On May 28, 2025, the United States Court of International Trade (USCIT) ruled that the expansive global trade tariffs introduced by President Donald Trump under the United States International Emergency Economic Powers Act (IEEPA)—a national security statute that gives the president authority to control economic transactions in some emergencies—were unlawful and should be withdrawn (the USCIT Ruling). These tariffs are one part of a broader series of trade measures impacting Canada since President Trump took office earlier this year.

The USCIT Ruling arose from two related lawsuits, one filed on behalf of a group of small companies in the United States impacted by the tariffs on Canadian imports, and another, brought by a coalition of state governments who claimed the tariffs harmed their local economies.

Immediately after the USCIT Ruling was issued, the Trump administration filed to appeal the ruling to the US Court of Appeals for the Federal Circuit (USCAFC). On May 29, 2025, the USCAFC granted an immediate injunction blocking the removal of tariffs issued under the IEEPA, effectively pausing the USCIT Ruling until the USCAFC hears the appeal with arguments from all parties.

What are the potential implications of the USCIT Ruling?

If reinstated following the appeal, the USCIT Ruling would remove the tariffs announced on April 2, 2025, as part of President Trump’s “Liberation Day” trade measures. This includes the 25% duty on most imports from Canada, which impacts Canadian businesses exporting goods to the US and has associated effects for US businesses and state governments reliant on cross-border trade.

No effect on sector-specific or CUSMA-eligible tariffs

The USCIT ruling does not affect the automotive, steel or aluminum industries. Tariffs affecting these sectors were imposed under the United States Trade Expansion Act and the Trade Act, which were not addressed in the USCIT Ruling, and will remain in place regardless of the USCAFC appeal outcome.

Similarly, IEEPA-based tariffs on goods eligible for duty-free treatment under the Canada-United States-Mexico Agreement (CUSMA) remain unaffected. These tariffs were already paused as of March 7, 2025, and are not subject to change as a result of the USCIT ruling or the USCAFC appeal. To qualify for CUSMA preferences, goods must meet the agreement’s “rule of origin,” requiring that a significant portion of the product be manufactured or assembled in North America, and accompanied by a Certification of Origin.

What happens now?

The USCAFC has set a briefing schedule through to June 9, 2025, for parties to lay out their arguments on appeal, after which the Court will decide whether to grant a longer pause on the USCIT Ruling regarding tariffs issued under the IEEPA.

For the time being, Canadian businesses impacted by the 25% duty on Canadian imports prior to May 28, 2025, will continue to feel the effects of those tariffs.

Next steps and managing risk

The events of the past few days highlight the continued volatility of the United States trade landscape and present significant challenges and uncertainties for Canadian businesses engaged in cross-border exports and supply chains. The USCAFC’s decision to grant an interim injunction, along with the continued application of tariffs issued under other statutory authorities, contributes to an increasingly complex trade environment.

Our integrated team of legal and public policy professionals across Canada and the US is actively tracking developments, and we are here to help you anticipate and respond to changes. For any questions, please contact the authors, Morgan Camley KC and Ivy Yang. Thank you to our articling student Mariam Zaidi for her significant contribution to this insight.

Visit our Navigating today’s shifting tariff and trade environment hub for additional resources.

Sign up here to receive regular updates and invitations to our webinar series, Border Talks, designed to provide timely updates on the evolving Canada-US political, business and legal landscape.