Counsellor Quarterly
April 6, 2026
Authors:
- Tasneem Azim-Khan, Vice President, Chief Investment Strategist
In a seminal Feb. 20 decision, the U.S. Supreme Court struck down the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) as the legal foundation for its sweeping global tariff policy. This ruling invalidated approximately 60-70% of tariffs implemented since April 2025, forcing the effective tariff rate on U.S. imports down from 13.6% to 7.6% and establishing critical procedural constraints on executive trade authority. The administration immediately pivoted to Section 122 of the Trade Act of 1974, implementing a 10% global tariff with a 150-day duration limit requiring Congressional approval for extension. This transition from a "blunt-force" to a "scalpel-like" approach fundamentally reshapes the trade policy landscape, though the administration continues exploring alternative legal mechanisms – including Sections 232, 201, 301 and 338 – to establish more durable tariff structures ahead of the Nov. 2026 midterm elections.
The economic implications extend beyond tariff rate adjustments. Following the U.S. Court of International Trade's order for full refunds, importers stand to reclaim more than $160 billion in tariff revenue – representing approximately 0.5% of GDP and creating a meaningful fiscal tailwind for corporate profitability. However, significant uncertainty surrounds the refund timeline, with the administration citing processing complexities that could span months or years, while U.S. Customs and Border Protection suggests refunds could begin as early as late April pending system updates. Notably, consumers who absorbed higher prices will receive no compensation, creating political tension as corporations appear to benefit from tariffs now deemed illegal. Despite these complications, the ruling represents a net positive: it demonstrates functional checks and balances between government branches, provides near-term inflationary relief through lower overall tariff rates and establishes procedural guardrails limiting unilateral executive trade actions.
For Canada, the direct impact remains limited given existing CUSMA protections, though specific sectors including steel, aluminum, copper and softwood lumber face steep Section 232 tariffs. The critical focus shifts to summer CUSMA renegotiations, where Canada must navigate Trump's characteristically aggressive negotiating style while the administration considers additional sectoral tariffs on semiconductors, pharmaceuticals, critical minerals and aerospace. The analysis anticipates a "better than feared" outcome for Canada, though expects amplified negative rhetoric and targeted concessions as the U.S. leverages its position as Canada's dominant trading partner.
Read the full article here to discover the complete analysis, including detailed breakdowns of alternative tariff mechanisms, refund process implications, and strategic considerations for the upcoming CUSMA negotiations.
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