Section 232 tariffs keep key Canadian sectors at risk despite Supreme Court curb on IEEPA
Canadian investors hoping the latest US Supreme Court ruling would end tariff turmoil are getting something else instead: a narrower toolset for US President Donald Trump, but no real end to risk.
The court ruled 6–3 that the International Emergency Economic Powers Act (IEEPA) “does not authorize the president to impose tariffs,” striking down Trump’s use of emergency powers to levy broad duties on imports from Canada, Mexico and other countries, as BNN Bloomberg.
Trump had invoked IEEPA after declaring an emergency over fentanyl at the US–Canada border and used it to hit Canadian goods outside the Canada–United States–Mexico Agreement (CUSMA) with tariffs that rose from 25 percent to 35 percent.
All those IEEPA‑based levies are now void.
Trump called the ruling “deeply disappointing” and said he was ashamed of the six justices who ruled against him, even though Neil Gorsuch and Amy Coney Barrett – both appointed in his first administration – joined the majority.
He had previously warned of catastrophic consequences for US national security, foreign policy and the American economy if the court went this way, according to the Canadian Press via BNN Bloomberg.
Instead of backing off tariffs, Trump has pivoted.
He announced a “global tariff” under Section 122 of the US Trade Act, first at 10 percent and then at 15 percent after what he called a “thorough, detailed, and complete review” of the ruling.
Section 122 allows temporary tariffs of up to 15 percent for a maximum of 150 days unless Congress approves an extension, CBC News explains.
A White House fact sheet said the new tariff will not apply to CUSMA‑compliant goods and will not stack on top of existing sector‑specific tariffs, according to BNN Bloomberg.
US Treasury Secretary Scott Bessent told CNN’s State of the Union that this global tariff is “likely a five‑month bridge” while the administration reviews Section 232 and Section 301 tariffs, and that it is “highly likely” those tariffs will rise while Section 122 duties could disappear after five months.
For Canada, the more durable pressure still comes from Section 232 of the US Trade Expansion Act. Trump has used that law to impose tariffs on Canadian steel, aluminum, copper, some automotive parts, lumber and other wood products, citing national security, BNN Bloomberg.
Steel and aluminum tariffs started at 25 percent and climbed to 50 percent last June, while a 10 percent tariff on softwood lumber sits on top of countervailing and anti‑dumping duties that the US Commerce Department boosted from 14.5 percent to 35 percent earlier this year.
Medium‑ and heavy‑duty trucks face a 25 percent tariff, and finished automobiles are hit with a 25 percent tariff as well, although CUSMA exempts the North American content.
Trade analyst Carlo Dade of the University of Calgary’s School of Public Policy said the court decision shifts the risk rather than removing it.
Under IEEPA, Trump could hit “all Canadian exports at once”; now “a national problem is now a problem that varies by province,” he told BNN Bloomberg.
He called Section 232 the “next best thing” for Trump and argued the president will not “give up tariffs” because they bring in “too much money” and serve as “too good a lever.”
Dade said Section 232 requires a Department of Commerce investigation into national security risks that typically runs four to 10 months, creating a more structured process and some advance warning.
His analysis suggests Ontario has 58 percent of its exports to the US under existing or ongoing Section 232 investigations, Quebec 55 percent, Nova Scotia 44 percent, Manitoba 43 percent and British Columbia 35 percent, with those five provinces accounting for roughly 95 percent of Canada’s exports in sectors already targeted or under review.
CUSMA still provides the key buffer.
Matthew Holmes, executive vice‑president and chief of public policy at the Canadian Chamber of Commerce, said on CTV News Channel that “the good news for Canada” is that most trade into the US remains tariff‑free under CUSMA, as BNN Bloomberg reports.
The New York Times says Royal Bank of Canada estimates 89 percent of Canadian exports to the US last month went in tariff‑free, and notes Prime Minister Mark Carney has put the effective tariff rate on Canadian goods at 5.5 percent, with some estimates as low as 3.1 percent.
Even so, the upside from the ruling is limited.
Former Canadian ambassador to the US Frank McKenna told CTV News Channel that “the rest of the world gains more from this than Canada” because CUSMA was already shielding most Canadian exports, as reported by BNN Bloomberg.
Former foreign affairs minister Peter MacKay called the ruling a “major blow to the president” and said there is “growing resistance” to Trump’s punitive tariffs inside his own party, adding that “the cracks are starting to form” in the Republican Party as Canada heads into CUSMA talks.
Ottawa’s message is cautious.
Dominic LeBlanc, Canada’s minister responsible for US trade relations, said the IEEPA decision “reinforces Canada’s position” that those tariffs were “unjustified,” but stressed that “critical work lies ahead” to support industries still hit by Section 232.
He told CBC News that sectoral tariffs under other US laws are what really hurt the Canadian economy and said the situation underlines the need to diversify trade.
On the economic impact, Desjardins deputy chief economist Randall Bartlett said he expected the ruling to be “unambiguously positive for the Canadian economy” but not necessarily large in magnitude, according to BNN Bloomberg.
Experts told CTV News that the US may need to refund some IEEPA‑based tariffs, with Reuters estimating potential refunds of up to US$150bn, but the ruling does not decide whether companies will actually receive money back.
Holmes warned Canadian businesses not to view the decision as a clean win.
He said firms must stay compliant with CUSMA if they trade with the US or Mexico and “really” talk about diversification, because while “the form” of tariffs “changes by the day,” the “ultimate direction” of US policy is clear, as BNN Bloomberg reports.
