US-Canada Trade War Outlives Court Ruling Against Its First Tariffs
The White House revised the list of Canadian goods facing 50% tariffs Oct. 23, its latest move in a trade war that outlasted a Supreme Court ruling against its first tariffs. Selected Canadian wines, beers and spirits had been barred from the United States since Sept. 29. President Donald Trump said Oct. 25 that the two countries were close to a deal, though neither government had announced a return to formal talks.
The Supreme Court ruled 6-3 on Feb. 20 that a federal emergency-powers law did not authorize tariffs. That law had underpinned the 25% tariff on most Canadian goods and 10% tariff on Canadian energy that took effect in March 2025, after Trump declared a national emergency over illicit drugs crossing the northern border, according to the Federal Register. Trump signed an executive order the same day as the ruling ending collection of those duties, but the decision left tariffs imposed under other trade laws in place. National security tariffs on Canadian steel, aluminum, copper, autos and lumber remained in force, according to Canada's Trade Commissioner Service. The ruling limited the president's authority to impose tariffs under emergency powers but did not affect duties authorized by other federal trade laws.
The original emergency tariffs had also faced opposition in Congress. Republican Sen. Rand Paul of Kentucky joined Democrats in sponsoring a measure to end the emergency declaration behind the original fentanyl-linked tariffs. The Senate passed it 50-46 in October 2025, and the House passed similar legislation in February 2026, the sponsors said. Sen. Amy Klobuchar, D-Minn., said Sept. 8 that the newest tariffs would make it harder for Minnesota businesses and farmers to compete. The emergency tariffs those lawmakers targeted fell anyway when the Supreme Court ruled against them.
Trump replaced the struck-down duties with a temporary 10% global surcharge, which his Feb. 20 proclamation set to expire July 24. He ordered the 50% duties on Canada four days earlier, on July 20. The White House said they targeted Canada's 25% surtax on U.S. vehicles, its tariff-rate quotas on American dairy and provincial restrictions on U.S. liquor. U.S. Trade Representative Jamieson Greer said in a July 20 statement that Canada kept retaliating against U.S. efforts to rebalance trade. The new duties allowed the administration to continue pressing Canada over market access despite losing the legal basis for the original tariffs.
The dispute centered partly on longstanding disagreements over how freely American products could enter the Canadian market. The National Milk Producers Federation said Shawna Morris, its executive vice president for trade policy and global affairs, told U.S. trade officials at a Dec. 3, 2025, hearing that Canada manipulated its dairy tariff-rate quotas, which determine how much American dairy can enter Canada at lower tariff rates. Trump's July dairy proclamation targeted that system, focusing on Canada's treatment of U.S. cheese. Greer's office also cited Canada's decision to give European Union dairy better access to its market. Global Affairs Canada said in a 2025 briefing note that the government would "vigorously defend" its supply management system for dairy. Under a tariff-rate quota, imports within an established limit face lower duties, while shipments exceeding that limit are subject to higher tariffs.
Prime Minister Mark Carney suspended negotiations Aug. 21, saying in a statement that last-minute U.S. changes had left unfair and uneconomic terms. Carney said his government recognized early "that America has changed, and that we will not return to our old relationship," and he vowed to match the U.S. tariffs dollar for dollar. The 50% duties took effect Aug. 22, the date set in a White House proclamation that had delayed them from Aug. 19. The White House said Aug. 25 that Canada had rejected favorable U.S. offers on steel, aluminum, autos and lumber in favor of retaliation. Its release quoted Trump calling Canada "easily the most difficult and unreasonable" and adding, "They feel entitled, but they are not a State and will be entitled no longer!"
With negotiations suspended, the dispute escalated into a series of retaliatory trade measures. Canada imposed surtaxes of 15%, 25% and 50% Sept. 8 on about 27.6 billion Canadian dollars of U.S. goods, according to Department of Finance Canada, a sum a White House fact sheet put at about $20 billion. Trump signed proclamations the same day barring selected Canadian motorcycles, whey, molasses, beer, nonalcoholic beer, wine and spirits starting Sept. 29, according to the fact sheet. Greer said in a Sept. 8 statement that the bans followed naturally from what he called Canada's discriminatory treatment of American exports. Unlike tariffs, which allow imports to continue after duties are paid, the bans prohibited the covered products from entering the U.S. market.
