US Supreme Court Strikes Down Some Trump Tariffs, Causing Trade Worry for Canadian Businesses

The US Supreme Court struck down some Trump tariffs, but new ones could be coming. This is different from previous rulings.
By Newsroom | Business, International Trade |

The U.S. Supreme Court's decision to strike down some of President Donald Trump's tariffs has generated a mixed reaction among Canadian businesses. While the ruling is seen as a legal rebuke of presidential overreach and a welcome development in some aspects, it has also led to concerns about future trade instability and the potential for new tariff measures. The decision affects tariffs imposed under the International Emergency Economic Powers Act (IEEPA), which had become a significant source of revenue for the U.S. administration.

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Background of the Supreme Court Decision

On a recent Friday, the U.S. Supreme Court issued a ruling that invalidated a significant portion of President Trump's tariffs. The case specifically addressed tariffs enacted under the International Emergency Economic Powers Act (IEEPA).

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  • These IEEPA tariffs have generated tens of billions of dollars for the U.S. administration.

  • The Supreme Court's decision, a 6-3 vote, is considered a setback for the former president's economic agenda.

  • This ruling focuses on tariffs imposed using IEEPA, and some existing tariffs on products like steel, aluminum, and automobiles, which were enacted under different laws, remain in place.

Canadian Business Perspectives

Canadian businesses are facing a period of uncertainty following the Supreme Court's decision. While some tariffs have been struck down, the possibility of new trade measures looms.

Read More: Supreme Court Ruling Against Trump Tariffs Boosts US Stocks by 207 Points on Tuesday

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  • Mixed Reactions: The ruling is described as a "welcome development" by some Canadian businesses, but also as a situation that "does nothing to resolve the ongoing trade crisis threatening Canadian jobs and key industrial sectors," according to Unifor.

  • Lingering Uncertainty: The British Chambers of Commerce and other global trade bodies have warned of "lingering uncertainty surrounding import levies."

  • Potential for New Tariffs: Dan Kelly, President of the Canadian Federation of Independent Business (CFIB), stated that "other tariff and trade tools may be used to accomplish the same end," suggesting that the U.S. might explore alternative legal paths to impose new tariffs. The U.S. president has also indicated exploring other avenues for imposing tariffs.

Impact on Trade Agreements and Tariffs

The Supreme Court's decision has implications for existing trade deals and the broader landscape of international trade.

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  • Unaffected Trade Deals: The ruling does not appear to affect aspects of trade deals concerning specific sectors like steel, pharmaceuticals, and automobiles for some countries, such as the U.K.

  • Focus on IEEPA Tariffs: The case specifically examined tariffs implemented via IEEPA. Tariffs enacted under different legislation, such as those on steel and aluminum, are not directly impacted by this particular ruling.

  • Concerns for Global Trade: Leaders from the European Union, Japan, and other nations are questioning the stability of informal trade agreements made with the U.S. administration.

Potential Economic Ramifications

The decision raises questions about financial implications for businesses and potential price adjustments for consumers.

  • Refunds for Paid Tariffs: Businesses that paid tariffs under the IEEPA during the period in question may seek refunds, depending on their eligibility.

  • Consumer Price Adjustments: In the long term, consumers might see some potential price decreases if tariffs are removed or reduced.

  • Economic Uncertainty: Despite the court's ruling, economic uncertainty has been a persistent factor for businesses throughout the year, with some companies choosing not to halt their operational plans.

Future Trade Measures

The U.S. administration appears prepared to implement new trade policies, suggesting the current ruling may not be the final word on tariffs.

  • Exploring Other Avenues: The U.S. president has stated intentions to enact a 10% global tariff via an executive order and is exploring other methods to impose tariffs.

  • Call for Congressional Action: There is a call for Congress to provide "lasting protection against tariffs."

  • New Tariff Announcement: Reports indicate the U.S. president intends to charge an additional 10% global tariff.

Expert and Business Analysis

Organizations and business leaders have offered their perspectives on the court's decision and its potential consequences.

  • Unifor views the ruling as a "legal rebuke of presidential overreach" but emphasizes that it does not resolve underlying trade issues.

  • Dan Kelly of CFIB highlights that the ruling weakens the justification for past tariffs but anticipates the use of "other tariff and trade tools."

  • Trade bodies, such as the British Chambers of Commerce, have cautioned that the decision adds to existing "uncertainty surrounding import levies."

Conclusion and Outlook

The U.S. Supreme Court's decision to strike down certain Trump-era tariffs marks a significant legal development but does not eliminate trade uncertainty for Canadian businesses. The focus has been on tariffs enacted under the IEEPA, leaving other trade measures in place. While some businesses may benefit from potential refunds and the removal of specific levies, the expressed intent of the U.S. administration to explore and implement new tariff measures suggests a continued period of flux in trade relations. The legal challenges to tariffs are ongoing, and businesses must remain adaptable to potential shifts in trade policy.

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Frequently Asked Questions

Q: Why did the US Supreme Court make a decision about Trump's tariffs on a recent Friday?
The court ruled that some tariffs President Trump put in place using a law called IEEPA were not allowed. This decision affects tariffs that brought in a lot of money for the US government.
Q: How does this Supreme Court ruling affect Canadian businesses?
Canadian businesses are worried because even though some tariffs are gone, the US might try to add new ones using different rules. This makes trade planning harder.
Q: What kind of tariffs did the Supreme Court rule against?
The ruling specifically targeted tariffs put in place under the International Emergency Economic Powers Act (IEEPA). Tariffs on things like steel and aluminum, which were put in place using different laws, are still in effect.
Q: Will Canadian businesses get money back from the tariffs they already paid?
Some businesses that paid tariffs under the IEEPA during the time in question might be able to ask for their money back. This depends on the specific rules and if they qualify.
Q: What might happen next with US tariffs on Canadian goods?
The US President has said they plan to add a new 10% global tariff and are looking for other ways to put tariffs on goods. This means trade rules could change again soon.
Q: Do other countries have concerns about this US Supreme Court ruling?
Yes, countries like those in the European Union and Japan are worried about how stable trade agreements with the US are because of this decision.