How the U.S. Supreme Court's tariff decision could impact Canada

The hearing will combine two cases: one pushing back on what are usually referred to as Trump’s reciprocal tariffs and the other which also argues against the fentanyl-related duties on Canada, Mexico and China. 

It will not impact Trump’s expanding use of tariffs under Section 232 of the Trade Expansion Act of 1962 that is already hammering Canada’s steel, aluminum, automobile, lumber and copper industries.

Prime Minister Mark Carney has repeatedly cautioned Canadians that it’s likely some level of tariff will remain even as his Liberal government negotiates an agreement with the Trump administration.

While there appears to be a worldwide acceptance that Trump has fundamentally changed global trade, nations, including Canada, will be watching closely to see if the president’s favourite tariff tool will survive judicial challenge.

Lawyers representing the businesses say they will argue in America’s top court that the act, usually referred to by the acronym IEEPA, was never intended to give the president wide-ranging powers over duties. 

The U.S. Constitution gives the power of taxes and tariffs to Congress. IEEPA does give the U.S. president authority to control economic transactions after declaring an emergency but it doesn’t include the word “tariff” or any synonyms. 

Lawyers say they will also argue that even if the Supreme Court rules IEEPA can be used for tariffs, the statute requires it must be in response to an unusual and extraordinary threat. They say trade deficits — which Trump used as the basis for his “Liberation Day” duties — do not amount to an extraordinary threat.

But the court could issue a split ruling because the fentanyl-related tariffs are based on a slightly different legal theory, said Stanford Law School professor Michael McConnell.

The Supreme Court could uphold Trump’s fentanyl emergency and therefore the economywide duties on Canada.

Carlo Dade, director of international policy and the New North America Initiative at the University of Calgary’s School of Public Policy, said if the court strikes down the reciprocal tariffs but upholds the fentanyl duties, Canada will be in a difficult position globally. 

“If the fentanyl tariffs stay, then we’re stuck with the anytime, anywhere, anyhow tariffs,” Dade said. “And that … weakens us uniquely globally.”

Trump hit Canada with 25 per cent economywide tariffs in March by declaring an emergency at the northern border related to the flow of deadly fentanyl. These tariffs don’t apply to goods compliant under the Canada-U.S-Mexico Agreement on trade, known as CUSMA.

U.S government data shows a minuscule volume of fentanyl is seized at the northern border compared to the United States border with Mexico. Ottawa, however, took action to appease Trump’s concerns — appointing a “Fentanyl Czar,” introducing border security legislation and putting more helicopters and drones in the air.

Negotiations with the Trump administration continued to be rocky and the president boosted duties on Canada to 35 per cent in August, claiming Ottawa failed to co-operate in curbing the flow of fentanyl. 

Carney seemed to steady bilateral relations during a White House visit in October. The prime minister has said the CUSMA carveout for the fentanyl-related duties puts Canada in a more desirable position than most other nations and Canadian officials were focused on lessening the impact of Trump’s sector-specific duties. 

Carney has said there was progress in trade talks but an Ontario-sponsored advertisement quoting former president Ronald Reagan once again turned Trump’s ire north. The president terminated trade talks, alleging that Canada was trying to influence the Supreme Court ahead of this week’s hearing.

Dade said no matter the outcome of the hearing, Canada will be facing tariffs.

If the fentanyl-related duties do fall, Dade said, it will change the crisis in Canada caused by Trump’s tariffs. Currently, when Trump changes his mind on tariffs it can impact the entire Canadian economy and “everyone is scrambling,” Dade said. 

“If you move to a 232 regime, then the president has to pick a category. He has to file for an investigation,” Dade said. “The investigation has to go through.”

Dade also noted that Trump has other tools he can use to impose economywide duties on other countries, but those statutes are more restrained and limited. Either way, he said Canada has to be prepared.

“The Americans are attempting to rewrite global trade rules,” Dade said. “We’re suffering, everyone else is suffering, but we’re gonna have to come up with something else.”

This report by The Canadian Press was first published Nov. 2, 2025.