Lawrence L. Herman
September 6, 2025
The cheering was fleeting last week after the US Federal Court of Appeals (in a 7-4 split decision) ruled many of Donald Trump’s broad-based “Liberation Day” tariffs illegal.
As widely expected, the case is now headed to the U.S. Supreme Court, where six of the nine justices are Republican appointees, three of whom were installed by Trump, whose administration has asked the Court to fast-track its decision on whether to take up the case to Sept. 10, and hold arguments in November. The court’s new term begins, as always, on the first Monday of October, this year the 6th. The default assumption is that SCOTUS will give Trump a victory.
But if the Court were to rule against him on his use of the International Economic Emergency Powers Act(IEEPA) to justify his trade war, there’s a slew of other tariff weapons he can use, as Treasury Secretary Scott Bessent and others have pointed out. For starters, there’s the 1962 Trade Expansion Act, and its well-known section 232, which Trump used to impose sectoral tariffs on Canadian steel, aluminum and automobiles as well as non-USMCA complaint auto parts. Although section 232 requires a Commerce Department report justifying the need for emergency action in specific sectors and in specific countries, there’s little doubt that Commerce Secretary Howard Lutnick, would deliver what’s needed.
While the process takes time and doesn’t allow across-the-board tariffs against the whole world, section 232 is certainly in play, with Commerce now in the process of preparing reports on pharmaceuticals, copper, semiconductors, aircraft components and other strategic products. Softwood lumber is even under review.
This is a trade war, after all, unprecedented in nature and scope, waged by an administration battling not only other Western democracies but against the norms and precedents of its own country.
Trump could also dust off the old Tariff Act of 1930, better known as the Smoot-Hawley Tariff Act, as some American commentators have speculated. Section 338 of that Depression-era statute allows the president to impose 50% tariffs when a foreign country is found to be discriminating against American goods. It’s another weapon in Trump’s trade arsenal and although it doesn’t authorize the kind of broad-brush tariffs Trump imposed under IEEPA, it may come into the picture, depending on the Supreme Court’s decision.
Then there’s the frequently used section 301 of the Trade Act of 1974, allowing the US Trade Representative (USTR) to investigate foreign trade practices that are deemed “unjustifiable, unreasonable or discriminatory” and “burden or restrict” US commerce, following which the President can issue tariffs as corrective measures. While a little more cumbersome than IEEPA, section 301 is another powerful tool Trump has at hand. Section 201 of the same legislation allows the imposition of “safeguard” tariffs against increased imports “sufficient to cause serious injury or threat thereof” to a domestic industry producing the same item. Trump used this section in 2018 to impose tariffs on residential washing machines and solar cells and modules.
Trump could also dust off the old Tariff Act of 1930, better known as the Smoot-Hawley Tariff Act, as some American commentators have speculated.
All of this means it’s more than likely that Canada’s trade relations with the US will involve a continuing series of battles, whatever the Supreme Court might decide on IEEPA. So, it’s worth taking a moment to look at the tariff weapons that Canada has available for use as possible countermeasures.
While less dramatic than all this IEEPA fuss, Parliament has given a surprising dose of unrestrained tariff power to the federal cabinet. As remote as it may be for any Canadian government to attempt the aggrandization of executive authority taking place south the border, it’s worth noting that Canadian law gives the federal cabinet and the PMO a powerful tool when it comes to countering harmful foreign (e.g. US) trade actions.
Canada’s tariffs are contained in a schedule to the Customs Tariff Act. While the statute itself can only be amended by Parliament, section 53 of the Act delegates almost unlimited authority to the federal cabinet to apply tariff countermeasures by order-in-council, following recommendations by the ministers of finance and foreign affairs, “for the purpose of enforcing Canada’s rights under a trade agreement in relation to a country or of responding to acts, policies or practices of the government of a country that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada . . “
This action can be taken, as section 53 says, “Notwithstanding this Act or any other Act of Parliament”. The power was used by the Trudeau government to impose counter-tariffs on US aluminum and steel in 2018 and on Chinese EVs in 2024 and was used again by the Carney government in 2025 to impose countermeasures on American steel, aluminum and motor vehicle imports. All this was done by cabinet order alone.
The reality is that Canada should be prepared for the fact that there are always alternate tariff routes for Trump if the Supreme Court decides against him in the IEEPA case, notwithstanding his claim that the US would be brought to the “brink of economic catastrophe” by an unfavourable ruling. With or without IEEPA, these mechanisms remain in play and will have a bearing on the impending CUSMA review.
Given the use of tariffs as his administration’s signature trade policy, it’s impossible to believe Trump would agree to any new or re-jigged Canadian trade deal that seriously weakens his ability to wield the tariff weapon. Prime Minister Carney has already pointed out the reality that US tariffs, in some form, can’t be avoided in any new trade deal.
Meanwhile, negotiations are continuing with the Trump administration. Not much information has been disclosed, even after the press conferences following the federal cabinet retreat in Toronto September 4-6. However, Dominique Leblanc did say, in a revealing comment, that the two sides were looking at “a series of small deals” that would put Canada in a better position.
That reference to “small deals” seems to indicate that a full-scope trade agreement is not under consideration and that the federal government is getting prepared for the continuation of US duties in some form and at some levels, not only in the impending USMCA review but in our ongoing bilateral relations, whatever might happen. We’ll know more about what Trump intends when US objectives for the review are released next month.
But from everything we know about Trump’s trade policy so far, we’re in a very different era, beyond any sense of common NAFTA or USMCA-type objectives, one in which the bilateral relationship will shaped and determined by US tariffs and by the ongoing threat of tariffs.
Canada needs to be ready for tough days with the Americans, and has to keep its own tariff arsenal ready for use.
Policy contributor Lawrence Herman is an international lawyer with Herman & Associates, a senior fellow at the C.D. Howe Institute in Toronto and a member of the Expert Group on Canada-US Relations. He is a former foreign service officer, having served in Canada’s Permanent Mission to the United Nations and the GATT.