Canada – Public Procurement International

President Trump: Canadian Products To Be Cut from GSA Schedules

Editor’s note: This post was updated on September 11, 2026

On September 8, 2026, President Donald Trump posted to his “Truth Social” page that he would direct the U.S. General Services Administration (GSA) to remove Canadian-origin products from GSA’s Multiple Award Schedule contracts:

Source. President Trump’s declaration came in the midst of a broader “trade war” between Canada and the United States. Among other measures, Trump has issued executive orders sharply increasing U.S. tariffs on a range of Canadian products. (CSIS analysis.)

The GSA MAS contracts have revenues of approximately US$50 billion per year. They are standing catalogue contracts, similar to “framework agreements” used around the world, and analogous to “Standing Offer” contracts in the Canadian government. GSA hosts an online catalogue which allows users to research the country of origin for each product offered under the MAS contracts.

The GSA MAS solicitation recognizes that the MAS contracts are covered by the United States’ trade agreements, including the World Trade Organization’s Government Procurement Agreement (GPA), per standard clause FAR 52.225-5. Both Canada and the United States are members of the GPA, which generally opens member nations’ public procurement markets to vendors from other members.

An open question is whether, per Canada’s general “Buy Canada” policy framework, Canada’s interim policy on reciprocal public procurement access will be implicated by President Trump’s order. (Fasken analysis of the policy)

The Trump administration has expressed frustration with the GPA (see below), which the administration argues affords foreign vendors unfair access to U.S. public procurement markets.

President Trump and Buy American — The Overlooked Report

Should vendors challenge Trump’s action in court, attention may turn to the enforceability of U.S. trade agreements regarding procurement. That issue was litigated in two separate lines of cases (Per Arsleff and Vectrus Services), both stemming from a prior U.S. agreement with the Danish government to limit procurements to Danish and Greenlandic firms at a U.S. Air Force base in northwestern Greenland (a Danish territory).

Thule Air Base in 1955 (renamed Pituffik Space Base in 2023) (Source)

When the U.S. Air Force awarded a services contract at the Greenland base to a subsidiary of a U.S. firm, Danish and Greenlandic companies protested at the U.S. Government Accountability Office (GAO). In its decision denying that initial protest, GAO focused on the eligibility terms of the Air Force solicitation, which GAO noted were strictly met by the awardee. Per Aarsleff A/S, Comp. Gen. B-410782 (Feb. 18, 2015). In sustaining a follow-on bid protest to the U.S. Court of Federal Claims, Per Aarsleff A/S v. United States, 121 Fed. Cl. 603, 622 (2015), the court held that the “treaty bar” of 28 U.S.C. § 1502, which bars the Court of Federal Claims from adjudicating claims under international treaties and agreements, did not apply because the court was merely using the U.S.-Danish agreement as a tool in interpreting the terms of the governing solicitation. 121 Fed. Cl. at 622. On appeal of that decision, the U.S. Court of Appeals for the Federal Circuit reversed on the narrower ground that the solicitation’s description of eligible contractors was patently ambiguous, and so should have been protested before award. Per Aarsleff A/S v. United States, Fed. Cir. No. 2015-5111, 2016 WL 3869790 (June 23, 2016).

More recently, Vectrus Services A/S v. United States (U.S. Court of Federal Claims 2023), involved the same diplomatic agreement with Denmark and the same base in Greenland. The Court of Federal Claims, per Senior Judge Marian Blank Horn, ruled that the “treaty bar” did not exclude the Court of Federal Claims’ jurisdiction; instead, as in the Court of Federal Claims’ earlier decision in Per Arsleff (above), she used the prior agreement with Denmark as a “backdrop” to understand the Air Force’s actions.

For background on U.S. trade agreements relating to procurement, see Christopher R. Yukins & Allen Green, International Trade Agreements and U.S. Procurement Law (2018), in The Contractor’s Guide to International Procurement (American Bar Association 2018) (Erin Loraine Felix & Marques Peterson, eds.), and Jean Heilman Grier, The International Procurement System: Liberalization & Protectionism (2022) (available on Amazon.com)

President Trump’s Reciprocal Tariffs — and the Procurement Exception

President Trump has announced sweeping tariffs against most of the United States’ leading trading partners. Many nations have indicated that they will retaliate (see running updates compiled by the Global Trade Alert), and international trade flows may be severely disrupted.

The Procurement Exception

There is, however, an important tariff exception for federal procurement. When foreign goods are imported for sale to the U.S. government, if proper procedures are followed, the goods may be free from tariffs, per longstanding U.S. regulations. For information on U.S. agencies’ exemptions from tariffs in their procurements, see the analysis compiled here.

Were the Tariffs Properly Calculated?

Were the U.S. tariffs improperly calculated? The U.S. Trade Representative (USTR) has published the formula (at left) used to calculate the tariffs announced on “Liberation Day,” April 2, 2025. (The vast popular importance of this formula was confirmed when it became the subject of a Saturday Night Live comedy sketch on April 5, 2025.) The formula, described in the box below, was used (according to the USTR) to calculate tariff rates at the rate necessary to “zero-out” persistent trade deficits.

The USTR calculated the tariff rates as follows, referencing the formula below: “Consider an environment in which the U.S. levies a tariff of rate τ_i on country i and ∆τ_i reflects the change in the tariff rate. Let ε<0 represent the elasticity of imports with respect to import prices, let φ>0 represent the passthrough from tariffs to import prices, let m_i>0 represent total imports from country i, and let x_i>0 represent total exports. Then the decrease in imports due to a change in tariffs equals ∆τ_i*ε*φ*m_i<0. Assuming that offsetting exchange rate and general equilibrium effects are small enough to be ignored, the reciprocal tariff that results in a bilateral trade balance of zero satisfies.”

