OTTAWA — The U.S. Court of International Trade ruled unanimously against many of President Donald Trump’s tariffs—including those he slapped on Canada linked to concerns about fentanyl. It marks a blow to his efforts to reshape global trade, but the fight is not over.

Here’s what you need to know.

What it means for Canada: The three-judge panel ruled on Wednesday that the International Emergency Economic Powers Act, which Trump invoked to bring in many of his tariffs, does not give the president authority to use it as “leverage” to get other countries to do what he wants.

That includes pressuring them to crack down on fentanyl, which is the reason Trump gave for imposing his initial broad-based tariffs on Canada, Mexico and China. The 10 per cent baseline and steeper so-called reciprocal tariffs on most of the world he announced on April 2 were also struck down. While Canada and Mexico were spared that day, the White House did say a 12 per cent reciprocal tariff would eventually replace the one linked to fentanyl.

What’s not changing: The court did not rule against Trump’s decision to restore tariffs on all steel and aluminum, or his tariffs on autos. Those still affect Canada. Both came through a different authority than the one addressed by the court: Section 232 of the Trade Expansion Act of 1962. Trump has also threatened tariffs on pharmaceuticals, copper, semiconductors, lumber and other sectors.

Canada’s response: The ruling matches Canada’s view that the fentanyl-related tariffs “were unlawful as well as unjustified,” Prime Minister Mark Carney said Thursday in the House of Commons. Canada’s trading relationship with the U.S. remains “profoundly and adversely threatened” by the other tariffs, which he called “similarly unjustified.” Establishing a new relationship with the U.S. and diversifying trade remains a “top priority” for his new government.

How investors reacted: U.S. stock markets were up at the sign of a crack in the global trade war that has been fueling fears of a recession.  At closing time, the Dow Jones Industrial Average was up by 0.28 per cent, the S&P 500 was up by 0.4  per cent and Nasdaq was up by 0.39 per cent. The S&P/TSX Composite Index was down by 0.28 per cent and the Canadian dollar was up by 0.31 per cent—$0.72 compared to the U.S. dollar. 

What comes next: The Trump administration is fighting back. “The injunction threatens to unwind months of foreign-policy decision-making and sensitive diplomatic negotiations, at the expense of the nation’s economic well-being and national security,” the Justice Department argued in a Thursday court filing to the U.S. Court of Appeals for the Federal Circuit. It also threatened to ask the Supreme Court to intervene as early as Friday. The appeals court ordered a stay while it considers motions from both sides, but did not give any reasons. “These activist judges are trying to slow down something right in the middle of really important negotiations,” Kevin Hassett, director of Trump’s National Economic Council, said Thursday in an interview with Fox Business.