Canada's trajectory may not be complete, advisors caution
The United States' tariffs on Canadian goods, previously declined by a federal court, have been temporarily reinstated following an appeal. The U.S. Court of Appeals for the Federal Circuit granted an administrative stay on May 29, 2025, overturning the original ruling made by the U.S. Court of International Trade. As a result, the tariffs, including the 10% global tariffs and the 25% fentanyl-related duties, are back in effect.
The initial ruling declared that former President Trump did not have the authority under emergency powers to impose certain tariffs. However, the Trump administration filed an emergency motion for a stay pending appeal, claiming that the tariffs were necessary for national security.
The plaintiffs challenging the tariffs have until June 5 to respond to the motion for a stay, with the government replying by June 9. This indicates that the legal battle is ongoing. Canadian officials have voiced their intent to continue opposing the tariffs.
The case originated from the International Emergency Economic Powers Act of 1977, a national security law that grants the president the power to control economic transactions after declaring an emergency. The initial ruling stated that Trump overstepped his powers in imposing almost all countries' tariffs under this act.
Experts suggest that affected Canadian importers should start gather their transaction documents in case the appeal is unsuccessful. If the request for an appeal is successful, refund claims can be filed. However, Canadian business groups argue that the decision offers no short-term certainty. The Canadian Chamber of Commerce maintains that the end of this trade war will be determined by a newly negotiated agreement.
Canadian and international businesses are seeking definitive relief from trade disruptions, desiring lasting security, stability, and resilience. The focus should be on renewing and extending the USMCA to ensure the stability and solidity of the three economies. Goldy Hyder, President and CEO of the Canadian Chamber of Commerce, reiterates that the current situation lacks certainty and predictability for North American businesses.
RBC CEO Dave McKay noted that the court decision facilitates the renegotiation of the USMCA in the coming months. However, McKay warns that the decision does not mean a broad agreement with the U.S. on the future of trade has been achieved and that a high level of uncertainty remains.
If the decision is ultimately confirmed, President Trump could reimpose tariffs under different justifications, potentially using other legal levers. The Trump administration has been known to disregard the specifics of the law and process, instead setting a desired outcome and then working backward to find a way to achieve it.
- The ongoing legal debate over the imposition of tariffs by former President Trump, specifically on French goods, could see these duties reinstated, given the precedent and the administration's history of finding potential workarounds for legal justifications.
- As the dispute over tariffs on Canadian goods continues through the courts and into politics, international finance and business are closely watching the situation, particularly in light of the potential impact on general-news headlines, such as the negotiations surrounding the USMCA agreement, which aims to stabilize and solidify the economies of the United States, Canada, and Mexico.
