After a lull, international trade policy leapt back into the news as the U.S. and Canada, long the closest of allies, faced off in a tariff war.<\/p>\n
President Donald Trump is employing a number of legal tactics to justify tariffs after the Supreme Court\u00a0invalidated<\/a>\u00a0the\u00a0legal authority<\/a>\u00a0he cited soon after taking office and announcing tariffs on nearly every nation.<\/p>\n The resulting levies are not as high or as broad as the president had initially sought when he announced his \u201cLiberation Day\u201d a few months into office. But trade experts say Trump has nonetheless made significant strides toward his original policy aims.\u00a0<\/p>\n Tariffs are today roughly between where they were when Trump took office and their peak in early 2025 after Liberation Day. \u201cBut they have slowly been climbing their way back up, and they may not be done climbing yet,\u201d Tax Foundation senior economist Erica York said.<\/p>\n Here\u2019s the state of play on Trump\u2019s second term tariff policy.<\/p>\n \t\t\t\t\t\t\tHow high are tariffs now?<\/p>\n The average U.S. tariff rate is currently 7.2%, according to the\u00a0Tax Foundation<\/a>. Except for a spike in early 2025, before the Supreme Court\u2019s ruling, that\u2019s higher than at any time since 1967, when Trump was still in college.\u00a0<\/p>\n A related metric \u2014 the average tariff rate adjusted for the total value of shipped goods \u2014 has risen from 2.8% when Trump took office for the second time to 12.5% today. In between, the average peaked at 21% before falling after the court\u2019s ruling.<\/p>\n All told, a majority of imports to the U.S. now have a tariff, though the administration has made exceptions for some agricultural products, generic pharmaceuticals and other items. Sometimes these exceptions came under pressure from companies or lawmakers.<\/p>\n The number of countries subjected to tariffs is down from about 180 on Liberation Day to about one-third of that now, said Ross Burkhart, a Boise State University political scientist who specializes in trade policy. But for many of the United States\u2019 biggest trade partners, the basic tariff rate has generally settled in at 10% to 12.5%,\u00a0including<\/a>\u00a0the European Union, Taiwan, Japan, South Korea, and the United Kingdom.<\/p>\n \t\t\t\t\t\t\tWhat Canadian products are affected?<\/p>\n The goods subject to the newly imposed tariffs are a modest subset of cross-border trade, representing about $20 billion of the $382 billion in Canadian goods bound for the U.S.\u00a0<\/p>\n Still,\u00a0about<\/a>\u00a0500<\/a>\u00a0products<\/a>\u00a0are affected, including alcoholic beverages, dairy products and flowers. Although some U.S. tariff targets are symbolic \u2014 such as hockey equipment \u2014 others could have a significant economic impact in the U.S., such as plywood, a key component of housing construction.\u00a0<\/p>\n \u201cThe U.S. does not have enough plywood to meet construction demand, so it will have to continue to source plywood from Canada,\u201d said Ross Burkhart, a Boise State University political scientist who specializes in trade policy. \u201cThis will make construction costs more expensive, and in combination with the higher cost of mortgages, this tariff can potentially have a major impact on housing affordability.\u201d<\/p>\n Collapsed trade talks also mean existing U.S. tariffs on Canadian automobiles, aluminum and steel will remain in place.<\/p>\n Canada is teeing up retaliatory tariffs on U.S. goods, effective Sept. 8. Prime Minister Mark Carney has said the moves will likely affect \u201csteel, dairy, appliances, agricultural equipment, pulp and paper, electronics.\u201d<\/p>\n The tariffs could be challenged in U.S. court. The Trump administration imposed them under Section 338 of the Tariff Act of 1930, an authority that has not been used before, and some legal experts told PolitiFact they think it could be overturned in court. Already, the Supreme Court\u00a0threw out<\/a>\u00a0an earlier round of Trump tariffs based on a different law.<\/p>\n \t\t\t\t\t\t\tCould these new tariffs impact the midterm elections?<\/p>\n Of the eight most competitive U.S. Senate races, six are in states where Canada is the top trading partner: Georgia, Iowa, Maine, Michigan, North Carolina and Ohio.