Business
US Supreme Court may end ‘emergency’ tariffs, but that won’t stop the President
From the Fraser Institute
By Scott Lincicome
The U.S. Supreme Court will soon decide the fate of the global tariffs President Donald J. Trump has imposed under the International Emergency Powers Act (IEEPA). A court decision invalidating the tariffs is widely expected—hovering around 75 per cent on various betting markets—and would be welcome news for American importers, the United States economy and the rule of law. Even without IEEPA, however, other U.S. laws all but ensure that much higher tariffs will remain the norm. Realizing that protection will just take a little longer and, perhaps, be a little more predictable.
As my Cato Institute colleague Clark Packard and I wrote last year, the Constitution grants Congress the power to impose tariffs, but the legislative branch during the 20th century delegated much of that authority to the president under the assumption that he would be the least likely to abuse it. Thus, U.S. trade law is today littered with provisions granting the president broad powers to impose tariffs for various reasons. No IEEPA needed.
This includes laws that Trump has already invoked. Today, for example, we have “Section 301” tariffs of up to 25 per cent on around half of all Chinese imports, due to alleged “unfair trade” practices by Beijing. We also have global “Section 232” tariffs of up to 50 per cent on imports of steel and aluminum, automotive goods, heavy-duty trucks, copper and wood products—each imposed on the grounds that these goods threaten U.S. national security. The Trump administration also has created a process whereby “derivative” products made from goods subject to Section 232 tariffs will be covered by those same tariffs. Several other Section 232 investigations—on semiconductors, pharmaceuticals, critical minerals, commercial aircraft, and more—were also initiated earlier this year, setting the stage for more U.S. tariffs in the weeks ahead.
Trump administration officials admit that they’ve been studying these and other laws as fallback options if the Supreme Court invalidates the IEEPA tariffs. Their toolkit reportedly includes completing the actions above, initiating new investigations under Section 301 (targeting specific countries) and Section 232 (targeting certain products), and imposing tariffs under other laws that have not yet been invoked. Most notably, there’s strong administration interest in Section 122 of the Trade Act of 1974, which empowers the president to address “large and serious” balance-of-payments deficits via global tariffs of up to 15 per cent for no more than 150 days (after which Congress must act to continue the tariffs). The administration might also consider Section 338 of the Tariff Act of 1930—a short and ambiguous law that authorizes the president to impose tariffs of up to 50 per cent on imports from countries that have “discriminated” against U.S. commerce—but this is riskier because the law may have been superseded by Section 301.
We should expect the administration to move quickly to use these measures to reverse engineer Trump’s global tariff regime under IEEPA. The main difference would be in how he does so. IEEPA was essentially a tariff switch in the Oval Office that could be flipped on and off instantly, creating massive uncertainty for businesses, foreign governments and the U.S. economy. The alternative authorities, by contrast, all have substantive and procedural guardrails that limit their size and scope, or, at the very least, give American and foreign companies time to prepare for forthcoming tariffs (or lobby against them).
Section 301, for example, requires an investigation of a foreign country’s trade and economic policies—cases that typically take nine months and involve public hearings and formal findings. Section 232 requires an investigation into and a report on whether imports threaten national security—actions that also typically take months. Section 122 has fewer procedures, but its limited duration and 15 per cent cap make it far less dangerous than IEEPA, under which Trump has repeatedly threatened tariffs of 100 per cent or more.
Of course, “procedural guardrails” is a relative term for an administration that has already stretched Section 232’s “national security” rationale to cover bathroom vanities. The courts also have largely rubber-stamped the administration’s previous moves under Section 232 and Section 301—a big reason why we should expect the Trump administration’s tariff “Plan B” to feature them.
Thus, a court ruling against the IEEPA tariffs would be an important victory for constitutional governance and would eliminate the most destabilizing element of Trump’s tariff regime. But until the U.S. Congress reclaims some of its constitutional authority over U.S. trade policy, high and costly tariffs will remain.
It finally happened. Canada received a federal budget earlier this month, after more than a year without one. It’s far from a budget that’s great. It’s far from what many expected and distant from what the country needs. But it still passed.
