Trump's tariff plan includes a ‘fallback’ in case fentanyl justification falters

U.S. President Donald Trump’s sweeping reciprocal tariff plan comes with a “fallback” for free trade partners Canada and Mexico if a national emergency declaration on border controls and fentanyl used in February to justify 25 per cent tariffs on them doesn’t hold up. 

While no new tariffs were imposed on the two countries, the order Trump signed Wednesday contemplated the possibility of the justification being terminated or suspended, which would trigger a new 12 per cent levy.

“This is the fallback” said William Pellerin, a partner in the international trade practice at law firm McMillan LLP and former deputy director at Global Affairs Canada.  “If, for whatever reason, the original 25 per cent tariffs based on fentanyl trade are dropped — including because Canada or other parties successfully challenge those tariffs — then another fight looms to challenge these additional reciprocal tariffs that would take their place.”

According to the executive order, the reduced “ad valorem” rates of duty would not apply to energy, potash or any article eligible for duty-free treatment under the three-way CUSMA trade agreement that is a part or component of any article substantially finished in the United States.

Fen Osler Hampson, co-chair of the expert group of Canada-U.S. relations at Carleton University, said he would not be surprised if the stance on Canada was influenced by growing pushback in the United States, including Virginia Democratic Senator Tim Kaine’s challenge to the imposition of tariffs on Canada, which has even drawn support from Republicans.

“I think they’re obviously worried,” Hampson said. “The fact that there are a number of Republicans who call them on it, I think the message is getting through that we’re