Canada Faces New, Unpredictable Trump Tools After Tariff Ruling

Thomas Seal

Sat, February 21, 2026 at 4:25 AM GMT+9 4 min read

In this article:

ALI=F

+1.09%

(Bloomberg) – Canadian businesses can’t relax in light of the US Supreme Court decision striking down President Donald Trump’s emergency tariffs, experts said — the ruling simply moves his America First trade policy into a volatile new phase.

Trump’s response to the ruling raised the possibility that the tariff rate on some Canadian products could, in fact, go up.

Most Read from Bloomberg

Private Prisons Face an Existential Threat Under Trump's New Detention Plan

A Shaker Revival Points to Something Deeper Than a Trad Obsession

How Zoning Won

White House Ballroom Design Approved by Trump Commission After One Hearing

Canada and Mexico were among Trump’s first tariff targets using the International Emergency Economic Powers Act a year ago. The high court ruled in a 6 to 3 decision that the president exceeded his authority.

Following the decision, Trump said he’ll sign an order imposing a 10% global tariff using Section 122 of the Trade Act of 1974, which allows him to unilaterally levy tariffs as high as 15% for 150 days. He said the administration will also initiate investigations under Section 301, which takes longer to apply but which the US is already using against China.

Trump’s IEEPA tariffs had less bite against Canada and Mexico because the administration carved out an exemption for goods shipped under the rules of the US-Mexico-Canada Agreement. That brought the effective US tariff rate on Canadian goods to 3.7%, according to estimates from Desjardins economist Royce Mendes.

It wasn’t clear from Trump’s comments whether a similar exemption will apply to the 10% tariff under Section 122. If it does not, some Canadian exporters may actually wind up worse off despite the removal of IEEPA levies.

The main duty hitting Canadian companies today — Section 232 taxes against products such as autos, steel, aluminum and lumber — is unaffected by the court’s ruling.

The quick move from Trump shows he’s going to employ other tools. Those may go beyond conventional trade controls, according to Barry Appleton, a trade lawyer who has advised governments including the Canadian provinces of Ontario and British Columbia.

“The president didn’t lose his leverage, he just lost a lever,” Appleton said by phone. The dispute is “about leverage, it’s not about law.”

“At least with IEEPA, which was a constitutionally defective tool, we knew what was coming from the president, and we also understood that eventually it would be struck down.”

Now, Appleton said, “we’re going to see weaponizations of a variety of different tools that were never, ever conceived of in that way, utilized in that fashion, because the president does not want to go to Congress.”

Story Continues  

For instance, earlier this month Trump threatened to prevent the opening of a new bridge connecting Michigan with Ontario, connecting it to a demand for US equity in the project while airing grievances about Canada, including its dairy trade controls. The state of Michigan jointly owns the new bridge.

The USMCA deal itself comes up for review this year, and Trump has privately asked aides why he needs to keep the pact going, Bloomberg reported.

“Once again, another layer of uncertainty,” Dominic LeBlanc, Canada’s minister for trade relations with the US, said on Radio-Canada.

“The reality for business is going to be that we’re not seeing the end of this never-ending tariff story,” Matthew Holmes, the Canadian Chamber of Commerce’s chief of public policy, said on Canadian Broadcasting Corp.

The administration will continue to pursue its objective, probably with “more and more blunt instruments,” Holmes said.

The court ruling is an “important victory in the fight against President Trump’s tariffs but the battle isn’t over yet,” said Doug Ford, premier of Ontario, Canada’s most populous province. “We need to watch how the White House reacts” and fight the Section 232 tariffs, he said.

Canadian politicians have tried to improve their negotiating position with domestic reforms to bolster the country’s economy. Prime Minister Mark Carney has started an agency to fast-track major projects and legislated to dissolve interprovincial trading barriers.

That’s not enough, his main opponent has said.

“The truth is no one can control what President Trump will say or do and so we must instead focus on what we can control,” Conservative Leader Pierre Poilievre said on X. “We must unblock our energy and minerals, unleash our economy, and bolster our military and self-reliance for leverage to fight for tariff-free trade with the US.”

–With assistance from Melissa Shin, Christine Dobby, Mathieu Dion and Laura Dhillon Kane.

Most Read from Bloomberg Businessweek

Supreme Court’s Tariff Ruling Is Secretly a Gift to Trump

How Jerome Powell Is Trump-Proofing the Fed

The Georgia Pastor Accused of Defrauding the VA of Nearly $24 Million

Millennials Melted Their Brains With Screens. Their Kids Want None of It

Kids Want Cheap Stuff, and Lots of It. Five Below Delivers

©2026 Bloomberg L.P.

Terms and Privacy Policy

Privacy Dashboard

More Info