The backbone of Trump’s trade policy will be put in the hands of nine judges this week.
Driving the news: A case challenging the legality of Trump’s so-called Liberation Day tariffs will be heard by the U.S. Supreme Court starting Wednesday. At the crux of the case is whether Trump can use a presidential emergency clause to slap tariffs on countries at will.
Why it matters: A Supreme Court ruling against the Trump administration could make it more difficult for the president to impose tariffs on a whim. Canada’s economy, more than most, has felt the impact of that erratic policymaking.
- The Bank of Canada has noted that the uncertainty around tariffs is a major hindrance to Canadian businesses making investment and hiring decisions.
Catch-up: Trump has leaned on the International Emergency Economic Powers Act (IEEPA) as his primary vehicle for imposing tariffs, declaring different emergencies — from a fentanyl crisis to trade deficits — to bypass Congress, which typically approves tariff policy.
- Lawyers representing a dozen U.S. states argue that trade deficits — which the U.S. has had for the past 50 years — don't meet IEPPA’s bar of an extraordinary threat.
- If IEPPA can no longer be used, the president will likely have to turn to more targeted, sector-specific tariffs, which require an investigation to impose.
Yes, but: While the Supreme Court case could quash the blanket 35% tariffs on Canadian imports, tariffs on specific sectors like autos, lumber, and steel won’t be affected.—LA