A number of experts from around the world have criticized the formula and the values used in the formula:

As the graphic from USA Today/AFP below shows, because the Trump administration assumed the value of “ε” (the elasticity of imports with respect to import prices) was 4, and the value of “φ” (the passthrough of tariffs to consumer prices) was set at .25, the equation neutralized those elements — essentially leaving the equation one of dividing the trade balance (“x” (exports) minus “m” (imports) divided by “m” (imports)), and dividing the quotient by 2.

As CNN noted, quoting Mike O’Rourke from Jones Trading, “‘While these new tariff measures have been framed as “reciprocal” tariffs, it turns out the policy is actually one of surplus targeting [i.e., aiming to “zero out” trade deficits]. . . . ‘There does not appear to have been any tariffs used in the calculation of the rate. The Trump administration is specifically targeting nations with large trade surpluses with the United States relative to their exports to the United States.'”
Senior economists Kevin Corinth and Stan Veuger at the American Enterprise Institute offered the following example to explain how the Trump reciprocal tariffs were calculated: “As an example, if the US imports $100 million worth of goods and services while exporting $50 million to a country, then the Trump Administration alleges that country levies a 50 percent tariff on the United States (the difference between $100 million and $50 million, divided by $100 million). The ‘reciprocal’ tariff put into effect by President Trump . . . would be half of that, 25 percent.”
The AEI economists argued that the formula used by the Trump administration was incorrect in assuming that “φ” (the passthrough from tariffs to import prices) was .25. They noted that “the elasticity of import prices with respect to tariffs should be about one (actually 0.945), not 0.25 as the Trump Administration states.” The Trump administration officials’ mistake, the economists said, “is that they base the elasticity on the response of retail prices to tariffs, as opposed to import prices as they should have done. . . . It is inconsistent to multiply the elasticity of import demand with respect to import prices by the elasticity of retail prices with respect to tariffs.” If the tariff rates were corrected, the AEI economists wrote, the corrected rates (assuming the 10 percent floor imposed by President Trump) would (for example) top out at 13.2% for Lesotho (compared to the current top rate of 50%); the rate for China would drop from 34% (which triggered massive retaliation from China) to 10% (the lowest rate allowed by the Trump policy).

Could Tariffs Replace Income Taxes?

One of the open questions surrounding the Trump tariffs is whether tariffs, if raised high enough, could replace U.S. income taxes. Economists Simon Evenett and Marc-Andreas Muendler concluded the answer is no: “Until the late 19th century, states raised most of their government revenues from import tariffs. Could the practice work today? A side effect of taxes is that they discourage the economic activity that they are assessed on. Tariffs are taxes on imports and no different: they shrink trade. [In their study they] allow tariff revenues to change an economy’s savings and therefore the trade balance, as the U.S. administration intends. Then the displacement effect of import tariffs is so strong that tariff revenues cannot plausibly fund more than a few days of annual U.S. government spending.“

Tariffs on U.S. Services Exports

Another open issue is whether U.S. services — which normally enjoy a substantial trade surplus — might be subject to reciprocal and severe tariffs abroad. A study published by Simon Evenett and Fernando Martín Espejo shows that the U.S. Trade Representative’s formula for reciprocal tariffs, if turned about and applied by foreign nations to U.S. services exports, might result in much steeper tariffs against U.S.-based firms, if the practical barriers to imposing tariffs on services could be resolved.

On February 21, 2025, GW Law’s Government Procurement Law Program held a webinar on rising U.S. and EU protectionism, which discussed recent caselaw in the EU Court of Justice and the Trump tariffs.

Click for information on Trump tariffs and u.s. Procurement

Government Procurement Review (8th edition, 2020) – available online

The Government Procurement Review, one of the leading compilations of procurement laws from around the world, is now available in its 8th edition. Congratulations to the editors, Jonathan Davey and Amy Gatenby of the law firm of Addleshaw Goddard.

The volume, published annually, covers procurement law from fourteen countries and the European Union, including reviews by leading procurement practitioners from Australia, Austria, Belgium, Brazil, Canada, the Dominican Republic, Germany, Greece, Italy, Mexico, Russia, Switzerland, the United Kingdom and the United States.

For further information on foreign and international sources on public procurement law, please see the research guide prepared by GW Law’s government procurement research librarian, Mary Kate Hunter.

The U.S.-Mexico-Canada Agreement (USMCA): Some Surprising Outcomes in Procurement

Article available at: https://ssrn.com/abstract=3268740

Christopher R. Yukins – George Washington University Law School

The Trump administration recently released the proposed text of the U.S.-Mexico-Canada Agreement (USMCA), a major regional trade agreement that, if ratified, would replace the North American Free Trade Agreement (NAFTA). While the government procurement chapter of the proposed USMCA was largely a copy-and-paste from the abandoned Trans-Pacific Partnership agreement (TPP), the procurement chapter of the USMCA did contain a few major surprises — including the omission of Canada. This article reviews the background to the USMCA, some of the most important elements of the agreement, and the lessons learned for future international cooperation in procurement policy and law.

This article draws in part upon a paper that Professor Yukins will present at an interdisciplinary conference in procurement at the Sorbonne University, Paris in October 2018.