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Tariffs and Trade Resource Centre

Discussions on trade policy have spilled over Canada-U.S.-Mexico borders to involve trade partners around the world. With sudden shifts by the new U.S. administration, the continuing threat of new tariffs and trade barriers creates growing uncertainty in the market. These tariffs also provide a strong motivation for businesses to reorient their trade and supply chains to mitigate risk and remain globally competitive.

What would tariffs mean for Canadian exports, sector by sector? What’s the potential impact of retaliatory measures? How would reciprocal tariffs impact Canada-U.S. relations — and your business? How and where can you reposition inbound and outbound trade to other markets?

Keep an eye on this page as BLG’s international trade lawyers bring you the latest on the tariff issue, and how your company can adapt.

Canada US

The inside track on U.S. tariffs and Canadian trade

From Rambod Behboodi 


July 17, 2025 – New tariff announcements by Canada: What do they mean, and what do they really mean?

There is a theory in certain circles in Washington, D.C. that public pronouncements and positioning in the midst of ongoing trade (and security) negotiations are part of an overall strategy: concessions by the other side are made public and “pocketed"; back to the negotiating table, further concessions are demanded in private, only to be made public and pocketed … Rinse and repeat, until at some point a deal is announced. Before, of course, the deal is renounced and denounced, to be renegotiated and agreed and annulled – always with the intention of maintaining a position of “strategic uncertaintyvoire imbalance to end up with a win-lose solution at the end of the day.

There is no denying the fact of ongoing uncertainty. Whether it is part of a strategy and whether the strategy, such as it is, will deliver the desired win big-lose crushingly outcome is a different matter.

Time will tell.

In the case of Canada – we are now five days, or two weeks, from various deadlines. We will know where we are when we get there, but perhaps not even then. (See CUSMA.)

Be that as it may, although the United States has been negotiating in the public for some time, the government of Canada – not unreasonably – has been reluctant to get into the fray. There are good reasons for discretion in trade and diplomatic negotiations, not the least of which is that a deal must always be assessed as a whole and not – never, as in, not ever – in the light of specific concessions in ongoing negotiations that, pocketed or not, may well not find themselves in the final text. Which final text is in any event always open to further clarification through side letters and protocols and schedules and further agreements.

(In one set of negotiations, a small concession here gave rise to big issues there, which we eventually resolved through a side text over yonder. All good in the end, but you wouldn't know it in the middle.) Which is also why Canada has been reluctant to negotiate in the public. Or had been, until yesterday.

In the last two days, the Prime Minister has made two announcements, both significant, but perhaps not momentous.

To tariff or not to tariff, is that the deal?

In an interview yesterday, the Prime Minister noted that it was not clear that the United States would be willing to give up all of its tariffs in any agreement. Some outlets characterized this as a “concession" of sorts. Perhaps.

Or, perhaps not.

Let's say the United States keeps the “fentanyl" tariff framework (despite U.S. court rulings on that) and removes the remaining sectoral tariffs. Let's even “concede" that the United States would continue to apply 35 per cent – not 25 per cent, but the higher, 35 per cent – tariffs on exports from Canada of goods that are not USMCA-compliant. That is,  export of goods that do not conform with the rules of origin requirements of the trilateral Canada-United States-Mexico free trade Agreement (CUSMA or the USMCA). Is that bad?

It's complicated.

Only Canadian-origin goods – but not other goods originating from other countries and exported from Canada to the United States, or goods that a producer cannot establish are of Canadian origin - are entitled to tariff-free entry into the United States under the CUSMA. Because the United States used to have a largely free-trade framework, compliance with the rules of origin has not been that big of a deal: whether a good came from Canada or Syldavia did not matter, because there would be no tariff on it at all.

Impose differential tariffs, and the calculation changes.

Now, in the above scenario, if you keep USMCA-compliant as a limitation, it would mean that the United States could reasonably boast a big, huge, win of 35% tariffs on goods entering from Canada. But, equally, Canada could – much more quietly – consider itself lucky that the core of the CUSMA – no tariffs on Canadian-origin goods – has been maintained.

