US Supreme Court Strikes Down Trump Tariffs, USMCA Review Looms for Canada

Celebrations in Canada over the decision by the US Supreme Court to strike down President Donald Trump's global tariffs were both brief and muted.

The high court's decision, which included the "fentanyl" tariffs Trump imposed on Canada, China and Mexico, reinforced Canada's position that the levies were "unjustified", US-Canada Trade Minister Dominic LeBlanc said on X.

But LeBlanc noted the challenges ahead in Ottawa. There is the "critical work" to do in dealing with impacts from levies on steel, aluminium and automobiles, which Trump said will remain.

There is also the upcoming review of the Canada-US-Mexico trade deal, the USMCA, which covers a market of more than 500 million people.

The actual impact of the Supreme Court decision on Canadian tariffs is limited.

Last year, the Trump administration imposed tariffs on Canada and Mexico, with Canada facing 25%, later raised to 35%, with the president arguing both countries must do more to stop migrants and the illegal drug fentanyl reaching the US.

But the vast majority of trade, some 85%, under these "fentanyl" tariffs were already levy-free under a USMCA exemption.

LeBlanc's office declined to comment on Trump's proclamation imposing a 10% global tariff to replace the duties imposed under the International Emergency Economic Powers Act, or IEEPA, which the Supreme Court struck down.

The White House clarified the USMCA exemption will continue under the new 10% tariff.

On Saturday, Trump announced in a Truth Social post that he would be raising the new 10% tariff to 15%.

Beyond the remaining US tariffs on sectors like steel and automobiles, the biggest issue for Canada on its US trade agenda is the USMCA review. This summer, all three partners must decide whether to extend the deal, which was negotiated during Trump's first term.

A North American free trade deal has been in place in some form since the early 1990s, and has led to deeply integrated economies.

In Mexico this week, LeBlanc told reporters that both countries "remain absolutely committed to a trilateral trade agreement".

The Trump administration has been less enthusiastic about saying they want the USMCA renewed, and officials have suggested Washington would prefer separate bilateral deals with Canada and Mexico.

He also said he will meet US Trade Representative Jamieson Greer in the coming weeks to discuss the review talks, which are expected to kick into high gear ahead of a 1 July deadline.

It would be the first sign of formal trade discussions between the US and Canada after talks were halted last October by Trump, who was upset over an anti-tariffs advert sponsored by Canada's province of Ontario that aired on US networks - including during the World Series.

Greer, in an interview on Fox Business earlier this week, said it has been "more challenging" negotiating with Canada than with Mexico.

"They continue to have certain barriers. They refuse to sell US wine and spirits on their shelves.," he said. "There are a variety of issues that they have not addressed and they aren't addressing, and this makes it a big challenge and an obstacle for starting real negotiations with them."

Greer has previously named rules on dairy imports and a Canadian law called the Online Streaming Act, which requires American media companies like Netflix and Spotify to pay to support Canadian content, as other trade irritants.

As the rocky negotiations continue, Canada has sought to build trade ties outside the US, which currently buys about 75% of its exports, with a goal of doubling non-US exports by 2035.

Many Canadian business groups on Friday said that uncertainty remains.

Dennis Darby, CEO of Canadian Manufacturers & Exporters, said businesses are ultimately looking for a successful renewal of the USCMA that "puts an end to recurring trade disruptions".

"Predictable, rules-based trade is essential for manufacturers on both sides of the border," he said.