By Jennifer Lee and Jackson Mariani

April 22, 2026

Since President Trump’s “Liberation Day” imposition of global tariffs last April, the application of U.S. tariffs has been more more uncertain, global trade is more fragmented, and U.S. protectionism is driving trade diversification among America’s partners, including Canada.

The U.S. Supreme Court (SCOTUS) decision overruling Trump’s use of the International Emergency Economic Powers Act (IEEPA) leaves the average U.S. effective tariff rate at about 11%, the highest since the 1940s (excluding 2025). The punishing effect applies to both allies and non-allies alike – Canada and the EU face 6-7%, Mexico and Japan face about 11%, India faces just over 13%, and China faces roughly 19%.

The IEEPA duties refund process for affected businesses has just begun. It will certainly be slow and uneven in terms of who can recover up to $160 billion in tariff refunds. The U.S. Customs and Border Patrol (CBP) refund process is expected to take months and initially only applies to unliquidated tariffs (estimated tariffs – not yet finalized by CBP) or those finalized in the past 80 days – just 63% of all the IEEPA duties ruled impermissible.

The Trump administration’s immediate response to the SCOTUS ruling of a universal tariff under Sec. 122 threw several trade agreement frameworks into chaos. The EU trade deal ratification process was further delayed over the news (the bloc will likely conclude internal meetings in mid-June), and talks with India to reach a framework agreement were also pushed back (a delegation visited Washington April 20-22 to work towards resolving the remaining issues).

The Sec. 122 tariff faces its own legal challenge and is expected to be litigated on an expedited basis, similar to the IEEPA tariffs. The U.S. Court of International Trade heard oral arguments from plaintiffs and administration defendants April 10. As with IEEPA, any potential refunds may be a long time coming.

Even without the legal challenge, the Sec. 122 instrument is time-bound. The February tariffs would expire July 24 (unless Congress votes to extend them), so the administration is ramping up its use of alternatives tools, namely Sec. 232 and Sec. 301 investigations.

• On April 2, Trump announced a Sec. 232 100% tariff on patented pharmaceuticals (effective July 31 or Sep. 29), with lesser penalties for trade agreement countries (15% for the EU, Japan, South Korea, Switzerland, and Liechtenstein; 10% for the UK).
• Notably, the administration can quickly and easily expand existing 232 investigations to include derivative products (e.g., to include knitting needles as a national security risk under the 232 steel tariffs). Effective April 6, the U.S. expanded prior Sec. 232 tariffs on steel, aluminum, and copper products to cover the full product value instead of just the portion that is metal. The expansion applies a 50% rate on articles made entirely or almost entirely of steel, aluminum, or copper (25% for UK imports); a 25% rate on derivative steel, aluminum, and copper articles with less metal content (15% for UK imports); and a 10% rate for derivatives where the aluminum, steel, or copper was entirely smelted/melted and cast/poured in the U.S.
• USTR launched new Sec. 301 investigations March 11th on forced labor practices (targeting 60 economies; normally there are only a handful of 301 cases in a given year) and structural excess manufacturing capacity (targeting 16 economies). Public CIT hearings are scheduled to begin April 28 for the forced labor case and May 5 for the excess capacity case. USTR expects to conclude the investigations (and determine remedies) before the potential July 24 expiration of Sec. 122 tariffs.

The uncertainty for companies and trade partners continues, as even “done deals” are not reliable. The deals the Trump administration negotiated are largely framework agreements rather than binding pacts. They are also subject to U.S. modification at will. Trump threatened to change the UK deal April 15 over his frustration with Prime Minister Starmer’s response to the Strait of Hormuz crisis. (Note King Charles III is expected to meet Trump in Washington April 27, hoping to ease tensions in the “special relationship.”)

For Canada and Mexico, the fate of the trilateral deal with the U.S. (USMCA/CUSMA) carries greater significance; for now, over 90% of Canadian exports and an estimated 84% of Mexican exports continue to be exempted from U.S. tariffs due to coverage under the USCMA. That could change if USMCA renewal fails. (But note that the deal does not protect Canada and Mexico from sectoral tariffs. For Canada this includes Sec. 232 tariffs on steel, aluminum, lumber, copper, and autos – thus, the April 6th steel, aluminum, and copper changes apply. And any renewal of USMCA is still expected not to protect from such sectoral tariffs.)

Talks between the U.S. and Mexico are progressing on a separate, faster track, with the first official bilateral negotiating round for the joint review scheduled for late May in Mexico City. But Canada is expected to start technical discussions with the U.S. next month (by comparison, the technical discussions between the U.S. and Mexico started back in mid-March). Still, Prime Minister Mark Carney has a stronger negotiating position as a result of victories for his Liberal party in April 13th by-elections that gave him a majority government. Mexico and Canada also intend to pursue bilateral talks without the U.S. in early May.

Failure to renew the USMCA for a full 16-year term by the end of the USMCA Commission’s July 1 joint review does not necessarily kill the agreement (USTR Greer has already suggested USMCA talks may be extended). If the parties fail to renew, they can continue annual reviews (with the option for full-term renewal at any annual review) until the deal expires in 2036 or they choose to withdraw. Any renewal would likely imply changes to the original agreement on key issues including rules of origin and in sectors such as autos, telecom, energy, technology, and agriculture. A retreat to bilateral deals remains a possibility; USTR Greer remarked April 7th that separate “protocols” with Mexico and Canada would likely be necessary.

The global trade environment still faces heightened risk and uncertainty as the Trump administration remains committed to its brand of protectionism, leaving countries and businesses to develop coping strategies to deal with a reliably unreliable U.S. approach to trade and investment.

Jennifer Lee is a Senior Associate at The Scowcroft Group, where she provides analysis to corporate clients and financial institutions covering East Asia, Latin America, resources and the energy transition, as well as export controls.

Jackson Mariani is a Research Intern at The Scowcroft Group, where he focuses on Latin America and global trade. Jackson holds a bachelor’s degree in international affairs from New York University and is currently pursuing a master’s degree at Georgetown University’s Security Studies Program.