The U.S. Supreme Court ruled on Friday that U.S. President Donald Trump’s tariffs on Canada and other countries are unlawful — but that doesn’t mean an end to Trump’s global trade wars.
The ruling only affects the tariffs Trump imposed under emergency powers, including his so-called “reciprocal” tariffs and separate duties on Canada related to fentanyl. It also means Trump can no longer use that authority to threaten or impose additional tariffs whenever he sees fit.
As Trump himself pointed out after the ruling, the decision does not address several other tariffs on specific sectors like steel, aluminum and autos, which will remain in place. Those were imposed under a U.S. law known as Section 232, which remains available for Trump to use in the future.
Trump also used a different authority to impose a temporary global 10 per cent tariff, effectively replacing the baseline tariff rate for most countries that was struck down Friday.
The White House clarified the new tariff does not apply to goods compliant with the Canada-U.S.-Mexico Agreement on free trade (CUSMA).
Questions also remain on whether the government will be forced to refund the extra costs paid by American businesses due to the now-unlawful tariffs, which the court’s ruling does not address.
“This really guarantees more uncertainty and likely more tariffs down the road, both globally speaking but possibly for Canada as well,” said Matthew Holmes, executive vice-president at the Canadian Chamber of Commerce.
“It’s certainly not the end of this never-ending tariff story. It’s just a new chapter.”
Here’s what to know about the decision and what happens next.
What does the ruling strike down?
The case involved a pair of lawsuits that challenged Trump’s use of the International Emergency Economic Powers Act (IEPPA), a 1977 law that allows the president to manage economic transactions during an emergency.
Trump had argued the law’s language of regulating imports allowed him to impose tariffs as a response to two emergencies he declared early last year: one about fentanyl trafficking from Canada, Mexico and China, and another regarding historic trade deficits with dozens of other countries.
Canada faced a 35 per cent rate under those fentanyl tariffs at the time of the Supreme Court’s ruling, with a lower 10 per cent rate on energy and fertilizer products like potash.
However, Trump had exempted goods that were traded under CUSMA, meaning those goods faced no tariff at all.
Prime Minister Mark Carney has repeatedly pointed out that roughly 85 per cent of Canadian exports to the U.S. fall under that CUSMA exemption.
Trump on Friday night signed an executive order officially ending the IEEPA tariffs, saying they will no longer be collected “as soon as practicable.”
What stays in place?
Trump has imposed a series of other, sector-specific tariffs on several industries using Section 232 of the U.S. Trade Expansion Act, which allows the president to address “excessive” foreign imports deemed a risk to national security.
The law requires the U.S. Commerce Department to investigate those imports and reach a conclusion justifying the tariffs, which can take months to complete.
Section 232 tariffs have been imposed on steel, aluminum and copper at a rate of 50 per cent; automobiles, heavy trucks and auto parts not compliant with CUSMA at a 25 per cent rate; and some furniture, kitchen cabinets and vanities at 25 per cent.
A 10 per cent tariff was also imposed on softwood lumber under Section 232, on top of existing and separate anti-dumping duties.
All of those tariffs remain in place despite the Supreme Court decision, and Section 232 remains a tool that Trump can use in the future.
How else might Trump impose tariffs?
Trump signed an executive order on Friday imposing a 10 per cent global tariff under Section 122 of the U.S. Trade Act, which will last for 150 days.
That’s the maximum amount of time allowed under the law, though Congress can vote to extend it. However, both the U.S. House of Representatives and the U.S. Senate have voted to strike down the IEEPA tariffs in recent months.
The White House said the new global tariff will not apply to goods already tariffed under Section 232, as well as certain agricultural goods including those that cannot be produced in the U.S. Certain electronic, aerospace and pharmaceutical goods, as well as some autos and auto parts, will also be exempt.
Trump said Friday his administration was initiating “several” investigations under Section 301 of the Trade Act. That statute is similar to Section 232 but tasks the U.S. Trade Representative with those probes.
It has been used by Trump and other presidents in the past to go after countries like China in particular for “unfair” trading practices.
Trump suggested he may go even further than financial barriers on trade, including possible complete embargos on imports, arguing the court had given him the authority to do so.
“Now the court has given me the unquestioned right to ban all sorts of things from coming into our country, to destroy foreign countries — a much more powerful right than many people ever thought we even had — but not the right to charge a fee,” he said. “How crazy is that?”
Robert Glasgow, an international trade lawyer based in Toronto, said before Trump’s remarks that the administration won’t be stopped by the court’s decision.
“It’s not the end of the war,” Glasgow said. “There’s still a lot of conflict left … and I think that they’re going to try to find every underhanded trick they can to try to impose more and greater tariffs.”
Will there be refunds?
The ruling leaves one major question unanswered: whether American businesses that paid the extra tariff costs will be refunded.
“We’ve taken in hundreds of billions of dollars — not millions, hundreds of billions of dollars,” Trump said.
“Wouldn’t you think they would have put one sentence in there saying (either) keep the money or don’t keep the money? I guess it has to get litigated for the next two years.”
The Penn-Wharton Budget Model at the University of Pennsylvania projected Friday that the U.S. government has collected US$164.7 billion in revenue from the IEEPA tariffs alone, accounting for 52 per cent of all customs duties since last January.
Several large and medium-sized businesses, including Costco, have already sued to ensure they are refunded in the event of the tariffs being struck down.
We Pay the Tariffs, a coalition of small U.S. businesses that signed onto the Supreme Court case, launched a signature collection campaign moments after Friday’s ruling to appeal to the government for refunds.
“The administration’s only responsible course of action now is to establish a fast, efficient, and automatic refund process that returns tariff money to the businesses that paid it,” the group’s executive director Dan Anthony said in a statement.
“Small businesses cannot afford to wait months or years while bureaucratic delays play out, nor can they afford expensive litigation just to recover money that was unlawfully collected from them in the first place. These businesses need their money back now.”
Lawyers acknowledged during November’s oral arguments in the Supreme Court that refunding the tariffs would create a “mess” for the government — something Justice Brett Kavanaugh highlighted in his dissenting opinion Friday.
“The mechanism there would be to work with your U.S. customs broker or U.S. council to file refund requests with U.S. Customs and Border Patrol,” Glasgow said.
Because that mechanism is not laid out in the court decision, he continued, “this is going to have to be a case-by-case attempt to retrieve the money.”