UPSC Prelims Practice Questions — Despite the language of escalation, U.S., Canada have time to strike a trade deal

Q1. In February 2026 the United States Supreme Court held, by a 6-3 majority, that a 1977 federal statute relied upon to justify sweeping tariffs did not authorise the President to levy duties, since the Constitution vests that power in Congress. That statute is:

  • A. The Trading with the Enemy Act
  • B. The International Emergency Economic Powers Act
  • C. The Trade Expansion Act, Section 232
  • D. The Trade Act, Section 301

Q2. Consider the following statements comparing the successive rounds of United States tariff action against Canada and Canada's responses: Which of the statements given above is/are correct?

  1. The executive orders of 1 February 2025 applied a rate of 25 per cent to most Canadian imports, while Canadian energy products were taxed at the lower rate of 10 per cent.
  2. The 50 per cent tariff announced in July 2026 was applied to the entire range of Canadian merchandise without any exception whatsoever, energy products and critical minerals included.
  3. Canada's first retaliation, imposed in March 2025, covered $30 billion worth of United States goods, with an announced plan to extend it to $155 billion if the American tariffs remained in place.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q3. In 2025 Canada took the first formal step in WTO dispute proceedings against the additional American ad valorem duties, a step which triggers a 60-day window for the two sides to settle the matter before adjudication may be sought. That step is known as:

  • A. A request for consultations
  • B. A request for the establishment of a panel
  • C. A request for the good offices of the Director-General
  • D. A notification of a mutually agreed solution

Q4. Consider the following statements regarding how the United States–Mexico–Canada Agreement (USMCA/CUSMA) differs from the North American Free Trade Agreement it replaced: Which of the statements given above is/are correct?

  1. It raised the share of a vehicle's components that must be manufactured within North America for tariff-free treatment from 62.5 per cent to 75 per cent.
  2. It additionally requires that at least 30 per cent of the work on a tariff-exempt vehicle be performed by workers earning a wage of at least $16 an hour.
  3. It was signed in November 2018, and most of its provisions came into effect in July 2020.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. The World Integrated Trade Solution (WITS) database, which records that roughly 77 per cent of Canada's merchandise exports went to the United States in 2023, is maintained by:

  • A. The International Monetary Fund
  • B. The Organisation for Economic Co-operation and Development
  • C. The World Bank
  • D. The United Nations Conference on Trade and Development

Q6. Periodic institutional reviews of Canada's entire trade regime — which document its export concentration and its 21 tariff quotas — are carried out under a standing surveillance mechanism operated by:

  • A. The World Trade Organization
  • B. The Organisation for Economic Co-operation and Development
  • C. The International Monetary Fund
  • D. The United Nations Conference on Trade and Development

Q7. Consider the following statements about the two long-standing irritants in United States–Canada trade, softwood lumber and dairy: Which of the statements given above is/are correct?

  1. In WTO dispute DS277 the United States was the complainant, challenging Canadian federal and provincial stumpage programmes for softwood lumber.
  2. The softwood lumber disputes, including DS277, ended in a mutually agreed solution notified in October 2006 in the form of the Softwood Lumber Agreement.
  3. Canada's dairy measures have themselves been litigated at the WTO with Canada as the respondent, in the dispute concerning measures affecting the importation of milk and the exportation of dairy products.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q8. Among the commodity groups covered by Canada's tariff-quota commitments at the WTO, the single highest average over-quota tariff protection — running to roughly 200 per cent and above — is applied to:

  • A. Live animals and meat products
  • B. Dairy products
  • C. Cereals and oilseed products
  • D. Fresh fruit and vegetable products

Q9. Which one of the following correctly describes the manner in which Mark Carney assumed the office of Prime Minister of Canada in March 2025?

  • A. He was chosen leader of the Liberal Party of Canada in a party leadership contest, and took office after the collapse of the incumbent government
  • B. He led his party to victory in a federal general election held in March 2025 and was thereafter invited to form the government
  • C. He was named an interim Prime Minister by the Governor General while the Liberal Party's leadership contest was still under way
  • D. He moved directly from the governorship of the Bank of Canada to the prime ministership at the request of the outgoing Prime Minister

Q10. Which one of the following positions did Mark Carney occupy earliest in his career?

  • A. Governor of the Bank of Canada
  • B. Governor of the Bank of England
  • C. Leader of the Liberal Party of Canada
  • D. Prime Minister of Canada

Q11. The United States and Canada remain partners in continental and transatlantic security frameworks even as their trade relations have deteriorated. Consider the following statements about those frameworks: Which of the statements given above is/are correct?

  1. Canada was among the twelve original signatories of the North Atlantic Treaty of 1949.
  2. NORAD is a bi-national command of the United States and Canada whose mandate was extended to maritime warning in 2006.
  3. Article 5 of the North Atlantic Treaty has been invoked by the alliance on only one occasion, following the September 2001 attacks on the United States.
  4. The headquarters of NATO and the headquarters of NORAD are both located at Brussels, Belgium.
  • A. 1 and 3
  • B. 2 and 4
  • C. 1, 2 and 3
  • D. 3 and 4 only

Q12. Canada's Critical Minerals Strategy, published under the title 'From Exploration to Recycling: Powering the Green and Digital Economy for Canada and the World', is the responsibility of which federal department?

  • A. Global Affairs Canada, which handles Canada's international trade and investment files
  • B. Natural Resources Canada, the department for energy, minerals and forests
  • C. Innovation, Science and Economic Development Canada, the industrial policy department
  • D. Environment and Climate Change Canada, the department for environmental assessment