When External Tariffs Meet Internal Barriers: The Impact of Trump’s Trade War on Canadian Relations

Maya Rosebrugh-Galipeau

Trade disputes between Canada and the United States are nothing new. Over the years, the two countries have clashed on everything from lumber and dairy to steel and aluminum. While these disagreements often flare up in the headlines, they are part of a long-standing pattern of economic tug-of war. There is however a lot at stake as roughly $3.6 billion dollars worth of goods go between both countries every day (according to statistics from 2023). This makes the trade relationship between the two countries upwards of 3 trillion dollars a year. Recently, however, the disputes have taken on a new intensity which has reminded Canadians just how fragile cross-border trade can be. 

The basis of the disputes:

The latest round of conflict stems from tariffs applied in 2018, 2020 and most recently 2025. The United States has applied a baseline 10% on all imports, along with steep additional measures aimed at certain countries. Canada for example faces a 25% tariff while others like Cambodia (59%) and Vietnam (56%) are hit even harder. 

These tariffs make Canadian exports less competitive in the U.S. market and have sparked calls within Canada to push back. Many business are also struggling to navigate “stacked” (overlapping tariffs applied to a single imported product) and the shipping companies (who are uniquely responsible for accepting the foreign goods & making sure that the right tariff is paid) are beginning to charge the maximum rate and leaving it to the exporter to figure out if they need a refund. This uncertainty across the board has left both parties and consumers feeling annoyed and betrayed. 

What exactly is a tariff? : 

Tariffs are taxes imposed by one government on another country’s goods typically aimed at making domestic goods more attractive to consumers. It can be more easily described as an extra cost added at the border that has very little impact on a single purchase, but when applied to large-scale imports, the costs quickly snowball and reshape trade decisions. Legally, tariffs are paid by importers when they bring foreign goods into the country but in practice the added expense usually gets passed on to consumers since retailers often raise prices to cover the tax. Therefore discouraging local consumers from buying international goods and pushing them towards cheaper local products.

What do tariffs have to do with the law? : 

Tariffs are legal measures that are created, enforced and challenged through legislation and international agreements. 

In Canada, under the Constitution Act of 1867, Section 91 (2), the federal government has exclusive jurisdiction over the “Regulation of Trade and Commerce” and Section 91 (3) outlines Custom Duties.

In terms of regulations, the first part grants authority over international and interprovincial trade and the second regulates matters affecting the national economy as a whole (General Trade and Commerce Power). And the Custom Duties allows the federal government the power to tax goods imported into Canada.  

These all give Parliament the legal authority to impose tariffs on goods coming into Canada. 

In the United States, the U.S constitution gives Congress the power to “lay and collect duties, imports and excises” from Article 1, Section 8, which allows for the funding of the government through various forms of taxation such as tariffs. In practice however, Congress has delegated some powers to the President such as what was seen in the most recent cases (2018, 2020 and 2025). President Donald Trump has cited “national security” as the reason for the tariffs which essentially gives him a “free pass” letting him bypass the free trade agreement preestablished between the United States, Mexico and Canada. This free trade agreement is known as the Canada-U.S.-Mexico Agreement, or CUSMA. 

This additionally fits into the law as Canada Border Services Agency (CBSA) and U.S Customs and Border Protection (CBP) have been legally empowered to collect tariff duties, seize goods if laws are violated and impose penalties on businesses that evade or misreport tariffs. 

The Canadian Solution: Focus on Interterritorial and Interprovincial Trade: 

In response to this and in an attempt to increase national trade, a bill known as Bill C-5 was introduced to the House of Commons on June 6th, 2025. This Bill received Royal Assent on June 26, 2025, making it an official law. 

Bill C-5 contains two parts, the first would kickstart the “Act to enact the Free Trade and Labour Mobility in Canada” and the second is “Building Canada Act”. 

Part 1 of this bill will eliminate federal restrictions on the flow of goods, services and workers across Canada. It does so by providing a framework that cuts down on federal rules thus making trade between provinces and territories easier. 

This would allow local businesses to reach more customers in other provinces/territories and expand market access for all companies. As there are fewer restrictions, goods would also be able to move better between provinces and territories, which would reduce shortages during crises and improve supply chain resistance. 

