Today, the U.S. Supreme Court struck down the use by the Trump administration of the International Emergency Economic Powers Act of 1977 (IEEPA) for imposing tariffs on foreign countries. The Court essentially ruled in Learning Resources v. Trump that Congress had not authorized the use of IEEPA in this far-reaching manner. IEEPA was construed more narrowly and had been used in this narrow manner since its inception. IEEPA gives the President of the United States the power to "regulate" or "prohibit" imports when a national emergency had been declared. The Court did not rule on the validity of the reasons for declaring such emergencies, but merely focused on the authority to impose wide-ranging tariffs. The Court's judgment is a setback for the Trump administration and its capricious and harmful trade policies, but it will not end them.

As the principal dissenting judge (Kavanaugh) pointed out, the Trump administration could have used alternative instruments available to them to impose tariffs. He wrote "[...] the Court today concludes that the President checked the wrong statutory box by relying on IEEPA rather than another statute to impose these tariffs". He is not wrong about that, even though the majority of the Court was clearly right about stipulating that IEEPA did not confer the powers that the Trump administration had claimed for imposing broad universal tariffs. That power lies with the U.S. Congress. Article I, Section 8, of the U.S. Constitution specifies that "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises." The U.S. Congress has delegated some of these powers to the executive through various trade laws, typically along with a process that determines when trade measures can be used to address threats to national security, injury to domestic industries, violations of trade agreements, international payments problems, and discrimination against U.S. commerce.While tariffs collected under the authority of IEEPA from U.S. businesses will likely have to be paid back, it is far from clear that consumers will get a reprieve. They have already paid higher prices on many goods. The damage is already done and can't be undone.

Even after the U.S. Supreme Court has ruled on the use of IEEPA, five other trade instruments remain that the Trump administration may use to continue its antagonistic trade policies. In addition to IEEPA, the Trump administration has already been relying on Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974. Section 232 was used in March 2025 to impose global tariffs of 25% on imports of steel and aluminum, including from Canada (increased to 50% on June 4th). In April 2025, Section 232 was also used to imposed global tariffs of 25% on imports of automobiles and light trucks. Since 2018, the US has also used Section 301 tariffs mostly against China. The use of Section 232 is based on a threat to national security, which in the case of a military ally such as Canada is patently ludicrous. Section 301 provides more leeway to impose tariffs. It allows the U.S. administration to impose tariffs in response to actions by foreign countries that violate U.S. rights under international trade agreements or that burden or restrict U.S. commerce in ways that are deemed "unjustifiable," "unreasonable," or "discriminatory". However, invoking Section 301 involves due process and consultation, which the U.S. President clearly does not like.

There are also trade policy instruments that the Trump administration has not used yet: Section 201 of the Trade Act of 1974 for injury to a domestic industry (which is narrow in scope); Section 122 Trade Act of 1974 on international payments problems (which has never been used to impose tariffs before, and is limited to 150 days and a maximum 15% rate), and Section 338 of the Tariff Act of 1930 (also never used, with a 50% tariff rate limit). The latter in particular will appeal to the Trump administration because it does not involve any due process. Determining what amounts to "discrimination against U.S. commerce" appears relatively immune to court challenges because the statute give the President the authority to impose tariffs "whenever he shall find as a fact" that a foreign country engages in a variety of discriminatory practices. The 50% limit on the tariff rate means that almost all of the new trade agreements that were negotiated could fit within the scope of Section 338, which also has no time limit.

In a news conference, Trump mentioned already that he will pivot to other trade measures including Section 122 (which broad tariffs but with limited duration) and Section 301 (for additional tariffs). Curiously, he did not mention Section 338, which would provide the broadest of authority among the available tools. Perhaps, as an untested instrument lacking precedent of use, the administration may be afraid of litigation testing its authorioty here as well. But this instrument could be used against countries that have not yet signed a deal with the United States. In the end, it looks likely that the Trump administration will employ a variety of policy instruments to achieve its goals. Using multiple instruments makes it less likely that the failure of one instrument will upend the overall trade policy.

Today's ruling by the U.S. Supreme Court is not going to end Trump's trade war. It is a procedural setback for Trump, and clearly a slap in the face for interpreting statutory authorities in an overly expansive way. The Trump administration has been pushing legal boundaries in numerous ways—trying to strengthen executive power as far as the courts will permit, while a Republican-dominated Congress has been reluctant to assert its own rightful constitutional powers. There is little chance that this posture may change before November's midterm elections. Republicans in Congress are too afraid of Trump to speak up and stand up for the traditional Republican values that embrace liberalized international trade.

Today's ruling by the U.S. Supreme Court also emphasized the "major questions doctrine—the principle stating that federal agencies cannot regulate matters of major economic or political significance without clear, explicit authorization from the U.S. Congress. This doctrine has been championed by some of the Supreme Court judges, including Chief Justice John Roberts, who wrote the majority opinion in the case. The problem, though, is that Congress has been either politically deadlocked or unwilling to assert its constitutional powers more clearly. On February 11, the U.S. House voted against Trump's tariffs on Canada, with some Republicans joining almost all Democrats. It's a start, even though this vote is now moot because terminating the national emergency that was the basis for invoking IEEPA against Canada is no longer needed as invoking IEEPA was struck down by the Court.

As Canada and Mexico are heading into a review of the Canada, United States, and Mexico Agreement (CUSMA) that is due to be completed by July 1, 2026, Canada can expect headwinds. The Trump administration is likely going to double down on threats and trade actions to achieve their goals. There is some scope for negotiations—opening up Canada's dairy market would ultimately benefit Canadian consumers. But Canada's federal government should understand that giving in to threats from the Trump administration will only lead to more demands in the future. To save CUSMA, paradoxically, Canada has to be willing to give up CUSMA and suffer serious economic pain in the short term, and be ready to retaliate in kind against any unfair new trade measures from the United States. Appeasement does not work with Trump because it shows weakness, and the only thing that succeeds with him is a demonstration of strength—a willingness to retaliate if needed, and inflict harm on Trump's own agenda. The U.S. President believes—falsely—that America does not need Canada, and therefore that Canada has no cards to play in CUSMA negotiations. If Canada is seen to be too desperate to cling to CUSMA, there will be a long string of unsavoury demands. It would be better to walk away from a subservient and disadvantageous deal and instead wait for sanity to return to Washington in future years. Trump will also likely try to split CUSMA and negotiate separate deals with Canada and Mexico by pursuing the classic divide-and-conquer strategy. In turn, Canada and Mexico will maintain a stronger negotiating position if they work together and coordinate their approaches.

Expect the next months to remain turbulent. Canada's new chief trade negotiator, the Honourable Janice Charette, has ample experience that will help her navigate the challenges ahead. I wish her and her team well. Canada's trade with the United States is hugely beneficial for both sides. Geography will always keep Canada's economy tied to that of our neighbour. Many Americans understand the benefits of trade with Canada. The current U.S. administration doesn't. History will judge it wrong. Today, the U.S. Supreme Court judged this administration wrong as well. It's a start, but it won't be enough.