on all Canadian exports at once which meant every province faced the same risk, explains Carlo Dade, director of International Policy at the School of Public Policy at the University of Calgary.
“But the President has other powers,” says Dade.
“A national problem is now a problem that varies by province.”
He says the ruling will not end Canada’s tariff angst. Instead, Trump is likely to turn to other tariff authorities delegated by Congress.
“If he loses one tool, he’s going to look at the next best thing he has, and that’s Section 232,” says Dade.
“He’s not going to give up tariffs. It’s too much money coming in. It’s too good a lever.”
Section 232 is the ‘next best thing’
Dade explains Section 232 allows the President to impose tariffs on specific products following an investigation by the U.S. Department of Commerce into whether imports threaten U.S. national security. Trump used the measure during his first term to impose tariffs on Canadian steel and aluminum.
“We’re going from anytime, any amount, any reason I want, to specific products after an investigation that takes four to 10 months,” says Dade.
“It’s not waking up at 2 a.m. and seeing a tweet going, ‘I’m going to tariff 35 per cent on everyone.’ No. That’s off the table.”
Instead, he says, there is now a structured process with advance warning that gives governments and businesses time to prepare.
“Not everyone across the country is hit. Only certain products, which means only certain provinces,” says Dade.
Provinces face uneven exposure
According to Dade’s analysis, Ontario has the highest exposure to Section 232 tariffs, with 58 per cent of its exports to the United States falling under existing or ongoing Section 232 investigations.
Quebec follows at 55 per cent, Nova Scotia at 44 per cent, Manitoba at 43 per cent and British Columbia at 35 per cent.
Together, those five provinces account for roughly 95 per cent of Canada’s exports in sectors currently targeted or under review.
He says Section 232 investigations are expected to take between 153 and 300 days before a final decision is made, creating a window for governments and businesses to prepare.
Canada needs to immediately take proactive measures
Dade says federal and provincial governments must now focus on investigations already underway under Section 232 and identify which industries are exposed before tariffs are imposed.
He warned policymakers should not interpret the ruling as the end of tariff pressure.
“We need to change our focus from worrying about a 2 a.m. tweet to looking at what’s under Section 232 investigations and start taking proactive measures,” says Dade.
Implications for CUSMA
Dade says the ruling also raises questions ahead of the upcoming review of the Canada-United States-Mexico Agreement.
He says Canada should prioritize securing meaningful protection from Section 232 tariffs in negotiations.
“If we sign something and the president can just turn around and impose Section 232 tariffs anyway, then we haven’t solved the problem,” he says.
This article was first reported by BNNBloomberg
