The use of tariffs has trended downward for decades, but the current Trump administration has implemented unprecedented mechanisms for imposing tariffs, leading to dramatic changes in scope and impact. As explained by WilmerHale Partner David Ross, President Trump is the first U.S. president to rely on the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs; IEEPA, a federal statute, lacks express provisions granting such use. However, the administration’s reliance on IEEPA, combined with the resurrection of seldom used statutes, such as the Trade Expansion Act of 1962, has raised questions about the future of international trade in North America and beyond.
In September 2025, the American Bar Association held its Business Law Section Fall Meeting in Toronto, Canada, and addressed recent tariff developments in a CLE program entitled “What’s Up with the Tariffs? A Primer on Tariffs, Trade Agreements, Economic Sanctions, Business Impact, and the Economy.” The discussion was moderated by Diana Preston, Attorney and Principal at Preston Financial Law & Consulting. The program featured insights from panelists David Ross, Partner at WilmerHale; Wendy Wagner, Partner at Gowling WLG (Canada) LLP; Jared Grossman, Senior Legal Counsel at Honda Canada Inc.; and Betsey Temple, Senior Vice President and Associate General Counsel at U.S. Bank.
U.S. Tariffs in 2025
As background, a tariff is a form of tax paid by the importer of goods into the country. The intended purposes of tariffs include increasing tax revenue, protecting domestic industries, and exerting influence on other governments.
Since the beginning of 2025, the U.S. imposed tariffs in unconventional and unprecedented ways. As mentioned, the current Trump administration cited IEEPA as a flexible tool to implement tariffs. On February 1, 2025, the U.S. imposed tariffs for the first time via IEEPA to respond to “any unusual and extraordinary threat . . . to the national security, foreign policy or economy of the United States.” Specifically, the administration referenced Canada and Mexico’s alleged failures to address immigration and the flow of fentanyl into the U.S. to impose a 25 percent tariff on both countries (which increased to 35 percent for Canada on July 1, 2025). On April 2, 2025, the administration imposed a 10 percent baseline reciprocal tariff on nearly all U.S. trading partners, a total of fifty-seven countries.
The current administration also relied on Section 232 of the Trade Expansion Act of 1962 (“Section 232”) to impose tariffs. Although reliance on Section 232 for tariff purposes started in Trump’s first term and remained unchanged during the Biden administration, Section 232 has been used more significantly in Trump’s second term. Ross noted, “What makes these tariffs, I think, particularly important is that [the administration] has been applying them not just to your core products like aluminum or steel, but to derivative products that include aluminum or steel. . . . By doing that, it has vastly expanded the scope of the tariffs.” For example, products subject to U.S. tariffs may include timber or lumber as well as their derivative products like furniture and kitchen cabinets—items far removed from the basic core products and not obvious threats to national security.
Currently, litigation in the U.S. regarding the lawfulness of tariffs based on IEEPA is stayed, so the tariffs remain effective. To the extent the IEEPA tariffs are determined unlawful (the consolidated challenges will be heard in November 2025), the administration mentioned considering several alternative tools. Specifically, the administration may rely on Sections 122 and 301 of the Trade Act of 1974 and Section 338 of the Tariff Act of 1903. Although these alternatives do not perfectly replace the IEEPA tariffs, Ross explained that, collectively, the alternatives and the use of Section 232 on derivative products can capture a very significant amount of trade, even if the IEEPA tariffs are struck down.
Responses to U.S. Tariffs
The recent U.S. tariffs have caused another layer of complexity and friction for international trade. To start, Canada imposed a 25 percent retaliatory tariff on about $30 billion worth of imports from the U.S., targeting U.S.-origin products. However, Canada’s global relations and domestic interests ultimately led it to repeal the retaliatory tariffs. Wagner spoke of Canada’s varied pressures in satisfying the demands of the U.S. while maintaining its own diverse trading markets. For instance, Canada was forced to impose tariffs on electronic vehicles and other products from China, which were met with counter-tariffs by China on agricultural and other significant imports to Canada. Similarly, Mexico has been experiencing U.S. pressure to impose a 50 percent tariff on China, but such policy has yet to be decided.
Naturally, China has pushed back on the U.S. by leveraging its unique position to retain exports of critical minerals and products that the U.S. needs. Meanwhile, the collective U.S. tariffs implemented on China since President Trump’s first term set a baseline tariff of roughly 50 percent on China, ranging as high as 100 percent on some products.
Due to the resulting complications for North American trade and global trading partners, Canada heightened protections for its own economy. For instance, Canada enacted a new “Buy Canadian Policy,” which requires domestic and foreign suppliers contracting with Canada to source key materials from Canadian companies and implements local content requirements for procurements that cannot be completed by Canadian suppliers.
Impact of U.S. Tariffs
It is unclear whether the recent U.S. tariffs have achieved their intended overall purpose. Since implementation of the tariffs, inflation rates in North America have increased (by 1.7 percent in Canada, 2.7 percent in the U.S., and 3.51 percent in Mexico), and unemployment rates rose (to 7.1 percent in Canada and 4.3 percent in the U.S.). Although the U.S. experienced an initial increase of tariff revenue of roughly $90 billion since last year, this revenue should decrease over time because of the inherent purpose of reducing imports. Preston noted that, “in contrast to what might have been expected, manufacturing jobs have decreased by 33,000 jobs between January and August [2025], so that’s different than [what] the intent was, and we’re starting to see some feedback on the implementation of the tariffs.”
Above all, the volatility of recent tariffs and trade policies have caused challenges for businesses. Grossman explained that “tariffs create uncertainty, which makes it difficult for businesses to plan,” adding, “Companies are also focusing resources on navigating the tariffs rather than innovating and often commencing new projects.”
Conclusion
It is unlikely that tariffs will revert to the status quo of prior decades. Businesses and attorneys should anticipate a new era of trade relationships and industry dynamics. To minimize tariff impact, Temple described three factors to evaluate: (1) the value of the imported goods, (2) the classification of goods under the applicable tariff regime, and (3) the supply chain location. Overall, as Wagner concisely stated, “It’s not just all about tariffs, it’s about costs.” Wagner further commented that the costs for goods will change and are likely to increase due to business uncertainties. Therefore, attorneys and clients should consider the costs in every agreement, deal negotiation, or project.
To learn more, view the program as on-demand CLE, free for Business Law Section members.