With the budget vote drama now behind us, there may be space for some general observations beyond the details of the concerning deficits and debt. What kind of budget did Canada get?
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For a government that built its political identity on social-program expansion and moralized spending, Budget 2025 arrives wearing borrowed clothing. It speaks in the language of productivity, infrastructure, and capital formation, the diction of grown-up economics, yet keeps the full spending reflex of the Trudeau era. The result feels like a cabinet trying to change its fiscal costume without changing the character inside it. Time will tell, to be fair, but it feels like more rhetoric, and we have seen this same rhetoric before lead to nothing. So, I remain skeptical of what they say and how they say it.
The government insists it has found a new path, one where public investment leads private growth. That sounds bold. However, it is more a rebranding than a reform. It is a shift in vocabulary, not in discipline.
A comparison with past eras makes this clear.
Jean Chrétien and Paul Martin did not flirt with restraint; they executed it. Their budgets were cut deeply, restored credibility, and revived Canada’s fiscal health when it was most needed. The Chrétien years were unsentimental. Political capital was spent so financial capital could return. Ottawa shrank so the country could grow. Budget 2025 tries to invoke their spirit but not their actions. Nothing in this plan resembles the structural surgery of the mid 1990s.
Stephen Harper, by contrast, treated balanced budgets as policy and principle. Even during the global financial crisis, his government used stimulus as a bridge, not a way of life. It cut taxes widely and consistently, limited public service growth, and placed the long-term burden on restraint rather than rhetoric. Budget 2025 nods toward Harper’s focus on productivity and capital assets, yet it rejects the tax relief and spending controls that made his budgets coherent.
Then there is Justin Trudeau, the high tide of redistribution, vacuous identity politics, and deficit-as-virtue posturing. Ottawa expanded into an ideological planner for everything, including housing, climate, childcare, inclusion portfolios, and every new identity category. Much of that ideological scaffolding consisted of mere words, weakening the principle of equality under the law and encouraging the government to referee culture rather than administer policy.
Budget 2025 is the first hint of retreat from that style. The identity program fireworks are dimmer, though they have not disappeared. The social policy boosterism is quieter. Perhaps fiscal gravity has begun to whisper in the prime minister’s ear.
However, one cannot confuse tone for transformation.
Spending is still vast. Deficits grew. The new fiscal anchor, balancing only the operating budget, is weaker than the one it replaced. The budget relies on the hopeful assumption that Ottawa’s capital spending will attract private investment on a scale that economists politely describe as ambitious.
The housing file illustrates the contradiction. The budget announces new funding for the construction of purpose-built rentals and a larger federal role in modular and subsidized housing builds. These are presented as productivity measures, yet they continue the Trudeau-era instinct to centralize housing policy rather than fix the levers that matter. Permitting delays, zoning rigidity, municipal approvals, and labour shortages continue to slow actual construction. Ottawa spends, but the foundations still cure at the same pace.
Defence spending tells the same story. Budget 2025 offers incremental funding and some procurement gestures, but it avoids the core problem: Canada’s procurement system is broken. Delays stretch across decades. Projects become obsolete before contracts are signed. The system cannot buy a ship, an aircraft, or an armoured vehicle without cost overruns and missed timelines. Spending more through this machinery will waste time and money. It adds motion, not capability.
Most importantly, the structural problems remain untouched: no regulatory reform for major projects, no tax competitiveness agenda, no strategy for shrinking a federal bureaucracy that has grown faster than the economy it governs. Ottawa presides over a low-productivity country but insists that a new accounting framework will solve what decades of overregulation and policy clutter have created. More bluster.
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From an Alberta vantage, the pivot is welcome but inadequate. The economy that pays for Confederation, energy, mining, agriculture, and transportation receives more rhetorical respect in Budget 2025, yet the same regulatory thicket that blocks pipelines and mines remains intact. The government praises capital formation but still undermines the key sectors that generate it.
Budget 2025 tries to walk like Chrétien and talk like Harper while spending like Trudeau. That is not a transformation; it is a costume change. The country needed a budget that prioritized growth rooted in tangible assets and real productivity. What it got instead is a rhetorical turn without the courage to cut, streamline, or reform.
