As U.S. customs officials get set to stop collecting some of Donald Trump’s tariffs after they were ruled illegal last week, Canadian business leaders and trade experts are breathing a small sigh of relief as it became clear new “global” duties wouldn’t apply to goods currently exempt under CUSMA.
Trump announced the new global 10 per cent tariff Friday afternoon, just hours after the U.S. Supreme Court ruled he had no authority to impose sweeping tariffs under the International Economic Emergency Powers Act. By Saturday, Trump raised it to 15 per cent.
Full legal regulations announced late Friday, however, clarified the new tariffs won’t apply to goods exempt under the Canada-US-Mexico Agreement on trade, said international trade lawyer John Boscariol.
“It’s now clear that if a company’s goods are exempt under CUSMA, that they’ll still be entering the U.S. without any tariff,” said Boscariol, head of the international trade law group at McCarthy Tetrault.
That means the vast majority of Canadian exports to the U.S. are still heading south without any duty or tariff being applied, he noted. For companies whose goods didn’t qualify — Friday was also good news, Boscariol added. That’s because Canadian companies had been facing a 35 per cent tariff under IEEPA for non-CUSMA-compliant exports to the U.S.
“Going from 35 down to 15 is definitely a good thing,” said Boscariol.
Among the regulations released late Friday was one repealing the IEEPA tariffs, and ordering the U.S. Customs and Border Patrol to stop collecting them. CPB subsequently announced they’ll stop collecting them as of Tuesday.
While Trump fumed at the Supreme Court decision and individual justices, the ruling and the late Friday release of the formal regulations are good news not just for the actual tariff being faced, said Boscariol.
“For the first time, it probably gave us a bit of comfort that the rule of law has prevailed. In normal times that wouldn’t be a big deal, but right now, it’s meaningful,” said Boscariol.
Keeping the CUSMA exemptions in place is another promising sign, said a senior official with the Canadian Chamber of Commerce. With the continental trade agreement set for a formal review in July.
“We take it as an incredibly positive sign that they continue to exempt CUSMA-compliant products, and recognize the existing trade relationship on a continental basis,” said Matthew Holmes, the Chamber’s chief of public policy.
Stock and bond markets, Holmes said, seem to be indicating some optimism that CUSMA will survive the review largely intact, despite Trump’s repeated public musings that it’s no longer needed.
“I think the markets have priced in that CUSMA continues as well,” said Holmes. “If there’s a fear that it’s going to degenerate into a situation like we saw in Greenland, though, I think the markets would react badly.
Still, Holmes noted, Trump has already indicated he’ll be expanding his use of sector-specific tariffs using other legislation, which he’s already hammered some parts of the Canadian economy with, including steel, aluminum and softwood lumber.
“In coming days, we could see other sectors getting pulled into the sector-specific tariffs,” Holmes said.
