U.S. President Donald Trump has announced a significant increase in tariffs on Canadian goods, raising them from 25 per cent to 35 per cent. The executive order is intended to remedy what Trump calls decades’ worth of efforts by Canada to undermine the economic interests of the United States. Items included in the Canada-United States-Mexico Agreement (CUSMA) will still be excluded from these new tariffs.
The announcement comes amid a flurry of ongoing trade negotiations. Let’s be clear – Canada has the resources that Trump says the United States desperately needs, including oil, gas, and critical minerals. His administration’s legal argument – based upon a national security statute – is being challenged to allow him to raise such tariffs. If complete, this move indicates a more serious and aggressive turn of U.S.-Canada relations. It’s raising new and significant questions about the future of trade between the two countries.
Justification for the Tariffs
In his campaign announcement, Trump made a big deal about having to renegotiate trade deals. So he’s looking out to make sure that the U.S. gets a better deal. He stated, “Canada shouldn’t settle for anything less than the right deal.” This sentiment is part of a larger frustration in his administration over what it perceives to be predatory dumping practices by its northern neighbor.
The Trump administration’s counsel asserts that the president has broad authority to impose these tariffs. This authority is rooted in the International Economic Emergency Powers Act of 1977 (IEEPA). This legal interpretation has faced scrutiny. An 11-judge panel has aggressively challenged the administration’s justification for using IEEPA to slam tariffs. They played directly to fears about military readiness and other outside casus belli.
“If the president says there’s a problem with our military readiness and he puts a 20 per cent tax on coffee, that doesn’t seem to necessarily deal with (it)” – Chief Circuit Judge Kimberly Moore
Legal scholars note that no president has ever invoked IEEPA to impose tariffs. All this raises deep questions about the constitutionality of Trump’s conduct. As a matter of U.S. history, the Constitution mandates that power over taxation and duties is given to Congress alone.
Reactions from Canadian Officials
The response from authorities in Canada has been immediate, emphatic, and panicked. In Canada, Ontario Premier Doug Ford said he was “deeply concerned” over the tariff hike. We expect the federal government to do a strong and vigorous response to our interests.
Ford highlighted Canada’s crucial role as a supplier to the United States, stating, “Canada has what the United States needs: oil and gas, critical minerals, steel and aluminum, electricity, potash and uranium. We’re America’s number one customer and keep millions of Americans working.” His remarks certainly show that Canada hopes to use its advantageous position entering negotiations all while avoiding souring trade relations.
The Premier’s comments highlight just how critical a targeted strategy is when responding to U.S. tariffs. The Canadian government is now faced with the challenge of maximizing its leverage in light of Trump’s aggressive trade policies.
Ongoing Trade Negotiations
Next, Trump replaced the tariffs with new conditions—extending trade talks with Mexico by 90 days. This executive action is another indication of his playbook to realign trade relations within North America. And now, the United States’ northern neighbor is TENSE. At the same time, negotiations with Mexico continue to close remaining gaps.
Specifically, Trump’s administration says that Mexico has committed to eliminating several non-tariff trade barriers as part of these negotiations. This latest move could help shape Canada’s fortunes as it tries to ride out its own storm of U.S. tariffs.
Meanwhile, as all this played out in the media, Trump was forced to admit he hadn’t even spoken to Canada. This indicates that diplomatic discourse between the two countries is still extremely limited. His suggestion that Mark Carney may have reached out hours before implementing the new tariffs indicates a lack of direct dialogue.