The Oct. 23 proclamation, effective Oct. 30, removed plywood sheets, some paper products, certain machinery and refrigeration equipment, and packing crates from the 50% duties while adding certain valves, carpets and waste products, according to a White House fact sheet. Trump imposed those duties in July under a 1930 trade law that no president had expressly used to impose tariffs before, according to the Congressional Research Service, and the White House said they applied even to goods that qualified for duty-free treatment under the U.S.-Mexico-Canada Agreement. The fact sheet said the changes were meant to keep pressing Canada over what the administration called discriminatory treatment of U.S. commerce. U.S. Customs and Border Protection collected the duties from American importers at the border. The revised lists meant some importers would receive relief while others would face new costs when the changes took effect.
The tariffs also affected Canadian businesses that depended on sales to the United States. The Canadian Federation of Independent Business, which represents 103,000 companies, reported from member surveys that the 50% U.S. tariff directly hit 40% of small Canadian exporters. "The new U.S. 50% tariff hits even the smallest home-based jewelry maker," federation President Dan Kelly said Aug. 25, criticizing relief programs that excluded many small firms. That day, Ottawa announced a support package worth 7.5 billion Canadian dollars, including 2 billion Canadian dollars for a Canada Strong Diversification Fund, according to Department of Finance Canada. The assistance was intended to help businesses manage the tariffs and develop markets outside the United States.
Ontario's automotive industry was particularly exposed because of its dependence on U.S. trade. Motor vehicles and parts made up 22.6% of Ontario's international exports in 2025, and the United States bought 71.7% of the province's international exports, according to the Ontario government. "We can't trade good jobs for a bad deal that would cement unjust, industry-killing tariffs," Lana Payne, national president of Unifor, a union that represents Canadian autoworkers, said in an Aug. 22 statement. Payne backed the counter-tariffs in an Aug. 25 statement and urged Ottawa to steer government purchasing toward Canadian goods. "Workers are being asked to absorb the economic shock of a trade war they did not start and cannot control," Unifor Quebec director Daniel Cloutier said in the same statement. Automakers depend on cross-border supply chains in which components can move between Canada and the United States before vehicles are completed.
The restrictions on alcoholic beverages created problems for producers on both sides of the border. U.S. spirits exports to Canada fell more than 70% year over year from March through December 2025, after Canadian provinces pulled American liquor from store shelves, according to the Distilled Spirits Council of the United States. "For more than a year and a half, American distillers have shouldered the brunt of this trade dispute," council President and CEO Chris Swonger said Sept. 9. Spirits Canada said Sept. 29 that the U.S. ban added uncertainty for an industry that sent $948.6 million in spirits, about 93% of its export value, to the United States in 2025.
Beyond the immediate tariffs, the dispute also raised questions about the future of the trade agreement governing commerce among the United States, Canada and Mexico. Greer said July 1 that the United States would not renew the pact in its current form, according to the Congressional Research Service, a decision that required annual reviews of the pact. Greer said the agreement remained in force, but the White House said the 50% duties applied regardless of its duty-free treatment for the products they covered. The U.S. Trade Representative's office opened public comments Oct. 2 on a 2027 joint review, with submissions due Jan. 12, 2027. The review provides an opportunity to address disagreements over the agreement, although tariffs imposed under separate U.S. laws would not automatically disappear.
Canadian public opinion suggested that Ottawa faced little pressure to make major concessions. The Angus Reid Institute surveyed 1,498 Canadians Sept. 3-4 and found 73% wanted Ottawa to refuse difficult concessions even if relations with Washington worsened. Even the prospect of losing their own job left 42% in favor of staying the course. A plurality, 41%, favored waiting until after the Nov. 3 U.S. midterm elections to resume negotiations. The online survey measured stated resolve, not how people would behave if prices rose or jobs disappeared.
In a televised interview in Michigan on Oct. 25, Trump said a deal could come within a couple of months, possibly before the election. "In the case of Canada, we'll have a fair deal for our country finally after 50 years of really bad trade practices," he said. The Supreme Court struck down the legal basis for the trade war's first tariffs, but duties, import bans and retaliation under other laws kept the fight going.
Alexander Fernandez, Journalist
Life News Today
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