Canadian trade experts are closely watching an upcoming U.S. Supreme Court decision on the legality of President Donald Trump’s use of emergency powers to impose sweeping global tariffs — a ruling that could have significant implications for Canada’s economy and cross-border trade.
The court has scheduled Friday as an opinion day, meaning it could issue a decision as early as then. While the court does not disclose in advance which cases it will rule on, the timing has heightened anticipation among businesses and governments on both sides of the border.
At issue is whether Trump had the authority to impose tariffs without congressional approval under the International Emergency Economic Powers Act (IEEPA), a 1977 law traditionally used to impose sanctions or freeze assets of foreign adversaries. If the court strikes down the use of IEEPA for tariffs, duties imposed under that authority would be lifted.
“If the Supreme Court strikes it down, it really does send a big message to the U.S. administration and to President Trump that these tariffs were not permissible,” said William Pellerin, an international trade lawyer with McMillan LLP. He added that such a ruling could discourage further tariff increases or sudden policy shifts.
What it could mean for Canada
For Canada, a ruling against the Trump administration would eliminate tariffs imposed early in the trade dispute, which the U.S. justified on concerns about drug trafficking and irregular migration at the border.
Most goods traded between the two countries are already protected under the Canada–United States–Mexico Agreement (CUSMA). As a result, experts say the immediate economic benefit would be concentrated in sectors not covered by the agreement.
“It doesn’t include things like steel and aluminum that are covered under Section 232,” said Randall Bartlett, deputy chief economist at Desjardins. “The impact will be unambiguously positive for the Canadian economy, but it’s not clear that it will be large in magnitude.”
Pellerin cautioned that even if the court rules against the administration, Trump still has other legal tools at his disposal to impose tariffs. “I think we are going to see a continued use of tariffs, and that’s unfortunate,” he said.
A potential refund challenge
If the IEEPA tariffs are struck down, experts warn the decision could trigger a complex and lengthy refund process. Reuters has estimated that governments worldwide could be owed as much as US$150 billion in repaid duties.
“It’s going to be an administrative nightmare,” said Adam Taylor of NorthStar Public Affairs, noting that manufacturers, retailers and consumers could all seek compensation for tariffs paid under an invalidated policy.
Experts said it is unlikely consumers would see refunds directly, even if duties are repaid. “The best-case scenario would be that manufacturers see some money back,” Taylor said, adding that the U.S. refund system remains difficult to navigate.
Trump watching closely
Trump has publicly weighed in on the pending decision, posting on social media this week that he hopes the Supreme Court will allow the tariffs to stand. He credited the duties with helping drive U.S. financial markets to record highs.
Legal observers note that justices across the ideological spectrum raised concerns during hearings last year about whether the president exceeded his authority under IEEPA. If the court rules in Trump’s favour, experts say it could dramatically expand presidential power.
“If you can use IEEPA to raise tariffs, then you can presumably use it to impose all sorts of taxes,” Taylor said. “That would be a groundbreaking development.”
Broader trade implications
The ruling comes as Canada’s trade relationship with the U.S. is already shifting. According to Statistics Canada, Canadian exports to the U.S. fell 4.1 per cent in October, while exports to non-U.S. markets rose 15.6 per cent to a record high.
Economists caution against reading too much into a single month of data, but say the figures suggest Canadian businesses are gradually diversifying away from their largest trading partner.
“As long as there are barriers to trade, trade will fall over time,” Taylor said.
CUSMA review ahead
The decision also comes just weeks before Canada begins formal talks with the U.S. on the scheduled review of CUSMA. Canada-U.S. Trade Minister Dominic LeBlanc is expected to be in Washington later this month for those discussions.
In a statement, LeBlanc’s office said Canada will “let the judicial process follow its course” on the Supreme Court case, while continuing preparations for the trade agreement review. Canadian officials declined to say whether federal representatives will be in Washington for the ruling, noting that outgoing ambassador Kirsten Hillman and her team are monitoring developments.
Whatever the outcome, experts say the court’s decision could reshape the trade landscape at a pivotal moment for Canada-U.S. economic relations.