U.S. – Canada Trade Dispute and Domestic Backlash

Relations between the United States and Canada are under significant strain as a sweeping trade dispute centered on tariffs, infrastructure leverage, and broader geopolitical alignments intensifies. At the same time, Trump’s broad tariff regime targeting Canadian steel, aluminum, and other imports has provoked retaliation from Canadian authorities, disrupted deeply integrated supply chains, and fueled political backlash within the United States over rising costs and trade policy direction. These developments, coupled with debates over the use of emergency economic powers to justify tariffs and uncertainty ahead of upcoming USMCA negotiations, are intensifying partisan divisions in Congress and raising broader questions about the scope of executive power in U.S. trade policy.

This week, the relationship between Canada and the United States grew tumultuous as President Donald Trump escalated tariff threats and challenged longstanding arrangements, threatening to close the bridge between the two countries unless the United States received compensation and at least 50 percent ownership. At the same time, Canada is grappling with spillover effects from regional instability in the Caribbean, as fuel shortages and U.S. sanctions disrupt air travel and tourism flows. Cuba is facing broader fuel scarcity affecting electricity, transportation, and industry; it produces very little of its own fuel and depends heavily on imports, particularly from allies like Venezuela. Those supplies have become unreliable, weighing heavily on Canada’s economic outlook and foreign policy posture as it navigates global supply disruptions, and strained U.S. relations and sanctions that disrupt air travel and tourism flows. Together, these developments are weighing on Canada’s economic outlook and foreign policy posture as it navigates strained U.S. relations, global supply disruptions, and growing uncertainty in key markets.

The House is preparing to vote on H.J. Res. 72, a resolution to roll back the Trump administration’s tariffs on Canadian imports, including steel, aluminum, and automobiles, which currently range from 35% to 50%. The vote comes after several Republican lawmakers (Reps. Tom McClintock, Victoria Spartz, Kevin Kiley, Don Bacon, and Thomas Massie) split from the administration over the economic and constitutional implications of the tariffs. The Senate has already passed multiple resolutions disapproving of the tariffs, creating bicameral pushback. However, even if the resolution clears the House, President Trump has issued a veto threat. Overriding a veto would require a two-thirds majority in both chambers, a threshold that remains highly uncertain.

The Supreme Court is currently reviewing the administration’s use of the 1977 International Emergency Economic Powers Act (IEEPA) to justify the imposition of broad tariffs on Canadian goods. The case centers on whether IEEPA, traditionally used for sanctions and targeted economic restrictions, grants the president authority to implement these expansive tariffs; lower courts, including the Court of International Trade and the U.S. Court of Appeals for the Federal Circuit, have held that such tariff actions are not authorized. Canada has rolled back many of its retaliatory tariffs but continues to maintain countermeasures on U.S. steel, aluminum, and automobiles, keeping key sectors at the center of this dispute.