The U.S. Supreme Court just gave Canada’s CUSMA negotiators a gift.
What happened: In a 6-3 decision, the U.S. Supreme Court ruled that Donald Trump’s global tariffs announced on last year’s “Liberation Day” are illegal, as well as duties the White House claims it imposed in response to fentanyl trafficking.
Trump called the decision a “disgrace” and said he would use various other trade laws to restore the tariffs, as well as impose a new 10% global duty.
Yes, but: Because of CUSMA, around 90% of Canadian imports were unaffected by the now-illegal tariffs, and the ruling does not roll back the tariffs that have been most painful for Canada — the sector-specific duties on aluminum, steel, auto, and lumber imports.
Why it matters: The ruling does improve Canada’s position when it comes to renegotiating CUSMA by removing the threat of “reciprocal” tariffs suddenly being applied universally to Canadian goods.
On the other hand, it will also — at least temporarily — make imports from other parts of the world cheaper in the U.S. market, which could hurt Canadian importers who have enjoyed a relatively privileged duty-free position.
What’s next: The Trump administration will certainly try to resurrect its tariff regime by other means, but those are also likely to be challenged in the courts. This ruling suggests the White House could struggle to make a broad tariff policy stick without the approval of Congress, which it will almost certainly not be able to secure.—TS