The trade relationship between the United States (“US”) and Canada received a brief period of reprieve with the recent 30-day postponement of President Trump’s blanket tariffs and Canada’s retaliatory countermeasures.  Despite this intermission, the US and Canada appear set to face off again with tariffs and other countermeasures, much like their counterparts on the ice in the nations face off. 

President Trump has shown a willingness to continue his strategy of cajoling Canada into trade concessions, as evidenced by his February 10, 2025, executive order imposing a 25% tariff on all steel and aluminum imports entering the US.  While there may be legitimate questions about the legality of such tariffs, in this dispute where the refs are off the ice the size of the US economy is a major advantage.

2018-2019 Tariffs – The WTO Complaint

Previously, the Trump Administration targeted Canadian steel and aluminum imports with tariffs through an executive order under the Trade Expansion Act of 1962 (which will now be reinstated under the Trump’s new executive order, taking effect on March 12, 2025).

As Canada and the US are both members of the General Agreement on Tariffs and Trade (“GATT”) and the World Trade Organization (“WTO”), Canada filed a complaint at the WTO claiming the US tariffs were inconsistent with the GATT and the WTO agreement. 

Despite the questionable legality of the US tariffs, the US was still able to influence Canada into renegotiating the North America Free Trade Agreement (“NAFTA”), resulting in the United States-Mexico-Canada Agreement (“USMCA”), even in the face of the WTO complaint and retaliatory tariffs levelled by Canada. 

Accordingly, President Trump’s strategy of leveraging the superior size of the US economy to extract concessions from Canada worked as effectively as an NHL defenceman utilizing his size to muscle a winger off the puck. 

The USMCA – National Security Issues

It might also be suggested that President Trump’s tariffs, and any countermeasures imposed by Canada, violate the USMCA as Article 2.11 of the agreement appears to prohibit such measures.  However, Article 32.2 of the USMCA may permit the imposition of tariffs where they are meant to protect “essential security interests”. 

This clause seems to correspond with President Trump’s January 20, and February 10, 2025, executive orders justifying his imposition of tariffs on national security grounds.

Takeaways

While Canada might be slight favourites against the Americans in a head-to-head hockey game, the same cannot be said for Canada in its trade dispute with the current US Administration.  President Trump appears to be willing to drop the gloves and square up in a fight with the confidence that the US economy can weather any retaliatory measures imposed by Canada.

As we mentioned previously here, it may be better for Canada to adopt a position of restraint in response to US tariffs.  This strategy proved successful as President Trump agreed to postpone his initial round of tariffs due to Canada’s $1.3 billion border security plan.

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