U.S.-Canada tariff policy roadmap

On January 20, 2025, U.S. President Donald Trump signed the America First Trade Memorandum (Memorandum), directing U.S. federal agencies to study trade policies and evaluate trade relations with Canada, among other countries. President Trump has set a deadline of April 1 to receive reports and recommendations.

The potential for tariffs still exists. President Trump has expressed plans to impose tariffs on Canadian goods on February 1, 2025, but there has been no official legislation proposed to enact those changes.

In this insight, we lay out a potential roadmap for how the U.S. could revisit the trade relationship with Canada based on what has happened in the past. We also identify milestones for the months ahead, and proactive strategies to explore at each step.

This is a period of significant uncertainty. This roadmap does not guarantee specific outcomes or a fixed timeline — the goal is to provide an understanding of how trade relationships are typically evaluated and help you prepare your business for what may unfold.

U.S. trade policy responsibility

Powers to affect international trade policy , including the powers to sign trade agreements and impose tariffs, have in recent times become a shared responsibility between the U.S. President and Congress.

Tariffs fall under the constitutional authority to levy taxes, which rests primarily with Congress. In theory, Congress studies proposed tariff action in the relevant committees and must normally approve any presidential initiative related to tariff action, except in the instance of a presidential declaration of a national emergency. Still, the U.S. President can direct relevant White House senior officials, including the United States Trade Representative (USTR) and the Secretary of Commerce (and therefore the Department of Commerce), to study potential or proposed tariff action.

Step 1: Federal agency investigation

The U.S. President has tasked departments like the Department of Commerce and USTR with investigating trade flows, policies, and relationships with other countries. The goal is to identify areas of opportunity for new policymaking, including to address issues with trade deficits, border security and currency policies that the U.S. deems unfair to its economy.

The details of the investigation are at the discretion of the federal agencies.

Timeline:

 The timeline from the start of investigation to issuing report findings and recommendations is difficult to project. The U.S. has set an April 1, 2025, deadline to receive reports. Recent tariff investigations took longer to complete and were more limited in scope.

Proactive approaches for businesses:

• Consider undertaking a trade chain review to proactively develop data-driven scenario plans.
• Review press releases from relevant authorities regarding consultation periods and report timelines.

Step 2: Report findings and recommendations

The U.S. President will receive the report findings and recommendations which may call for additional action.

For example, it is possible the U.S. President may be justified to use emergency economic powers and implement immediate changes, like tariffs. Alternatively, the reports could call for a period of consultations as a next step.

Timeline:

The reports are expected to be issued as a deliverable of the investigation immediately upon its conclusion. They do not have a timeline independent of the investigative process. Normally, they are publicly released at the same time they are presented to the U.S. President.

Proactive approaches for businesses:

• Review the reports with your business advisors once they are issued.
• Consult with your business advisors about the implications for your business.

Fine-tune your trade chain review scenario planning to incorporate scenarios for specific recommendations contained in the relevant report(s).

Step 3: Consultation

After developing recommended actions, the U.S. government may consult with industry groups. The recommended actions may call for public consultations specifically, or consultations may be required as an outcome of legal action in the U.S. International Trade Commission (USITC), an independent body that specializes in trade policy.

Sometimes, public consultations are also conducted within the investigation step and the analysis is included in the investigation report.

Timeline:

Consultations normally require several weeks to a few months to complete, including receipt and review of written responses. Normally, the consultation period is publicly announced.

Proactive approaches for businesses:

• Consider participating in consultations, either unilaterally or as part of industry groups.
• Discuss consultations with your business advisors.

Step 4: Legislative or regulatory action

Following a consultation period, the U.S. federal government will refine the actions based on feedback and present a comprehensive strategy to Congress.

Congress must normally vote to approve new taxes and other levies before their take-effect date, which includes customs duties and tariffs. Where legislative grounds exist, regulatory action may be expedited by presidential proclamation.

The exception is in the event of a national emergency. Congress may still constitutionally oppose the new tariffs but can only effectively revoke or adjust them after their take-effect date.

If legislative changes are required, these changes would need to be supported by Congress. Changes to trade agreements are likely to take time in Congress but could be implemented in a matter of weeks upon approval.

Timeline expectations:

For this step, timelines vary significantly and depend on the mechanism for implementation.

Proactive approaches for businesses:

• Lobby U.S. federal officials, state officials, and congressional lawmakers — either unilaterally or as part of industry groups — to clarify the interests and the value proposition of your business’s trade with the U.S.

Step 5: Take-effect date and exclusion process

The final step is determining when tariffs will take effect and identifying any goods that will be excluded from tariffs.

The U.S. could detail how importers can make submissions requesting an exclusion from the tariff. These are normally granted in limited circumstances.

Timeline:

The take-effect date is generally immediate or within days after the official registration of the tariff action. An exclusion process is normally published at or around the same time to allow importers to apply for tariff relief.

Proactive approaches for businesses:

• Review impacts of new tariffs and associated tariff rules.
• Update scenario planning based on trade chain review.
• Consider applicable mitigation approaches.

Timeline examples for other recent U.S. tariff actions