Tariffs, the Executive Branch and Recent Developments in U.S. Trade Policy

Since returning to office in January 2025, President Donald Trump has pursued an aggressive and unpredictable trade policy that directly affects Canada Central to this agenda has been the imposition of new tariffs, typically justified on national security grounds, that stretch or outright violate U S trade commitments under the Canada-United States-Mexico Agreement (CUSMA) and World Trade Organization (WTO) rules Canada has responded with both targeted retaliatory measures and diplomatic engagement, though the volatility of U S policy continues to inject uncertainty into the bilateral relationship

Subsequent escalations raised the tariff burden further On July 31, the administration increased the International Emergency Economic Powers Act (IEEPA) tariff rate on Canada to 35 per cent, citing failed negotiations to secure concessions However, thanks to an exemption Trump granted in March 2025, exports meeting CUSMA requirements were excluded from the IEEPA tariffs This carve-out has proven critical, as nearly 90 per cent of Canadian exports were shipped to U S markets under CUSMA rules in April 2025 As a result, Canada’s effective tariff burden, while officially as high as 35 per cent, averages closer to 6 3 per cent Preserving market access through CUSMA is therefore vital for Canadian trade interests

U S trade policy under Trump is marked by protectionism, unpredictability and the aggressive and possibly unconstitutional expansion of presidential authority Canada has a double challenge: Ottawa must mitigate immediate economic damage while simultaneously bracing itself and preparing for a prolonged period of instability in its most important trading relationship