Canada does not require a new budgeting vocabulary. It requires a government willing to govern in the best interest of the country.
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I view the recent announcements by the Government of Canada as window dressing, and not addressing the fundamental issue which is that projects are drowning in bureaucratic red tape and regulatory overburden. We don’t need them picking winners and losers, a fool’s errand in my opinion, but rather make it easier to do business within Canada and stop the hemorrhaging of Foreign Direct Investment from this country.
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Changes are afoot—reportedly, carve-outs and tweaks to federal regulations that would help attract investment in a new oil pipeline from Alberta. But any private proponent to come out of this deal will presumably be handpicked to advance through the narrow Bill C-5 window, aided by one-off fixes and exemptions.
That approach can only move us so far. It doesn’t address the underlying problem.
Anyone in the investment world will tell you a patchwork of adjustments is nowhere near enough to unlock the large-scale energy investment this country needs. And from that investor’s perspective, the horizon stretches far beyond a single political cycle. Even if this government promises clarity today in the much-anticipated memorandum of understanding (MOU), who knows whether it will be around by the time any major proposal actually moves forward.
With all of the talk of “nation-building” projects, I have often been asked what my thoughts are about what we must see from the federal government.
The energy sector is the file the feds have to get right. It is by far the largest component of Canadian exports, with oil accounting for $147 billion in 2024 (20 percent of all exports), and energy as a whole accounting for $227 billion of exports (30 percent of all exports).
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Furthermore, we are home to some of the largest resource reserves in the world, including oil (third-largest in proven reserves) and natural gas (ninth-largest). Canada needs to wholeheartedly embrace that. Natural resource exceptionalism is exactly what Canada is, and we should be proud of it.
One of the most important factors that drives investment is commodity prices. But that is set by market forces.
Beyond that, I have always said that the two most important things one considers before looking at a project are the rule of law and regulatory certainty.
The Liberal government has been obtuse when it comes to whether it will continue the West Coast tanker ban (Bill C-48) or lift it to make way for a pipeline. But nobody will propose a pipeline without the regulatory and legal certainty that they will not be seriously hindered should they propose to build one.
Meanwhile, the proposed emissions cap is something that sets an incredibly negative tone, a sentiment that is the most influential factor in ensuring funds flow. Finally, the Impact Assessment Act, often referred to as the “no more pipelines bill” (Bill C-69), has started to blur the lines between provincial and federal authority.
All three are supposedly on the table for tweaks or carve-outs. But that may not be enough.
It is interesting that Norway—a country that built its wealth on oil and natural gas—has adopted the mantra that as long as oil is a part of the global economy, it will be the last producer standing. It does so while marrying conventional energy with lower-carbon standards. We should be more like Norway.
Rather than constantly speaking down to the sector, the Canadian government should embrace the wealth that this represents and adopt a similar narrative.
The sector isn’t looking for handouts. Rather, it is looking for certainty, and a government proud of the work that they do and is willing to say so to Canada and the rest of the world. Foreign direct investment outflows have been a huge issue for Canada, and one of the bigger drags on our economy.
Almost all of the major project announcements Prime Minister Mark Carney has made to date have been about existing projects, often decades in the making, which are not really “additive” to the economy and are reflective of the regulatory overburden that industry faces en masse.
I have always said governments are about setting the rules of the game, while it is up to businesses to decide whether they wish to participate or to pick up the ball and look elsewhere.
Capital is mobile and will pursue the best risk-adjusted returns it can find. But the flow of capital from our country proves that Canada is viewed as just too risky for investors.
The government’s job is not to try to pick winners and losers. History has shown that governments are horrible at that. Rather, it should create a risk-appropriate environment with stable and capital-attractive rules in place, and then get out of the way and see where the chips fall.
Link to The Hub article: Large-scale energy investments remain a pipe dream
Formerly the head of institutional equity research at FirstEnergy Capital Corp and ATB Capital Markets. I have been involved in the energy sector in either the sell side or corporately for over 25 years
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