WASHINGTON – Donald Trump’s plan to realign global trade faces its latest legal barrier this week in a federal appeals court — and Canada is bracing for the U.S. president to follow through on his threat to impose higher tariffs.
While Trump set an Aug. 1 deadline for countries to make trade deals with the United States, the president’s ultimatum has so far resulted in only a handful of frameworks for trade agreements.
Deals have been announced for Japan, Vietnam, Indonesia, the Philippines and the United Kingdom — but Trump indicated last week that an agreement with Canada is far from complete.
“We don’t have a deal with Canada, we haven’t been focused on it,” Trump told reporters Friday.
Trump sent a letter to Prime Minister Mark Carney threatening to impose 35 per cent tariffs if Canada doesn’t make a trade deal by the deadline. The White House has said those duties would not apply to goods compliant with the Canada-U.S.-Mexico Agreement on trade.
Canadian officials have also downplayed expectations of a new economic and security agreement materializing by Friday.
“We’ll use all the time that’s necessary,” Carney said last week.
Countries around the world will also be watching as Trump’s use of a national security statute to hit nations with tariffs faces scrutiny in the United States Court of Appeals for the Federal Circuit.
The U.S. Court of International Trade ruled in May that Trump does not have the authority to wield tariffs on nearly every country through the use of the International Economic Emergency Powers Act of 1977.
The act, usually referred to by the acronym IEEPA, gives the U.S. president authority to control economic transactions after declaring an emergency. No previous president had ever used it for tariffs and the U.S. Constitution gives power over taxes and tariffs to Congress.
The Trump administration quickly appealed the lower court’s ruling on the so-called “Liberation Day” and fentanyl-related tariffs and arguments are set to be heard in the appeal court on Thursday.
The hearing combines two different cases that were pushing against Trump’s tariffs. One involves five American small businesses arguing specifically against Trump’s worldwide tariffs, and the other came from 12 states pushing back on both the “Liberation Day” duties and the fentanyl-related tariffs.
George Mason University law professor Ilya Somin called Trump’s tariff actions a “massive power grab.” Somin, along with the Liberty Justice Center, is representing the American small businesses.
“We are hopeful — we can’t know for sure obviously — we are hopeful that we will continue to prevail in court,” Somin said.
Somin said they are arguing that IEEPA does not “give the president the power to impose any tariff he wants, on any nation, for any reason, for as long as he wants, whenever he feels like it.”
He added that “the law also says there must be an emergency and an unusual and extraordinary threat to American security or the economy” — and neither the flow of fentanyl from Canada nor a trade deficit meet that definition.
U.S. government data shows a minuscule volume of fentanyl is seized at the northern border.
The White House has said the Trump administration is legally using powers granted to the executive branch by the Constitution and Congress to address America’s “national emergencies of persistent goods trade deficits and drug trafficking.”
There have been 18 amicus briefs — a legal submission from a group that’s not party to the action — filed in support of the small businesses and states pushing against Trump’s tariffs. Two were filed in support of the Trump administration’s actions.
Brent Skorup, a legal fellow at the Washington-based Cato Institute, said the Trump administration is taking a vague statute and claiming powers never deployed by a president before.
The Cato Institute submitted a brief that argued “the Constitution specifies that Congress has the power to set tariffs and duties.” Skorup said there are serious issues with the Trump administration’s interpretation of IEEPA.
“We don’t want power consolidated into a single king or president,” he said.
It’s expected the appeals court will expedite its ruling. Even if it rules against the duties, however, they may not be immediately lifted.
White House Press Secretary Karoline Leavitt has said the Supreme Court should “put an end to this.”
There are at least eight lawsuits challenging the tariffs.
Canada is also being hit with tariffs on steel, aluminum and automobiles. Trump used different powers under the Trade Expansion Act of 1962 to enact those duties.
This report by The Canadian Press was first published July 27, 2025.