\u00a0<\/p>\n If there\u2019s any economic fallout in these states \u2014 particularly for small businesses, which are less able to adapt than big companies \u2014 campaigning Democratic candidates are likely to cast blame on the Republican president.<\/p>\n \t\t\t\t\t\t\tHow did Trump get tariffs back in place?\u00a0<\/p>\n Trump replaced the legal justification that was invalidated by the Supreme Court with alternative legal powers.<\/p>\n In some cases, he\u2019s used\u00a0Section 122<\/a>\u00a0of the 1974 Trade Act, which enables the president to add a 15% tariff on imports for 150 days given \u201clarge and serious\u201d deficits in the U.S. balance of payments with other nations or to prevent \u201can imminent and significant depreciation of the dollar\u201d in foreign exchange markets.<\/p>\n In other cases, he\u2019s used\u00a0Section 301<\/a>\u00a0of the 1974 Trade Act, which allows tariffs when the president determines that a foreign country \u201cis unjustifiable and burdens or restricts United States commerce\u201d through violations of trade agreements. These are generally targeted at specific industries or products.<\/p>\n He\u2019s also used\u00a0Section 232<\/a>\u00a0of the 1962 Trade Expansion Act, which lets the president impose tariffs if national security is threatened.\u00a0<\/p>\n To impose the\u00a0recent Canadian tariffs<\/a>, Trump used\u00a0Section 338<\/a>\u00a0of the 1930 Tariff Act, which allows the president to place up to a 50% tariff on foreign goods if the U.S. International Trade Commission finds that the foreign country has used unfair trade practices against the U.S. In levying the new tariffs, the White House said Canada had engaged in \u201cdiscriminatory treatment of American products\u201d including automobiles, dairy products and alcoholic beverages.<\/p>\n None of these powers is quite as unfettered as those the Supreme Court struck down; many of the legal authorities above require formal trade investigations before tariffs are enacted, and some have limits, either on how high tariff rates can go or how long the levies can be imposed.\u00a0<\/p>\n Some \u2014 especially the Section 338 tariffs used against Canada \u2014 may be open to legal challenge. If Democrats win control of the House and Senate in the midterm elections, they could try to curb Trump\u2019s efforts, something the president\u2019s fellow Republicans have generally been unwilling to do.<\/p>\n \t\t\t\t\t\t\tWhat is happening with refunds from the tariffs the Supreme Court struck down?<\/p>\n By invalidating Trump\u2019s initial round of tariffs, the Supreme Court required refunds of the tariffs already collected. This process has been underway for several months, as can be plainly seen from the data on federal tariff revenue collected.\u00a0<\/p>\n From April 2025 to April 2026, tariff revenue surged to about $20 billion to $30 billion a month, up from roughly $7 billion a month in the year before Trump\u2019s second term began. Then, in May 2026, it fell almost to zero, and in June and July, tariff revenue turned negative, meaning the refunds were outpacing tariff revenues collected. This period of negative revenue is likely to be temporary, lasting as long as refunds are being paid out.<\/p>\n Although the refund process has been relatively smooth, experts said, it may be easier for some companies than others.<\/p>\n \u201cSmaller businesses have a harder time receiving these refunds, while the Walmarts and Amazons of the world do just fine,\u201d Burkhart said.<\/p>\n Companies that imported the wrongly tariffed goods get the refunds and are under no obligation to share the proceeds of those refunds with their customers \u2014 the folks who often paid higher prices in the interim.<\/p>\n The refunds \u201cmay not match up with who ultimately bore the burden of the tariff,\u201d York said.\u00a0<\/p>\n \t\t\t\t\t\t\tWhat has been the tariffs\u2019 economic impact?<\/p>\n York said the tariffs haven\u2019t been as damaging as critics initially warned. That\u2019s partly because the overall rates are lower now than they were early in Trump\u2019s second term. But they aren\u2019t the economic panacea Trump\u00a0promised<\/a>.<\/p>\n Anecdotal evidence from companies surveyed show that tariffs have complicated businesses\u2019 decision-making \u2014 especially when levies have been imposed and reversed in short order.<\/p>\n Companies have \u201cpaused on hiring decisions, or paused on expansions, or had to forego other investments,\u201d York said. \u201cSo it certainly was disruptive.\u201d<\/p>\n