This is not without cost or disruption. But it does mean that a final outcome that has some sort of tariffs involved is not the end of the world for Canada. In fact, it might even be a really good deal. If the United States keeps to the bargain.

I won't speculate why the Prime Minister started talking publicly about the potential final outcome. But, like a plume of white smoke coming out of the Sistine Chapel, it might be a hint that habemus pactum.

Steel city blues

Optics and rhetoric aside, as noted above, we should assess the final agreement only when it comes out. A successful agreement will be one that removes the existing tariffs (and the threat of future tariffs) on Canadian-origin or USMCA-compliant steel (and aluminum, and copper, and autos).

Secretary Lutnick's latest comments might give you the impression that nothing of the sort will come to pass. Then again, Prime Minister Carney's statement at the beginning of his mandate – that he will be looking for a trade and security agreement with the United States – suggests that Canada has been playing the long game in the negotiations. (“Of course the U.S. can fight a war without American steel; it can fight multiple wars, all over the globe, with Canadian steel and aluminum and copper." Though you will not find this in any Canadian public statement.) This is speculation; we'll find out soon enough.

In the meantime, the steel industry needs help.

I started my trade career defending Canadian steel producers. I had the privilege last December to return to the sector in my appearance before the House Standing Committee on International Trade. The Canadian steel sector is heavily integrated into the U.S. economy, and it does not have an immediate alternative market to turn to. The reasons for this are global and complex, but the key point to bear in mind is that access to the U.S. market is essential for the Canadian steel sector, and no amount of internal trade will replace that in the short to medium term.

That access is threatened. Pending a negotiated resolution, the Prime Minister has announced a package of new steel measures to support the industry:

  1. Canada will be “tightening" its “tariff rate quote" for steel imports. This is essentially a two-tiered tariff framework: goods enter at a certain tariff up to a certain quantity (“within quota"), and then tariffs will go up above that “quota". The higher tariffs are usually set at a “prohibitive" level and not meant to be collected – the idea is, only the within quota steel enters the Canadian market. In this respect, there are similarities to Canada's supply managed sectors.
  2. Canada will put in place a series of support measures for the sector and its workers.
  3. Canada will “change federal procurement processes to require companies contracting with the federal government to source steel from Canadian companies."

These measures, though without a doubt helpful to the sector, are not long-term fixes. For that, we need the white plume.


July 11, 2025 –The 35 per cent solution

In a standard form letter with which we have become quite familiar, the President of the United States advised Prime Minister Carney of his intention to impose 35 per cent tariffs on Canada as of August 1.

There was mention of fentanyl, but given that that particular pretext has already been adjudicated and found wanting, we can set it aside. And because last week the government rescinded the Digital Services Tax to allow negotiations to go forward to meet an expected deadline of July 21, we know that the DST is not the issue either. President Trump's Secretary of Commerce has already indicated that a “zero-for-zero" deal is not on the table – because of undefined nontariff barriers or other equally undefined unfairness, some say, or because large section of the US electorate remains convinced, still, that foreigners and not US consumers pay the tariffs. So “grand strategy to reduce tariff barriers" is not the issue either.

What does this mean? For now, nothing.

Products that are compliant with the trilateral trade agreement's rules of origin will continue to enter the US tariff free. That is, those products that are not subject to special sectoral tariffs. And those products remain subject to the special sectoral tariffs, and not the additional proposed tariffs. So no change there.

Does the date matter? Probably not.

Canada and the United States had already agreed to try to come up with a deal before July 21. If that happens, August 1 won't matter. If it does not, August 1 is an extension. Either way, the letter is less threat than performance, and that, likely for a domestic audience.

As the dormouse said, 'Keep your head.'