The Indigenous and Environmental concerns of Bill C-5: 

Part 2 of this Bill will enact the Building Canada Act (BCA) which allows the government to label certain initiatives as “Projects of national interest” (PONIs). Once a project is designated as a PONI, the assumption is that it should go ahead, which changes the question from “whether the project should proceed at all” to “ what conditions should the project abide by”.

There has been significant pushback on this part of the Bill because of its ability to speed up approval for large projects that could pose environmental, health and safety risks. The Canadian Environmental Law Association claims that this act “Undermines Indigenous and Environmental Justice in Canada” (Wilson, 2025). 

Critics argue that the BCA allows large projects to be approved too quickly, without enough review or public participation.

There are a lot of concerns from Indigenous communities pointing out that it undermines consultation and consent by imposing unreasonably short timelines, bypassing normal legislative processes and excluding Indigenous people from meaningful review. The Act contains no legal requirement for Free, Prior and Informed Consent (FRIC) and instead centralizes decision-making power in Cabinet, which can further weaken accountability and removing safeguards that once protected Treaty rights and the environment. The current framework is seen as inadequate as it does not fully ensure meaningful engagement, consent or shared decisions-making with affected Indigenous peoples. At the same time, critics suggest that if the federal government is going to prioritize projects, it should focus on those that promote reconciliation, protect health and the environment and close infrastructure gaps. Some examples include safe housing, clean drinking water and access to renewable energy. 

Critics furthermore emphasize that community knowledge often strengthens environmental decision making, but the Act limits these voices. While the law’s preamble highlights a commitment to strong environmental standards, the actual provision weakens existing protections by letting certain projects bypass important federal environmental laws. 

Canada’s trade tensions with the U.S. highlight the risks of relying too heavily on international markets and have also exposed internal barriers to trade within our own country. In response, Bill C-5 aims to strengthen internal trade and boost economic resilience. However, the bill’s fast tracking of major projects has sparked many concerns regarding environmental protection and Indigenous rights. Moving forward, Canada must balance economic goals with social and environmental responsibilities to buy a fair and sustainable trade future. 

Work Cited

Armstrong, P. (2025, September 10). It’s not the tariffs, it’s the chaos: RCI. Radio Canada- Economy. https://ici.radio-canada.ca/rci/en/news/2191371/its-not-the-tariffs-its-the-chaos

First Nations Leadership Council. (2025, June 27). FNLC communique - Bill C-5: Overview and discussion. British Columbia Assembly of First Nations. https://www.bcafn.ca/news/fnlc-communique-bill-c-5-overview-and-discussion

Gouvernement du Canada. (2025, September 12). Government of Canada. One Canadian Economy - Canada.ca. https://www.canada.ca/en/one-canadian-economy.html

Government of Canada. (n.d.). How a Bill Becomes a Law. Parliament of Canada. https://learn.parl.ca/understanding-comprendre/en/how-parliament-works/how-a-bill-becomes-a-law/

Hansen, S. (2025, April 4). Which countries have the highest tariffs?. Investopedia. https://www.investopedia.com/ask/answers/040115/which-countries-have-highest-tariffs.asp

Powell, B. H. (2025, August 7). Bill C-5 & the building canada act: What you need to know. Environmental Law Centre. https://elc.ab.ca/post-library/bill-c5-building-canada-act-analysis/

Public Policy Forum. (2025, June 6). Interprovincial Trade Barriers: What they are and why they matter - PPF. Public Policy Forum. https://ppforum.ca/policy-speaking/why-canada-wants-to-finally-end-interprovincial-trade-barriers/

Radcliffe, B. (2025, August 15). The basics of tariffs and trade barriers. Investopedia. https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp

Schmunk, R., Benchetrit, J., Crawley, M., Dyer, E., Maimann, K., Panetta, A., & The Canadian Press. (2025, July 31). Canada-U.S. tariffs. CBCnews. https://newsinteractives.cbc.ca/features/2025/tariff-explainer/#intro

Wilson, J. (2025, August 27). Building Canada Act undermines environmental justice. Canadian Environmental Law Association. https://cela.ca/blog-building-canada-act-undermines-indigenous-and-environmental-justice-in-canada/