Canada is welcoming a court ruling that blocked U.S. President Donald Trump’s tariffs, Prime Minister Mark Carney said on Thursday.
“The government welcomes yesterday’s decision by the U.S. Court of International Trade, which is consistent with Canada’s longstanding position that the U.S. IEEPA tariffs were unlawful as well as unjustified,” Carney told the House of Commons.
Carney’s comments come after a three-judge panel blocked some of Trump’s signature policies, including the fentanyl and border security-related tariffs on Canada and Mexico. The court also blocked his global “reciprocal tariffs,” which Trump imposed in April, calling it “Liberation Day.”
“The challenged tariff orders will be vacated and their operation permanently enjoined,” the ruling says.
Carney said a number of tariffs on Canada remain, which the government will continue to fight.
“That said, we recognize that our trading relationship with the United States is still profoundly and adversely threatened and affected by similarly unjustified [Section] 232 tariffs against steel, aluminum and the auto sector, as well as continuing threats of tariffs against other strategic sectors, including lumber, semiconductors and pharmaceuticals,” he said.
He said Canada will continue to establish a new relationship with the U.S.
“It therefore remains the top priority of Canada’s new government to establish a new economic and security relationship with the United States and to strengthen our collaboration with reliable trading partners and allies around the world.”
Bloc Quebec Leader Yves-Francois Blanchet said, “It does give to future Canadian negotiators a better position. It reminds us that when you have to negotiate something with a friend, with your closest friend and ally, you should not start by creating false reasons to impose tariffs.”
Trump declared a national emergency on fentanyl earlier this year to justify the tariffs on Canada and Mexico, saying they were necessary to elicit action from those countries to curb the flow of the deadly opioid.
He later ordered that the United States’ trade deficits with several countries also amount to a national emergency.
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But the court sided with several states and businesses that challenged the tariffs over the economic harm the plaintiffs said was caused, and that only Congress has authority under the U.S. Constitution to approve tariffs.
The White House on Thursday called a trade court ruling against Trump’s tariff policy an example of judicial overreach and said the Supreme Court must rule in Trump’s favor when the case reaches the high court.
Trump used powers under the International Emergency Economic Powers Act (IEEPA) to impose several sets of tariffs on countries across the world.
“What this court order does is it vacates all of the tariffs that the Trump administration imposed using the authority under what’s called the IEEPA,” said Joseph Steinberg, an economist at the University of Toronto.
“All the tariffs that were imposed as a result of the fentanyl emergency are gone,” Steinberg said, adding however that U.S. tariffs on Canadian steel, aluminum and automobiles will remain.
This is because those tariffs were imposed not under IEEPA, but under Section 232 of the Trade Act of 1974, which gives Trump the power to impose tariffs on countries with which the U.S. has trade imbalances, Steinberg said.
John Boscariol, a Toronto-based international trade lawyer, said while the ruling doesn’t take away the threat of all tariffs, it vindicates Canada’s position.
“Canada wasn’t arguing in the court, but it vindicated Canada’s general position that there is no emergency or fentanyl emergency in the United States in terms of imports of fentanyl or other drugs from Canada into the United States,” he said.
However, by no means does this mean that Canada is out of the trade war.
“It could go right up to the Supreme Court of the United States. That’s a process that could take a year, as long as a year or so, and so it’s not going to resolve the issue right away, unfortunately,” Boscariol said.
With the steel and aluminum tariffs still in place, Canadian industry is not breathing easy yet.
Quebec, which accounts for most of Canada’s aluminum production, will still be hard hit by the impacts of the existing tariffs.
“They don’t change tariffs on aluminum, steel and car industry, which is still a problem,” Blanchet said.
The Canadian Chamber of Commerce said the only way out is a new trade deal.
“We will leave this decision to work its way through the United States courts system. Ultimately, the end of this trade war with the U.S. will not come through the courts. It will come when we have negotiated a durable, new agreement on trade that is trusted and respected by all involved,” Candace Laing, president and CEO of the chamber, said.
Canada’s auto industry is also watching the court ruling carefully.
“The tariffs are still in place on auto and steel (under Section 232 powers) so (there is) no impact on Canadian industry unfortunately,” Brian Kingston, president of Canadian Vehicle Manufacturers Association said.
David Adams, president and CEO of Global Automakers of Canada, said the ruling gives them some hope.
“It is gratifying that the American courts have validated what Canadians knew all along, that the grounds for the tariffs were specious – at best,” he said.
“The decision provides hope that the other illegal 232 tariffs, like those on Canadians autos, would also be investigated more thoroughly and likewise struck down on the basis of the existing automotive side letter under the CUSMA.”
— With files from Global’s Sean Boynton
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