US Supreme Court Stops Trump Tariffs on Canada and Mexico Under IEEPA

The US Supreme Court has stopped some tariffs imposed by former President Trump. This decision means tariffs on Canada and Mexico under the IEEPA law are gone, but other tariffs remain.
By Newsroom | Law, Trade |

A recent U.S. Supreme Court decision has overturned a significant portion of tariffs imposed by former President Donald Trump, specifically those enacted under the International Emergency Economic Powers Act (IEEPA). While this move is a setback for Trump's economic policies, it has a mixed impact on global trade, including for Canada. Tariffs enacted under different laws, such as Section 232 for national security reasons, remain in place, leaving a complex situation for international commerce and potential future trade disputes.

The U.S. Supreme Court ruled that President Trump exceeded his authority by imposing widespread tariffs using the IEEPA, a law typically reserved for national emergencies. This decision impacts tariffs imposed on major trading partners like Canada, Mexico, and China. However, tariffs related to national security and specific sectors, such as those on steel and aluminum under Section 232, were not affected by this ruling. The ruling has also raised questions about the future of potential refunds for businesses and consumers who paid these tariffs, with officials suggesting such processes could be complicated and lengthy.

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Where does the U.S. Supreme Court voiding some Trump tariffs leave Canada? - 1

Key Developments and Affected Tariffs

The Supreme Court's decision on Friday invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA). These were often described as broad, global tariffs enacted using executive emergency powers.

  • Tariffs Overturned:

  • IEEPA-based tariffs on Canada, Mexico, and China.

  • Tariffs on India over Russian oil.

  • Tariffs Remaining:

  • Section 232 tariffs on steel and aluminum.

  • Product-specific tariffs on copper, wood products, cars, and trucks.

The core of the ruling centers on the IEEPA, with other legal avenues for tariffs remaining unaffected.

Where does the U.S. Supreme Court voiding some Trump tariffs leave Canada? - 2

Impact on Canada

While the U.S. Supreme Court's decision has removed some tariffs that affected Canada, it does not represent a complete reprieve from trade barriers.

  • IEEPA Tariffs Lifted: Tariffs imposed on Canada under IEEPA are now overturned.

  • Section 232 Tariffs Persist: Tariffs on Canadian steel and aluminum products, enacted under Section 232, remain in place. These were previously lifted after the negotiation of the CUSMA trade agreement.

  • Uncertainty on Future Tariffs: It remains unclear if Canada will be subject to any new tariff threats Trump may propose using different legal bases.

Canada sees some tariff relief but continues to face trade measures under different U.S. legal frameworks.

Where does the U.S. Supreme Court voiding some Trump tariffs leave Canada? - 3

The Supreme Court's decision is rooted in an interpretation of U.S. law regarding the division of powers between the executive and legislative branches.

  • Congressional Authority: The ruling suggests that the U.S. Constitution grants Congress, not the President, the primary authority to levy taxes and tariffs on foreign countries.

  • IEEPA Interpretation: The Court found that the IEEPA does not grant the President the power to impose broad tariffs.

  • Executive Overreach: The decision implies that Trump exceeded his executive authority by using emergency powers for these specific tariffs.

"The Supreme Court struck down Trump's sweeping global tariffs imposed under emergency powers, voiding duties on major trading partners while leaving national security and sector-specific tariffs largely intact." - India Today

The court's decision highlights a fundamental disagreement over the scope of presidential power in imposing international trade duties.

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Where does the U.S. Supreme Court voiding some Trump tariffs leave Canada? - 4

Economic and Financial Implications

The overturning of these tariffs has led to discussions about potential refunds and broader economic impacts.

  • Potential Refunds: The Trump administration has indicated that companies could receive refunds for unlawfully collected tariffs without needing to sue, though the process is expected to be complicated and potentially take a year.

  • Revenue Reduction: A reduction in tariffs means less government revenue is available for spending.

  • Market Reaction: Stock markets reacted positively to the news of the ruling, suggesting that the business community viewed the tariffs as a drag on the economy.

"Refunds are expected to be complicated and Treasury Secretary Scott Bessent has said they could take a year." - USA Today

The financial consequences of the ruling are complex, involving potential reimbursements and a reduction in government revenue, with markets showing a favorable response.

Expert Analysis and Future Considerations

The Supreme Court's ruling has drawn commentary from various sources, focusing on its implications for future trade policy and executive power.

  • Setback for Economic Agenda: The decision is seen as a significant blow to Trump's signature economic policies and his approach to international trade.

  • Alternative Measures: Trump has reportedly discussed alternative tariff strategies, though it is unclear if these would have the same reach or impact as those overturned.

  • "Payback" Concerns: Trump has warned of potential "payback" from countries affected by tariffs, raising concerns about future trade relations.

"The court upheld a ruling from the U.S. Court of Appeals for the Federal Circuit that ruled Mr. Trump's tariffs were illegal." - CBS News

The ruling reinforces the limitations on presidential tariff powers and signals potential future conflicts over trade policy.

Conclusion and Next Steps

The U.S. Supreme Court's decision to strike down key Trump-era tariffs under IEEPA represents a significant legal and economic development. While it provides some relief to countries like Canada, trade relations remain complicated by existing Section 232 tariffs and the potential for future executive actions.

  • Tariff Landscape: The U.S. tariff landscape is now bifurcated: IEEPA tariffs are voided, while national security and sector-specific tariffs persist.

  • Refund Process: The complicated process of refunding collected tariffs is a major concern, with potential delays and administrative challenges.

  • Future Trade Policy: The ruling will likely shape future approaches to imposing tariffs, emphasizing the role of Congress and potentially leading to new legislative battles over trade powers.

The immediate future involves navigating the refund process and understanding the precise implications of the continued tariffs. The longer-term impact will depend on subsequent policy decisions by the U.S. administration and reactions from affected trading partners.

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Frequently Asked Questions

Q: Which Trump tariffs did the US Supreme Court stop?
The Supreme Court stopped tariffs that former President Trump put in place using the IEEPA law. These tariffs affected countries like Canada, Mexico, and China.
Q: What tariffs are still in place after the Supreme Court decision?
Tariffs on steel and aluminum that were put in place for national security reasons (Section 232) are still active. Other specific product tariffs also remain.
Q: How does this Supreme Court decision affect Canada?
Some tariffs on goods from Canada that were put in place under the IEEPA law are now stopped. However, tariffs on steel and aluminum for national security reasons are still in place.
Q: Will businesses get refunds for the tariffs that were stopped?
The U.S. government said businesses might get refunds for the tariffs that were stopped. However, this process will be difficult and could take about a year to complete.
Q: Why did the Supreme Court stop these tariffs?
The Court decided that President Trump used the IEEPA law too broadly and did not have the power to put these tariffs in place. They said Congress, not the President, has the main power to set tariffs.