Canada can’t drop its guard on U.S. tariffs

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There’s a scene in the revenge movie Kill Bill where the sword-wielding lead character slashes her way through a crowd of bodyguards in pursuit of a gangland leader. Just when she appears close to her objective, dozens more opponents arrive. Her target then mockingly asks: “You didn’t think it was going to be that easy, did you?”

Uma Thurman’s response reflects how much of the world felt briefly on Friday, after the U.S. Supreme Court invalidated a central element of President Donald Trump’s tariff policy. “You know, for a second there, yeah, I kind of did.”

That sense faded quickly as Mr. Trump laid out new ways he planned to impose tariffs worldwide. The global chaos agent will keep on being chaotic.

Still, the court decision is a major legal check on Mr. Trump’s presidency. And it is a small step toward some semblance of normality when it comes to tariffs, which should be determined by more than the whims of a single person.

Opinion: A ruling against Trump’s tariffs changes nothing, and everything

But the decision changes little now for Canada. While Mr. Trump will continue to exempt USMCA-compliant trade under his newly threatened global tariffs, as he had done for the emergency tariffs shot down Friday, the president is capricious. He could change his mind at any time.

The lesson for Canada is that it cannot let up on efforts to diversify away from the United States.

Canada remains uniquely exposed to U.S. threats, with the majority of its exports going to the neighbouring country. That was always a risk but the wrecking ball in the White House has made the danger too obvious to ignore. Reducing that exposure must remain top priority for the government.

Still, it’s good that the U.S. Supreme Court struck a blow against Mr. Trump’s habit of seizing on an emergency – even one that existed entirely in his own mind – as an excuse to impose a tariff. He used that pretext to issue wild demands that had to be taken seriously because of what he might do in response. He regularly used the threat of tariffs to pressure foreign leaders into making concessions.

So it’s positive that using emergency powers to levy tariffs was ruled unconstitutional on Friday. That’s an important brake on the president’s power.

This doesn’t entirely defang Mr. Trump, who can still unilaterally impose tariffs for up to 150 days under a different piece of legislation. He said Friday he would do so, implementing 10 per cent tariffs on all countries. One day later he upped that that to 15 per cent, the maximum allowable.

Two relevant points here. Because Mr. Trump is levying the maximum tariff possible, he has no further threat to issue under that legislation. And these tariffs, crucially, have a sunset clause. They expire in 150 days unless approved by Congress.

By that point the U.S. will be about two months from the midterm elections. This sets up a tension for congressional Republicans. They have backed much of Mr. Trump’s agenda but would be deciding on tariffs – which cost the average American household US$1,000 last year, according to the non-partisan Tax Foundation – when facing the judgment of voters.

Mr. Trump also retains the power to impose tariffs under legislative provisions called Section 301 and Section 232, the latter of which are being used to target Canadian steel, aluminum, copper, automobiles and wood.

However, if the U.S. President wants to impose these sorts of tariffs, doing so require a process beyond simply his say-so. There must be an investigation into alleged unfair behaviour by other countries. Even if these probes have tended to favour Mr. Trump’s position – 20 of 21 Section 232 investigations during his presidency found tariffs were acceptable – they take time and require evidence.

Of course, Mr. Trump could also defer to Congress to pass tariffs, acknowledging that power to do so rests with the legislative branch of government. Not too much faith should be placed on the Republican Congress finding the spine to defy Mr. Trump.

Still, the overall effect of the Supreme Court ruling could be a return to a less chaotic process when it comes to trade relations.

However, Canadians should not pretend that this heralds a return to the pre-Trump world of free trade. That world, at least for the foreseeable future, is gone.

Canada must adjust to this new reality rather than find solace in small victories such as a single court decision. It’s not going to be that easy.