Despite a recent Supreme Court ruling that challenged the legality of some tariffs imposed under the International Emergency Economic Powers Act (IEEPA), the Trump administration is signaling that tariffs will remain a key component of any future trade deal with Canada. U. S. Trade Representative Jamieson Greer has stated that the administration intends to utilize other legal avenues, such as Section 232 of the Trade Expansion Act of 1962 and sections 301 or 122 of the Trade Act of 1974, to continue imposing tariffs.
This stance has raised concerns among Canadian businesses and political leaders. Canada-US Trade Minister Dominic LeBlanc acknowledged that "significant work remains" regarding tariffs on steel, aluminum, softwood lumber, and automobiles. The USMCA review later this year adds another layer of uncertainty. Some worry about what further actions the Trump administration might take.
The current tariff landscape between the two countries is complex. As of February 2026, goods entering duty-free under the United States-Mexico-Canada Agreement (USMCA) are not subject to tariffs. However, a 10% tariff applies to energy, energy resources, and potash, while a 35% tariff is imposed on all other products. Furthermore, a 40% transshipment penalty exists in lieu of the applicable fentanyl tariff rate.
The ongoing trade disputes and the insistence on maintaining tariffs create a challenging environment for Canadian businesses that rely on cross-border trade. It remains to be seen how these issues will be resolved and what impact they will have on the Canadian economy.
