It was a ruling that grabbed headlines around the world – but the US Supreme Court’s rebuke of Donald Trump’s tariff regime isn’t one that’s likely to stir much hope in Canada of an end to ongoing trade turmoil.
That’s because while the US’ highest court deemed Trump’s tariffs illegal, its decision focused on levies introduced using the International Emergency Economic Powers Act (IEEPA), which excludes the most prominent tariffs on Canada: on steel, aluminum, lumber, and automobiles.
In short, the Canadian housing market doesn’t look likely to see any meaningful boost from the news, with the main factors weighing it down still in place.
And economists don’t see the decision spelling the end of Trump’s global tariffs. Charles St-Arnaud (pictured, top left), chief economist at Servus Credit Union, told Canadian Mortgage Professional the Supreme Court’s move probably came as no surprise to the Trump administration.
“The likelihood that it would be struck down was quite high,” he said. “So there’s a bit of relief, but we also know that most of the US administration was likely working behind the scenes to find ways to keep those tariffs on.
“I think we’re kind of in a wait-and-see situation to see what’s going to be used next to justify the tariffs, because I don’t think they’re going away anytime soon. It feels to me that the US administration is already working on going around the Supreme Court decision.”
Trump’s tariffs, introduced last year, fuelled fears of a deep recession and mass layoffs in Canada – and economic uncertainty has lingered even after a wave of exemptions for goods covered under the Canada-US-Mexico Agreement (CUSMA).
That unease isn’t likely to dissipate further after the Supreme Court’s ruling on Friday, Dominion Lending Centres (DLC) chief economist Sherry Cooper told CMP.
“This is less of a big deal than you might think because they’re going to use another authorization for tariffs as opposed to IEEPA,” Cooper said. “There’s a big debate now as to which companies will get refunds. It will no doubt be a very slow and difficult process because I’m not sure they’re keeping proper records of all of this.
“But it’s a mess. It’s a good thing for Canada in that it highlights how unnecessary this all was, but it doesn’t really change anything. He’ll use other excuses for the tariffs that are legal.”
Trump lashes out
Trump struck a combative tone on the Supreme Court decision in a Friday afternoon press conference, blasting the six justices who said his use of the IEEPA had been illegal.
He said he was using a different statute, Section 122 of the 1974 Trade Act, to impose new 10% global tariffs and hit out again at global trading partners he said had “ripped off” the US in previous years.
Few experts see harmony suddenly breaking out between the US and other countries, including Canada, in the months ahead. “Unfortunately, we’re still in the same mess we’ve been in for almost the last year,” Cooper said.
CUSMA review looms amid new headwinds
The decision presents a new twist ahead of the upcoming CUSMA review, which must be completed by July 1.
The outcome of those talks will likely prove pivotal, Cooper said, in determining the outlook for Canada’s housing market for the rest of the year.
“The uncertainty and the fact that we don’t know what’s going to happen to CUSMA is what’s weighing on the housing market. It’s not prices. It’s not interest rates,” Cooper said.
“If, all of a sudden, the free trade agreement between Canada and the US no longer existed, the 90% of exports that are not subject to tariffs because of CUSMA suddenly then would be. And that’s a very scary prospect for the economy.”
But it’s not a decision the US would likely take lightly. “That doesn’t mean the US will walk away from CUSMA,” she added. “Ninety-three percent [93%] of all aluminum imported by the United States comes from Canada. They can’t do without that – at least, not immediately.”
CMP
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