Trade uncertainty is back on the menu
The Supreme Court’s unsurprising decision to strike down President Trump’s emergency-based tariffs may, paradoxically, make things more complicated for Canada — not less. It didn’t take long to see the reaction. Rather than accept the Court’s limits on his authority, President 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 the brand.
Some pundits rushed to claim the decision was a humiliation. That is nonsense. If anything, the ruling handed President Trump an opportunity to inject even more uncertainty into global markets. A Supreme Court endorsement of the original tariffs would have created a predictable — if unpleasant — framework. Predictability allows businesses to adjust. What we now face instead is fluidity. And fluidity, in trade policy, is far more destabilizing.
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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 grocery shelf.
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Even before the Supreme Court’s ruling, many Canadian food businesses exporting non-CUSMA compliant products were forced to reduce their prices simply to remain competitive in the U.S. 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. A product can be technically tariff-free and still face higher input costs, stricter border scrutiny, currency volatility and contract renegotiations. In a deeply integrated $100-billion food corridor, uncertainty alone raises wholesale costs — and wholesale costs eventually reach consumers. Food prices in Canada can move without a single tariff being formally applied.
Looking ahead to the CUSMA review, the environment has rarely looked more delicate. President Trump could threaten to dismantle the trilateral framework and pursue bilateral deals with Canada and Mexico separately. The threat itself would be a powerful negotiating tactic. In practice, fully tearing up CUSMA would be economically disruptive and politically complex, especially given the degree of North American integration in agri-food. More likely, bilateralization would serve as leverage rather than destination. 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, as we have already seen. In the current environment, discipline — not bravado — will determine whether Canadian consumers ultimately pay the price.
