Canada Initiates WTO Dispute Consultations Over Tariffs

On March 5 and March 12, 2025, the Government of Canada issued back-to-back requests for dispute settlement consultations with the United States under the World Trade Organization (WTO) Dispute Settlement Understanding (DSU) concerning the imposition of U.S. tariffs.

Canada has requested consultations under the WTO DSU but separately asserts that the U.S tariffs also violate the Canada-United States-Mexico Agreement (CUSMA). Consultations are the first step in the dispute settlement process under both agreements.

The dispute consultations are being advanced in conjunction with Canadian counter-tariffs of 25% imposed against a total of C$59.8-billion worth of U.S. imports, with potential tariffs on another C$125-billion in U.S. imports as soon as April 2025. See our Cross-Border Tariffs topic centre and our Timeline of Key Dates and Documents for the latest developments

Canada’s Filed Requests for Consultations 

Canada’s March 5, 2025, request for consultations challenges U.S. tariffs of 10% imposed on Canadian energy imports and 25% on all other Canadian goods. These tariffs are currently suspended for goods qualifying for preferential treatment under CUSMA until April 2, 2025. They continue to apply to all Canadian goods imported without a CUSMA certificate of origin.

Canada’s March 12, 2025, request for consultations challenges U.S. tariffs of 25% imposed on steel and aluminum imports from Canada beginning on March 12, 2025. These tariffs are a revival of similar tariffs imposed by the U.S. in 2018, which a WTO dispute panel later found were not justified.

Canada’s requests challenge the U.S. tariffs primarily on the ground that they are inconsistent with WTO agreements to keep tariffs below certain “bound” maximums and to grant the same lowest “most-favoured nation” duty rates to all WTO members.

What Are the Dispute Procedures? 

The process for dispute resolution between Canada and the U.S. includes:

• Consultations: Under WTO rules, a request for consultations triggers a mandatory 60-day consultation period wherein Canada and the U.S. attempt to resolve the dispute bilaterally.
• Expedited Consultations: An expedited consultation period of 20 days applies to urgent measures that affect perishable agricultural goods. Canada’s March 5, 2025, request for consultations was filed under this expedited procedure.
• Dispute Settlement: If consultations fail, Canada can request that an international dispute arbitration panel be established to decide whether the U.S. has violated its obligations. Canada can choose to request a panel under CUSMA or the WTO, but it can only do so in one forum from this stage onwards.
• WTO Dispute Settlement: WTO dispute panels are required to issue a final report within nine months, or three months in expedited cases. The final report can then be appealed to the WTO Appellate Body, however this Body is not currently operational due to U.S. refusals to make appointments to the Body. As a result, an appeal can result in an indefinite de facto suspension of the proceeding.
• CUSMA Dispute Settlement: Once convened, CUSMA dispute panels are required to issue a final ruling within 180 days, or 150 days in expedited cases. CUSMA panel decisions are final and cannot be appealed. However, CUSMA itself is up for renegotiation in 2026.
• Remedies and Enforcement: In principle, if a WTO or CUSMA panel rules in favour of Canada, the U.S. must remove or adjust the tariffs. If it does not, Canada may seek WTO or CUSMA authorization to withdraw benefits to the U.S. in proportionate measure. A successful state-to-state claim will not result in any direct compensation for affected industries, but compensation can sometimes be an indirect or negotiated outcome of these proceedings.

Is There a Role for Private Industry?

State-to-state dispute resolution mechanisms under CUSMA and the WTO do not allow private companies to participate directly. However, businesses can play an indirect role in several ways:

• Providing Evidence and Expertise: Affected industries can supply pertinent data and sector-specific insights to their respective governments. This is particularly useful where tariffs target a specific sector, like steel and aluminum.
• Advocacy and Lobbying: Companies and industry associations can engage in advocacy efforts to influence government policy and encourage the initiation or resolution of disputes.
• Amicus Curiae Briefs: In certain instances, private entities may submit amicus curiae (“friend of the court”) briefs to provide additional perspectives or information, though the rules governing acceptance of such briefs are highly restrictive.
• Public Engagement and Media Campaigns: By raising public awareness and shaping public opinion, private industries can exert pressure on policymakers to address unfair trade practices.

We encourage businesses to contact the authors of this bulletin or any other member of our International Trade or Investment Treaty Arbitration groups if they are concerned about how dispute proceedings may affect them.