In a decision that sent ripples through North American trade circles, the U.S. Supreme Court has struck down President Donald Trump's global tariffs, including those dubbed the "fentanyl" levies imposed on Canada, China, and Mexico. The ruling, which came down late last week, has prompted cautious optimism in Ottawa, where officials hailed it as a validation of their long-standing complaints about the tariffs' legality. However, celebrations were short-lived as Canadian leaders quickly pivoted to the more pressing challenge of the upcoming review of the United States-Mexico-Canada Agreement, or USMCA, the trilateral trade pact that underpins much of the continent's economic integration.
U.S.-Canada Trade Minister Dominic LeBlanc described the Supreme Court's decision as reinforcing Canada's view that the tariffs were "unjustified," according to a post he made on X, the social media platform formerly known as Twitter. LeBlanc, speaking from Ottawa, emphasized the immediate relief but also underscored the lingering uncertainties. "There is the 'critical work' to do in dealing with impacts from levies on steel, aluminium and automobiles, which Trump said will remain," he added in the same statement.
The tariffs in question stemmed from actions taken by the Trump administration last year, when it initially imposed 25% duties on imports from Canada and Mexico, later escalating them to 35%. Trump justified these measures by arguing that both countries needed to do more to curb the flow of migrants and the illegal drug fentanyl into the United States. Yet, the actual economic bite from the Supreme Court's ruling appears limited. According to trade experts and government data, about 85% of the trade affected by these "fentanyl" tariffs was already exempt from levies under existing USMCA provisions.
Complicating matters further, the White House has announced a new 10% global tariff to replace the duties that were invalidated under the International Emergency Economic Powers Act, or IEEPA, the legal basis the court rejected. This new tariff is set to take effect on Tuesday, and officials clarified that the USMCA exemption will persist, shielding the bulk of North American trade from immediate disruption. LeBlanc's office declined to comment directly on Trump's proclamation introducing this blanket measure, leaving analysts to speculate on its broader implications for global supply chains.
Beyond these tariff skirmishes, the real stakes for Canada lie in the USMCA review process, which all three partner nations must undertake this summer. The agreement, negotiated during Trump's first term and replacing the decades-old North American Free Trade Agreement, or NAFTA, covers a massive market of more than 500 million people and has fostered deeply intertwined economies since the early 1990s. Under the pact's terms, the countries face a 1 July deadline to decide whether to extend it or renegotiate key elements.
Recent comments from Mexican officials suggest a strong commitment to maintaining the trilateral framework. During a visit to Mexico this week, LeBlanc told reporters that both Canada and Mexico "remain absolutely committed to a trilateral trade agreement." He announced plans to meet with U.S. Trade Representative Jamieson Greer in the coming weeks to jumpstart formal discussions, marking the first such high-level talks since Trump halted negotiations last October.
That earlier impasse was triggered by Trump's frustration over an anti-tariff advertisement sponsored by the Canadian province of Ontario. The ad, which aired on U.S. networks including during World Series baseball games, drew sharp rebuke from the White House and led to a freeze in bilateral discussions. Now, with the review looming, tensions persist on both sides of the border.
From the U.S. perspective, Greer has voiced growing impatience with Canada's trade practices. In an interview on Fox Business earlier this week, he described negotiations with Ottawa as "more challenging" than those with Mexico. "They continue to have certain barriers. They refuse to sell US wine and spirits on their shelves," Greer said, highlighting what he sees as ongoing obstacles. He has also pointed to Canada's restrictions on dairy imports and the Online Streaming Act—a law requiring American media giants like Netflix and Spotify to contribute funds supporting Canadian content—as persistent irritants.
Canadian business leaders, meanwhile, are urging stability amid the uncertainty. Dennis Darby, CEO of Canadian Manufacturers & Exporters, a key industry group, stated on Friday that companies are eager for a successful USMCA renewal that "puts an end to recurring trade disruptions." "Predictable, rules-based trade is essential for manufacturers on both sides of the border," Darby emphasized, reflecting the concerns of firms reliant on cross-border supply chains for everything from auto parts to aerospace components.
The USMCA's roots trace back to the 1994 implementation of NAFTA, which eliminated most tariffs and spurred a tripling of trade volumes across the region over the subsequent decades. But the agreement has faced criticism from all angles: labor unions in the U.S. decry job losses to lower-wage Mexico, Canadian farmers chafe at dairy market access rules, and Mexican officials push for more equitable investment protections. Trump's first-term renegotiation addressed some of these, introducing stricter labor and environmental standards, but the upcoming review could reopen old wounds or introduce new ones, especially with the administration's preference for bilateral deals over the multilateral setup.
Trump administration officials have been notably cool toward renewing the USMCA as is, with suggestions that Washington might favor separate pacts with Canada and Mexico. This stance aligns with Trump's long-stated "America First" approach, which prioritizes one-on-one negotiations to extract concessions. LeBlanc, however, has pushed back, insisting on the value of the three-way deal in maintaining economic stability.
In response to the trade frictions, Canada has been diversifying its export markets. The United States currently absorbs about 75% of Canadian goods, a dependence that Ottawa aims to reduce by doubling non-U.S. exports by 2035. Initiatives include bolstering ties with the European Union through the Comprehensive Economic and Trade Agreement and expanding into Asia-Pacific markets. Yet, with the U.S. remaining the dominant partner, any breakdown in USMCA talks could have outsized effects on Canadian industries like manufacturing and energy.
The Supreme Court's tariff ruling, while a win for Canada, underscores the fragility of the post-NAFTA order. Legal challenges to executive trade powers have mounted since Trump invoked emergency authorities, and this decision could embolden further lawsuits against remaining sector-specific duties on steel, aluminum, and automobiles—levies that Trump has vowed to keep in place. Canadian steel producers, for instance, reported losses exceeding $1 billion annually under these tariffs before partial exemptions were granted.
As negotiations gear up, all eyes will be on the Greer-LeBlanc meeting and the July 1 deadline. Failure to reach an extension could trigger a return to pre-USMCA tariff schedules, potentially disrupting $2.6 trillion in annual trilateral trade. For now, Canadian officials are tempering expectations, focusing on the "critical work" ahead while business groups like Darby's call for predictability.
The broader implications extend to global trade norms, where Trump's tariff strategies have upended decades of liberalization efforts. With the new 10% global levy looming, allies like Canada are bracing for a more protectionist era, even as they seek to preserve the North American economic bloc that has defined continental prosperity for generations.