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.

The Trump administration first linked Canada to the U.S.’s fentanyl crisis by expanding a southern border emergency declaration in February 2025 to cover illicit drug deaths from drug trafficking. Despite evidence from the Canadian government that very minor quantities of fentanyl cross the northern border, Trump threatened sweeping tariffs unless “sufficient action” was taken. Canada implemented enhanced border enforcement, including appointing a fentanyl czar and bringing in other measures, but Trump still wasn’t satisfied and imposed tariffs on March 4, 2025: 10 per cent on Canadian energy and potash and 25 per cent on most other goods. Congress and U.S. industry pressure moderated the impact on energy and potash, but overall, Canadian exporters faced steep new costs.