Today’s U.S. Supreme Court decision is a big warning shot to the president, but only a small relief for Canada’s economy.
What the Court decided
The Court ruled 6–3 that President Trump was not allowed to use a ‘national emergency’ law (the International Emergency Economic Powers Act, or IEEPA) to slap broad tariffs on imports. The justices said this law lets presidents respond to emergencies, but it does not clearly give them the power to create new tariffs, which are taxes on imported goods.
In simple terms: the president can’t just shout EMERGENCY and then rewrite trade rules on his own.
The ‘drug emergency’ and why it failed
As we mentioned in Canada at a Crossroads: Chapter One, Trump had declared a national emergency over fentanyl and other illegal drugs and then used IEEPA to justify big extra tariffs on Canada and other countries. Lower courts had already said this stretched the law too far, because the tariffs didn’t clearly deal with the drug problem; the Supreme Court has now agreed that IEEPA doesn’t authorize tariffs at all.
The logic: there has to be a direct link between the emergency (drugs) and the tool being used; punishing broad trade flows with new taxes isn’t a direct anti-drug measure.
What this means for Canada
As we also discussed in Canada at a Crossroads: Chapter One, our problems with USA are varied. Some of Trump’s emergency‑based tariffs are now gone, including his sweeping reciprocal tariffs that he justified with the fentanyl emergency and global trade imbalances. But many of the tariffs really hurting Canadian sectors – like autos, steel, aluminum, lumber, and some metals – were put on using other laws, such as national security or anti‑subsidy rules, so they stay in place. Analysts say this gives Canada a bit more leverage in upcoming CUSMA/USMCA talks, because Washington loses one of its favorite threats (a giant ‘drug emergency’ tariff on anything it wants), but it does not restore pre‑Trump, near‑free‑trade conditions.
Why this doesn’t really stop Trump
The ruling blocks one path (emergency drug powers) but leaves others open; Trump can still use different trade laws, such as national security powers, targeted anti‑dumping and subsidy cases, or new legislation, to hit specific Canadian exports. He has already hinted at new approaches, including ideas like across‑the‑board baseline tariffs layered on top of existing duties, which would not rely on IEEPA. So for Canada, this is more of a speed bump than a U‑turn: the trade relationship remains unstable, and CUSMA could still be threatened or even torn up in future negotiations.
Why this matters for U.S. democracy
The Constitution gives Congress, not the president, the power to set tariffs and write trade rules; this case tests whether the president can grab that power by stretching old laws. By saying ‘no, you can’t use an emergency law to give yourself massive new tariff powers,’ the Court is drawing a line and checking the executive branch – something many scholars see as a litmus test for whether U.S. institutions are still willing to limit presidential power.
This ruling could be read as a sign that the courts still matter in the U.S. system, because they were willing to tell the president ‘no’ on a major power grab around tariffs. At the same time, Trump has spent years slowly weakening respect for the rule of law by attacking judges he dislikes, ignoring long‑standing norms, and treating legal limits as obstacles to work around rather than rules to follow. Time will tell whether this decision marks the start of a broader pushback from the courts, or whether it triggers the opposite reaction: a harder effort by Trump and his allies to cut back the courts’ powers so they are less able to block him in the future.
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