A court ruled against Trump's tariffs. So what?

Globe and Mail

29-05-2025

Lawrence Herman is an international lawyer with Herman & Associates and a senior fellow at the C.D. Howe Institute in Toronto.
On Wednesday, the U.S. Court of International Trade threw a wrench into President Donald Trump's trade machine, blocking his 'Liberation Day' tariffs under the International Emergency Economic Powers Act (IEEPA), shutting down the so-called fentanyl and immigration duties as well as the 25-per-cent tariffs on non-CUSMA-compliant goods from Canada and the 10-per-cent baseline tariffs against the world. At least for now.
The decision was firm and decisive in saying that the orders were illegal under that statute. But the administration is appealing that decision to the Court of Appeals and, win or lose, the case will end up in the U.S. Supreme Court. The White House has successfully sought a stay of the ruling. All of this means it will take some time before this saga reaches judicial conclusion. In the meantime, uncertainty abounds.
It should also be noted that the CIT decision only affects these IEEPA tariffs. Other tariffs ordered by Mr. Trump under the 1962 Trade Expansion Act are not affected by the ruling. These include steel, aluminum and motor vehicles, as well the uncompleted section investigations by the Commerce Department and which could lead to tariffs on imports of copper, lumber, pharmaceuticals, critical minerals and other sector imports.
So, the drama is far from over. A feature of the byzantine U.S. system is that there always seem to be laws that can be dug up and dusted off to provide additional executive powers, whatever the courts may say at any given time. As Goldman Sachs reported in a note after the ruling, 'we expect the Trump administration will find other ways to impose tariffs.' This means that even if the CIT decision is a clear setback, it won't deter Mr. Trump from continuing his tariff wars using whatever alternative routes can be found. Canadian trade strategy should be geared accordingly.
This compounds current uncertainty. It brings to mind the new 'economic and security relationship' that Prime Minister Carney referred to at his May 6 meeting with Mr. Trump. It came up again in the Throne Speech. But it isn't clear what this new two-way relationship is all about, what it means in terms of resolving the tariff war in light of the CIT ruling or how it relates to CUSMA and the review of the agreement that's supposed to begin in June, 2026.
Adding to the uncertainty, at the May 6 meeting with the Prime Minister, Mr. Trump told journalists that he wasn't sure that the CUSMA was still relevant, obliquely suggesting that a new trade deal is what he had in mind.
Mr. Carney added currency to this notion, saying in his TV interview after the Throne Speech that there have been 'intensive discussions' since his meeting with Mr. Trump 'to work out a trilateral deal' and indicated that a deal could be struck before September. Mr. Carney has invited Mexican President Claudia Sheinbaum to the G7 meeting in Kananaskis, Alta., next month for possible sideline talks with Mr. Trump. Assuming this three-way meeting comes off next month at the G7, things may become clearer.
But a lot of serious questions remain to be answered. Even if there's some kind of understanding with Mr. Trump about a new trilateral trade deal, what does this mean in practice? It may or may not involve wholescale renegotiation of or adjustments to CUSMA. How does the 2026 CUSMA review fit into this? We just don't know. And then there's the idea of some kind of new, bilateral economic and security arrangement between Canada and the United States that remains shrouded in mystery. What are we talking about?
U.S. court's tariff ruling stirs questions about U.K.'s trade deal with Trump
Now, added to the uncertainty, there's the whole range of Mr. Trump's tariffs that need to be resolved in some way, taking account of the CIT's decision. Whatever the impact of that decision, the Section 232 tariffs on steel, aluminum and autos remain in place. And there are possible new tariffs on other sectors. From an immediate perspective, resolving the tariff issue is the most commercially important item for Canadian business.
So, where are we going? There's a lot of fog in the room, with different ideas in play that may or may not intersect. While governments rightly don't want to negotiate in public for good reason, there needs to be more information provided on where matters stand with the U.S. and with Mexico, including Mr. Carney's reference to 'intensive discussions' with the Americans on a new trilateral deal. While chaos and uncertainty continue to reign in Washington, we need more clarity from Ottawa.