The news landed last night with a thud that sent shockwaves around the world.
The U.S. Court of International Trade declared late Wednesday that President
Donald Trump
overstepped his authority when he invoked the International Economic Emergency Powers Act to
impose tariffs
on dozens of countries including Canada.
“Is there a dignified legal way, preferably in Latin, to say ‘holy s**t’?, wrote Nobel prize winning economist Paul Krugman in a late-night take on the ruling.
The federal court decision blocks both the “Liberation Day” tariffs and the earlier duties against Canada and Mexico related to fentanyl.
Tariffs on steel, aluminum
and autos made outside the United States were imposed under different powers and still apply.
The court has given the government 10 days to remove the tariffs and if its ruling holds it would eliminate new 30 per cent U.S. duties on imports from China, 25 per cent tariffs on goods from Canada and Mexico and 10 per cent duties on most other goods entering the U.S.,
Bloomberg reports.
“Just when traders thought they’d seen every twist in the tariff saga, the gavel dropped like a lightning bolt over the Pacific,” Stephen Innes of SPI Asset Management said in a note.
No one, however, believes this is the end of the story. The White House immediately appealed the decision, starting a battle that could go all the way to the Supreme Court. It is also unclear if the president will abide by the ruling in the meantime.
“It is not for unelected judges to decide how to properly address a national emergency,” White House spokesman Kush Desai in an emailed statement.
“President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness.”
There is also a good chance Trump’s administration will find other ways to implement its policies.
All the same, market screens were a sea of green this morning as hopes for relief from the tariff war echoed around the world. Futures on the S&P 500 were up 1.6 per cent overnight, with Asian markets and European futures making big gains.
“If the court ruling holds and tariffs are blocked, brace for a global risk rally across major indices, the U.S. dollar, and commodities on improved global growth expectations,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Canada and Mexico were first hit with economy-wide 25 per cent tariffs in March after Trump declared an emergency related to the flow of fentanyl over U.S. borders. Imports that comply with the
Canada-U.S.-Mexico Agreement
were later exempted.
If these universal tariffs are removed, Canada as one of the countries dependent on trade with the United States, would benefit the most, said Capital Economics.
However, as a big exporter of autos, steel and aluminum to the U.S., Canada still loses out unless it can negotiate concessions like the U.K. Canada is also vulnerable to lumber tariffs, which are still under investigation.
What happens in tariff talks is the next big question. Will Trump’s trading partners continue to seek deals?
“I don’t know why any country would want to engage in negotiations to get out of tariffs that have now been declared illegal,” Jennifer Hillman, a Georgetown Law School professor and former WTO judge and general counsel for the U.S. Trade Representative, told Bloomberg.
“It’s a very definitive decision that the reciprocal worldwide tariffs are simply illegal.”
With files from Bloomberg and The Associated Press
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In a country heavily exposed to Trump’s tariffs, Canada’s stock market has held up remarkably well, say strategists. So remarkable that it made it onto Deutsche Bank’s list of the biggest market dislocations this year.
Hitting an all-time high this week, the S&P TSX composite index is up 5.4 per cent since the start of a year which has been by anyone’s standards tumultuous. And Bloomberg’s aggregate index of Canadian bonds (government and corporate) is up 0.3 per cent year to date.
“It seems that Canadian assets have not been hit to the extent one might have expected if you knew there’d be extensive tariffs with its biggest trading partner,” wrote Deutsche macro strategist Henry Allen.
- Today’s Data: Canada current account balance, United States gross domestic product, personal consumption and pending home sales
- Earnings: Canadian Imperial Bank of Commerce, Royal Bank of Canada, BRP Inc, Best Buy Car Inc., Costco Wholesale Corp, Dell Technologies Inc., Hormel Foods Corp.
- These eight data points show how Trump’s trade war is already affecting the Canadian economy
- Canadian banks as ‘recession ready as they can be,’ says New Haven’s Rebecca Teltscher
- U.S. investors own Canada’s future and that needs to change
As Donald Trump’s ‘one, big beautiful bill’ makes its way to the Senate, tax advisers north of the border are warning that its effect on Canadians could be severe if Canada falls within Washington’s definition of a “discriminatory foreign country.”
Financial Post tax columnist Kim Moody says if enacted, the bill would impose significantly higher U.S. tax rates — ranging from five per cent to 30 per cent — on passive income, real property gains and business profits for affected foreign investors.
Find out more
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Financial Post column
can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his
mortgage rate page
for Canada’s lowest national mortgage rates, updated daily.
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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.
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Posthaste: What the tariff ruling that shook the world means to Canada
2025-05-29 12:46:24