June 5, 2025 – No unbound authority: Congress, the U.S. administration, the courts, and the power to tax

Last week, the United States Court of International Trade (CIT) released its highly anticipated ruling on the legality of two sets of tariffs imposed by the President of the United States under the International Emergency Powers Act (IEEPA). The court found that:

The IEEPA does not authorise any of the Worldwide, Retaliatory, or Trafficking Tariff Orders. The Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs. The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders.

In its summary judgment, the court also found that under the U.S. Constitution, no “narrowly tailored relief” was possible: “if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all”. The injunction affected only a subset of tariffs currently in force: for example, those imposed on autos or steel under s. 232 of the Trade Expansion Act 1962 continue in force. The U.S. government appealed the decision, and the U.S. Court of Appeals for the Federal Circuit promptly issued a “temporary” administrative stay of the injunction pending consideration of substantive motions.

How solid is the ruling? From an outsider’s perspective, quite solid on first read. To make sure that I had got the gist of it right, I looked at the critiques of the judgment; they did not disappoint. In fact, the ink was not yet dry on the ruling before John Yoo, of the Torture Memo fame, denounced the ruling as “a flawed decision that improperly intrudes into national security affairs and fails to grapple with the profound constitutional issues at stake.” According to Mr. Yoo, the CIT’s grounds for the decision were “remarkable, indeed unprecedented … [and] range far from the judiciary’s role in foreign affairs.” Indeed, the court, Mr. Yoo asserts, “intrudes into foreign policy in a manner no federal court has ever done before.” Here is the thing: you know the CIT ruling is solid because the critic does not even engage with the case the CIT based its entire decision on: the post-Nixon Yoshida case.

And also because of this – frankly astonishing – sentence: “the Court gestured to broader canons of construction, including the nondelegation and major questions doctrines.” [emphasis added] In a constitutional democracy, the “nondelegation doctrine” – or the Westminster presumption against the validity of “Henry VIII clauses” – is at the very heart of the relationship of the citizenry, the legislature, the Executive, and the power to tax. Courts do not “gesture” to bedrock principles.

So what next?

It is difficult to assess where the Appeals Court – or, indeed, the Supreme Court – ends up. More to the point, the trade policy quiver of the President, as we are all finding out, is full of discretionary and plenary authorities to impose taxes by Executive fiat. As Groucho Marx might have said, “Those are my provisions. If you don’t like them, I got others.” As mentioned, the s. 232 tariffs continue unabated. And not just: in a proclamation issued on June 3, the U.S. President raised the “national security” steel and aluminum tariffs from 25 to 50 per cent (except for exports from the United Kingdom). The Trade Act of 1974, and the Trade Act of 1930, provide additional avenues for the U.S. administration to impose punitive tariffs on trading partners.

In the light of the foregoing, the CIT ruling – and what comes of the various appeals – is only a minor bump in the road. This observed economic and legal chaos is, according to the U.S. Secretary of the Treasury, merely “strategic uncertainty” deployed as a negotiating tactic. Fair enough – though, of course, it remains to be seen what it is that the administration hopes to gain out of the negotiations.

I will leave you with this priceless statement by Senator John Kennedy of Louisiana, a strong supporter of the administration, in response to representations made by the U.S. Secretary of Commerce: “Why are you negotiating trade deals then? … You just said if a country came to you and offered the ultimate reciprocity, no tariff, no trade barriers, in return for doing us the same, you would reject that.”

Tariff and trade related insights

Canadian exports

With regulatory changes threatening just about every sector of the Canadian economy, BLG’s guidance as a full-service firm will prove a real advantage to Canadian companies looking for strategic solutions on tariff and non-tariff trade barriers. Our International Trade & Investment Group is the most senior and experienced in Canada, and can provide assistance to clients in all industries, including on:

  • Tariff mitigation
  • Supply-chain restructuring
  • Change in business relationships between related Canada-U.S. parties
  • Transfer pricing concerns
  • Certification of origin issues
  • Force majeure and related contractual clauses

You can’t afford to be passive in protecting your interests.

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