The U.S. Supreme Court ruling strengthens Trump’s hand heading into the CUSMA review
The U.S. Supreme Court’s decision to strike down President Donald Trump’s emergency-based tariffs may make things more complicated and costly for Canada, not less.
Rather than reducing trade risk, the ruling deepens uncertainty in an integrated North American agri-food market, increasing the likelihood of higher wholesale costs and ultimately higher grocery prices for Canadian consumers.
Rather than accept the Court’s limits on his authority, Trump pivoted immediately, criticizing the ruling and announcing new tariffs under a different statute, with hints that rates could rise further. The response was entirely consistent with his political style.
Some pundits rushed to claim the decision was a humiliation. That is nonsense. If anything, the ruling handed Trump an opportunity to create even more uncertainty in global markets. A Supreme Court endorsement of the original tariffs would have created a predictable, if unpleasant, set of rules. Predictability allows businesses to adjust. What we now face instead is policy instability, and that is far more disruptive.
Canada conducts roughly $100 billion a year in agri-food trade with the United States, with close to two-thirds of our food exports heading south. This is not simple trade. It is integration. Cattle cross the border for feeding and processing. Canola is crushed in the U.S. and re-enters as oil and meal. Processed foods depend on American ingredients, machinery and distribution networks. Hundreds of millions of dollars in food products move across the border every single day. When Washington experiments with tariff authority, that uncertainty moves directly from farmgate to the grocery shelf.
Even before the Supreme Court’s ruling, many Canadian food businesses exporting non-CUSMA-compliant products were forced to reduce their prices to remain competitive in the United States market. American buyers facing tariff costs could easily switch to domestic alternatives. To preserve contracts and shelf space, Canadian exporters absorbed part of the tariff burden themselves.
Examples of non-CUSMA-compliant food products can include processed snacks made with imported cocoa or specialty ingredients, frozen meals containing non-North American proteins or sauces, seafood that was harvested abroad but processed in Canada and repackaged imported fruits that have not undergone substantial transformation.
That meant thinner margins, delayed investments and, in some cases, postponed expansion plans. Tariffs do not just tax goods. They compress profitability.
Even if CUSMA-compliant goods remain exempt for now, trade risk has not disappeared. CUSMA replaced NAFTA in 2020 and governs most North American trade, and it includes built-in review provisions. A product can be technically tariff-free and still face higher input costs, stricter border scrutiny, currency volatility and contract renegotiations.
In a $100-billion food corridor, uncertainty alone raises wholesale costs that eventually reach consumers. Food prices in Canada can move without a single tariff being formally applied.
Looking ahead to the CUSMA review, which is mandated under the agreement’s six-year review clause and 16-year sunset framework, the environment has rarely looked more delicate. Trump could threaten to dismantle the three-country trade agreement and instead pursue separate bilateral trade deals with Canada and Mexico.
The threat itself would be a powerful negotiating tactic. Fully tearing up CUSMA would be economically disruptive and politically complex, especially given how tightly North American agri-food markets are tied together. More likely, the push for separate bilateral deals would serve as leverage rather than a lasting arrangement. But with this week’s rapid pivot, complacency would be naïve.
In Ottawa, restraint will matter. Escalating with new counter-tariffs to “punish” the Americans would only ricochet back onto Canadian grocery bills. In the current environment, discipline, not bravado, will determine whether Canadian consumers ultimately pay the price.
Dr. Sylvain Charlebois is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast.
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