Trump Administration Expands Trade Probes, Threatening New Tariffs on Canada and Beyond

The Trump administration is escalating its trade offensive, initiating investigations into the trade practices of 60 countries, including Canada, potentially paving the way for new tariffs. This move comes after the Supreme Court recently curtailed the President’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA).

Shifting Legal Strategies for Tariffs

Following the Supreme Court’s ruling, which struck down President Trump’s preferred tariff tools used for “Liberation Day” tariffs and duties related to fentanyl imposed on Canada, Mexico, and China, the administration is now relying on Section 301 of the Trade Act of 1974 and Section 122 of the same act. Trump has already implemented a 10% global tariff using Section 122, though its longevity is uncertain without congressional approval, which is considered unlikely. Section 301 offers a potentially more sustainable path for longer-term tariffs.

Section 301 Investigations: A Closer Glance

U.S. Trade Representative Jamieson Greer announced Wednesday the launch of investigations targeting China, the European Union, Mexico, and over a dozen other countries. These investigations will focus on “structural excess capacity” and unfair trade practices, including subsidies, overcapacity, and forced labor. If Greer determines that countries are engaging in such practices, the administration could “quantify the harm to U.S. Trade and then attempt to resolve that problem with the country concerned,” ultimately resorting to tariffs if resolutions fail.

Canada in the Crosshairs

Canada is already subject to Section 232 tariffs on steel, aluminum, automobiles, and cabinetry. The current Section 301 investigation’s specific focus regarding Canada remains unclear, but long-standing trade tensions, such as Trump’s repeated criticisms of Canada’s dairy supply management system, could be areas of scrutiny.

CUSMA Review and Potential for Bilateral Deals

These investigations coincide with the upcoming mandatory review of the Canada-United States-Mexico Agreement (CUSMA). President Trump has expressed doubts about his commitment to the trade deal, suggesting it may have served its purpose. The U.S. Has already begun negotiations with Mexico to revise CUSMA, but similar measures have not yet been announced for Canada. U.S. Trade Representative Jamieson Greer has suggested the possibility of moving towards separate bilateral trade deals with Canada and Mexico, breaking away from the trilateral agreement after 30 years.

Recent Discussions with Canadian Officials

Despite the escalating tensions, U.S. Trade Representative Jamieson Greer recently met with Canada’s chief negotiator, Janice Charette, newly appointed Ambassador to the United States, Mark Wiseman, and Canada-U.S. Trade Minister Dominic LeBlanc in Washington.

Moving Forward

The Trump administration’s aggressive trade strategy and reliance on Section 301 investigations signal a continued commitment to protecting American industries, even in the face of legal challenges. The coming months will be critical as the investigations unfold and negotiations surrounding CUSMA progress, potentially reshaping the future of trade relations between the U.S., Canada, and Mexico.