Quebec businesses say U.S. tariff ruling ‘not a victory yet'

Montreal Gazette

2 days ago

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Quebec business groups say a U.S. court decision striking down some of President Donald Trump's tariffs is a good sign, but that Canada now needs to focus on negotiations to address other tariffs on major exports.
The U.S. trade court's Wednesday decision — which was temporarily halted by an appeal court Thursday afternoon as the administration appeals the ruling — found the president didn't have the authority to impose two sets of tariffs using emergency powers.
That includes tariffs on Canada, Mexico and China that the administration said were imposed on the grounds that those countries weren't doing enough curb the movement of fentanyl, as well as so-called reciprocal tariffs on nearly every other country in the world that were related to trade deficits.
The ruling does not apply to tariffs on imports of steel and aluminum, or vehicles, which were introduced using other powers.
'This ruling is good news, it shows that the tariffs that were imposed were not based on law, on how we do our economic relations between Canada and the U.S.,' said Julie White, the president and CEO of Manufacturiers & Exportateurs du Québec. 'But, it's not over, the American administration is going to appeal and we still have a lot of steps to do with the American administration on the renegotiation of the (Canada-United States-Mexico Agreement).'
While manufacturers who were affected by the tariffs can breathe a little easier, White said, there is still a climate of uncertainty around trade with the U.S., which has pushed Quebec businesses to put investments and other projects on hold.
'It's good news, but it's not a victory yet,' White said, adding that she wants to see the federal government — which has not yet appointed a negotiator — prepare for trade negotiations with the U.S. and that businesses need to continue looking for other markets, a process that will take time.
Trump had already suspended the tariffs struck down by the Court of International Trade on Canadian goods that comply with the Canada-United States-Mexico Agreement.
With tariffs remaining on steel and aluminum, as well as pre-existing tariffs on softwood lumber, Véronique Proulx, the president and CEO of the Fédération des chambres de commerce du Québec, said Wednesday's decision will have little immediate effect on her organization's members.
'It sends a positive signal, a positive signal that the president can't evoke emergency measures to put unjustified tariffs in place and that there are institutions in the United States that are impartial and who clearly see that, once again, these tariff decisions were not justified,' she said, 'But in concrete terms, for our businesses, this has little impact on their day-to-day operations.'
Proulx said she hopes Prime Minister Mark Carney and his government recognize that the tariff war with the U.S. isn't over and that finding a solution needs to be a priority.
Two lawsuits led to the ruling by the New York-based federal trade court. One was filed by a group of small businesses, including a wine importer, V.O.S. Selections, whose owner has said the tariffs are having a major impact and his company may not survive. The other was filed by a dozen states, led by Oregon, who argued the tariffs interfered with their ability to engage in procurement and government contracts.
The core issue in the case was presidential power, said Raj Bhala, a professor at the University of Kansas School of Law who has written extensively on international trade law.
The law used to impose the tariffs, the International Emergency Economic Powers Act, allows the president to respond to an 'unusual and extraordinary threat' that's at least partially coming from outside the country, but the court found that fentanyl, trade deficits and illegal immigration weren't unusual and extraordinary, Bhala said in an interview.
The court also found that the president exceeded his authority under that law to regulate imports.
But Bhala, who thinks the case will likely end up at the Supreme Court, said the president may have some good arguments against the ruling, including those based on a theory that the courts don't have the right to impede his authority to deal with national security threats.
'I think one of the most foolish moves a foreign government could make is to say, 'ha, ha Trump is weakened, we don't have to worry about this, this is not a problem, it's going to go away, the U.S. courts will take care of it.' No, I would keep negotiating,' said Bhala, a dual Canadian and U.S. citizen.
Even if the ruling is upheld on appeal, the president has other powers to levy tariffs and Congress may pass legislation specifically authorizing the struck-down tariffs, Bhala said, adding that protectionism has proven popular with American voters.
'Don't gloat over this seeming victory, it may not last,' he said.