President-elect Donald Trump speaks during a meeting with Republican governors at Mar-a-Lago, Thursday, Jan. 9, 2025, in Palm Beach, Fla. (THE CANADIAN PRESS/AP-Evan Vucci)

By Canadian Press

Tariff threat

How Trump could declare a national emergency to hit Canada with 25 per cent tariffs

Jan 11, 2025 | 11:36 AM

United States president-elect Donald Trump may declare a national emergency in order to turn his threat to slap Canada with 25 per cent across-the-board tariffs into a reality.

With less than two weeks to go until Trump returns to the White House, it’s still not clear how the Republican leader will enact his tariff agenda. Greta Peisch, the former general counsel for the Office of the U.S. Trade Representative, said the incoming president could use the International Economic Emergency Powers Act (IEEPA).

“When you look at the link that the president-elect makes between tariff action and issues such as fentanyl and border security, he has not explained what authority he would use, but it would seem to be most closely linked to IEEPA,” Peisch said.

IEEPA is a national security statute that gives the U.S. president authority to control economic transactions after declaring an emergency.

While its predecessor, the Trading With The Enemy Act, was used during the Nixon administration to briefly impose a 10 per cent tariff on all imports into the U.S., no president has used IEEPA for tariffs.

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“(It) would be a new tool in the tariff toolbox,” Peisch said.

Trump is aware of the power of the statute. He threatened to use it to impose five per cent tariffs on Mexico if it didn’t address issues around the border and illegal immigration during his first administration.

“That never came to pass because a deal was worked out and the tariffs were never imposed,” Peisch said.

It’s been reported in the U.S. that Trump and his team are looking at declaring an economic emergency to use the statute this time around.

It’s not the only tool he has. Trump’s team also may be considering a section of the Trade Act of 1974, which was used to impose tariffs on China during his first administration, or a section of the Trade Expansion Act of 1962, which put duties on Canadian steel and aluminum, Peisch said.

The Canada-U.S.-Mexico Agreement, negotiated during Trump’s first administration, will not shield America’s closest neighbours. The agreement allows member countries to take measures considered necessary for their own essential security, Peisch said.

Soon after winning the election, Trump threatened to impose sweeping tariffs on Mexico and Canada unless the two countries stop drugs and people from illegally crossing their borders with America. He has said the action would be one of his first executive orders on Jan. 20, when he assumes office.

In response, Prime Minister Justin Trudeau and Finance Minister Dominic LeBlanc travelled to Mar-a-Lago to discuss the duties last year. A few weeks later, LeBlanc announced a series of measures to beef up border security with a $1.3-billion package.

But Trump has not dialed down his threats.

“We don’t have tariffs on them yet but that will happen,” Trump said about Canada Thursday.

Instead, the president-elect has said repeatedly that Canada should become the 51st state. He escalated that rhetoric this week by suggesting that he would use “economic force” to make it happen.

While Trudeau has said there’s not a “snowball’s chance in hell” that Canada would join the U.S., Canadian officials are preparing for a very real tariff threat.

“We have to be ready,” Foreign Affairs Minister Mélanie Joly told reporters Friday morning on Parliament Hill, ahead of a meeting of ministers on the Canada-U. S. cabinet committee to discuss the retaliatory measures Ottawa would deploy if tariffs are applied.

Ottawa is looking at its own tariffs targeting American steel, ceramics, plastics and orange juice.

Federal and provincial leaders also made frequent appearances on American news shows to warn that tariffs on Canada will harm U.S. consumers and businesses.

Wolfgang Alschner, an associate professor in international economic law at the University of Ottawa, said the current situation goes beyond a mere trade threat — and Canada is not dealing with the same issues it did during the first Trump administration, when the Republican leader imposed tariffs on steel and aluminum.

Alschner said the magnitude of the threatened tariffs and their connection to border security concerns qualify them as “economic coercion” — the use of abusive or excessive measures to affect trade and interfere with a foreign government’s exercise of its sovereign rights.

“We are seeing the U.S. using economic tools to achieve non-economic policy gains and that is the poster definition of economic coercion,” he said. “And that is something we really hadn’t seen in the Canada-U.S. relationship during Trump 1.”

Alschner said relying on targeted retaliatory tariffs won’t be enough, given the gravity of the situation. Canada also needs to offer the incoming Trump administration solutions on economic security, get rid of trade irritants and work on resetting the bilateral relationship, he said.

“It’s really imperative that this kind of game, because we are really playing with fire here, doesn’t get out of hand.”