In a partial victory that offers limited relief to Canadian businesses, the U.S. Court of International Trade has struck down some of former President Donald Trump’s aluminum and steel tariffs while upholding others. The mixed ruling, delivered yesterday, creates a complex landscape of uncertainty for Canadian exporters who have weathered years of trade turbulence with their largest trading partner.
“This ruling represents a crack in the foundation of Trump’s trade policy, but it’s far from the complete dismantling Canadian businesses had hoped for,” said Dr. Elena Richardson, Director of International Trade Policy at the University of Toronto. “We’re seeing a legal acknowledgment that certain tariffs lacked proper justification, particularly those imposed under national security pretexts.”
The court specifically invalidated tariffs on derivative aluminum products, ruling they exceeded presidential authority under Section 232 of the Trade Expansion Act. However, it maintained the validity of the original 2018 tariffs on primary aluminum and steel imports, which continue to impact Canadian manufacturers to the tune of approximately $3.6 billion annually.
Finance Minister Chrystia Freeland called the ruling “a step in the right direction” during a press conference in Ottawa but acknowledged that “Canada is not out of the woods yet.” Her cautious tone reflects the reality that while this represents a legal victory, the practical implications for Canadian businesses remain murky.
Industry experts point to the deep integration of Canadian-American supply chains as a key vulnerability. According to Statistics Canada, bilateral trade between Canada and the United States reached $1.13 trillion in 2023, with manufacturing sectors particularly dependent on cross-border movement of components and finished goods.
“The ruling creates winners and losers within the same industries,” explained Michael Kergin, former Canadian Ambassador to the United States. “A company producing primary aluminum remains subject to tariffs, while its competitor making derivative products might now be exempt. This creates competitive distortions that ripple throughout supply chains.”
For businesses in border communities like Windsor, Ontario, the partial relief offers little comfort. “We’re still navigating a maze of trade barriers that shouldn’t exist between supposed allies and partners under CUSMA,” said Sarah Nguyen, CEO of Great Lakes Manufacturing Association, referring to the Canada-United States-Mexico Agreement that replaced NAFTA.
Legal experts caution that the ruling could face appeals or trigger new tariff formulations that comply with technical requirements while achieving similar protectionist outcomes. “The Biden administration has 60 days to appeal, and there’s significant political pressure from U.S. steel producers to maintain these barriers,” noted international trade lawyer Jonathan Fried.
Canadian officials are reportedly preparing contingency plans that include potential retaliatory measures should the situation deteriorate. These preparations reflect lessons learned from previous trade disputes when Canada imposed targeted countermeasures on American goods equal to the value of Canadian exports affected.
Economic analysis suggests the continued tariffs could cost the Canadian economy approximately 0.4% of GDP growth if fully implemented across all categories. Hardest hit would be manufacturing hubs in Ontario and Quebec, where integration with American supply chains is most pronounced.
The ruling comes at a particularly sensitive time as both countries prepare for the CUSMA review process scheduled for 2026. Trade analysts suggest this legal battle could set the tone for those negotiations, potentially hardening positions on both sides of the border.
As Canadian businesses digest the implications of this partial victory, the fundamental question remains: in an era of rising protectionism, can the deep economic partnership between Canada and the United States withstand the political pressures to erect barriers rather than bridges?
