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Tariff Update: Latest Changes to US, Canada and Mexico Import Duties

Tariff Update: Latest Changes to US, Canada and Mexico Import Duties

ATN BREAKING NEWS |

Tariff Update: Latest Changes to US, Canada and Mexico Import Duties

October 28, 2026 | ATN Trade & Finance

Two days before a significant revision to Canadian tariffs takes effect, and with formal Canada-US trade negotiations still not underway, importers and exporters on both sides of the North American borders are navigating a shifting and increasingly granular set of duty obligations. Here is the current state of the landscape across Canada and Mexico, with the most urgent item first.

Canada: Section 338 Scope Changes Take Effect Thursday

A proclamation signed by President Trump on October 23 modifies the list of Canadian products subject to the 50% ad valorem Section 338 tariff, with the changes effective at 12:01 AM Eastern time on October 30 — this Thursday. The changes amend Proclamation 11048 and apply based on the date goods enter US commerce (or are withdrawn from bonded warehouse for consumption), not the shipment date. That timing detail matters immediately for goods currently in transit.

The October 30 revision shifts the composition of covered products in a direction consistent with what the Tax Foundation described as a movement from business inputs to finished consumer goods. The following categories are removed from the 50% Section 338 rate — meaning they revert to their base duty and any applicable Section 232 or other duties: plywood sheets, certain plastic film, boxes and bags, corrugated cartons and boxes, certain plastic-coated paper and paperboard, certain paper pulp articles, and specific refrigeration, temperature-treatment, filling, packing, and agricultural produce machinery (including HTS 8418.69.01, 8419.89.95, 8422.30.91, 8422.40.91, and 8433.60.00).

The following categories are added to the 50% Section 338 rate: paints, mastics, shampoos, soaps, lubricants and waxes (Chapters 32-34); cocoa powder; carpets and other floor coverings; vinyl flooring and medium-density fiberboard; certain air conditioners (HTS 8415.10.30); chest-type freezers (HTS 8418.30.00 — note that the refrigeration machinery code 8418.69.01 was removed while this freezer code was added, illustrating how classification at the 10-digit HTS level determines duty treatment); certain power tools (HTS 8467.29.00); certain valves (HTS 8481.80.30); certain waste products; wood panels; paper bags; canoes; and some medical equipment.

Three structural points apply to all Section 338 goods and have not changed: USMCA origin does not exempt covered products from the 50% duty; Section 338 rates stack on top of any applicable Section 232 duties on steel, aluminum, and derivatives; and the base rate remains 50% additional ad valorem. Canada has said it will match US exemption changes on a reciprocal basis, though CBP guidance implementing the October 30 changes is still pending as of publication. Importers should monitor CBP's Cargo Systems Messaging Service for implementation notices. For questions about specific HTS classifications within the added or removed categories, the proclamation annexes and CBP guidance control over product descriptions in trade press summaries.

An importer filed the first legal challenge to Section 338 tariffs at the Court of International Trade on October 20, arguing that subsequent legislation culminating in Section 301 "impliedly repealed" the Section 338 authority. The case's timing and outcome are unknown, and importers should not assume it changes their current obligations.

Canada: Trade Negotiations Have Not Started

Prime Minister Mark Carney confirmed Wednesday that a Canada-US trade deal will not be concluded before next Tuesday's midterm elections. Formal USMCA-framework negotiations have not yet begun. Political-level discussions are being led on the Canadian side by Deputy Prime Minister Dominic LeBlanc, with Reuters reporting that negotiators are working toward a framework covering steel and aluminum tariffs and automotive content rules. President Trump said separately this week that the trade dispute with Canada would end "pretty soon."

The negotiating history provides context for how far the two sides remain from a resolution. Formal talks froze for roughly five months before LeBlanc and US Trade Representative Jamieson Greer met in March 2026. Canada walked away from what was described as a near-final deal in August, leading to September 8's imposition of approximately $20 billion in Canadian retaliatory tariffs on US exports, including steel, dairy, and agricultural equipment. That followed earlier Canadian retaliatory packages totaling what Canadian officials have described as $27.6 billion in counter-tariffs since the dispute began. The Section 338 tariffs themselves date to July 20, 2026, when three proclamations imposed the 50% duty on Canadian dairy, alcoholic beverages, and motor vehicles — a scope that has expanded significantly through four subsequent rounds of proclamations.

The practical implication for importers and exporters operating across the Canada-US border is that the current tariff environment — 50% Section 338 on a broad and expanding list of Canadian goods, plus Canadian retaliatory tariffs on US exports, plus Section 232 on steel and aluminum — is likely to persist at minimum through November.

Mexico: USMCA Holds, But Section 232 Stacks

Mexico's situation is structurally different from Canada's: USMCA remains in force, and qualifying goods continue to enter the United States at approximately 0% under the agreement. That preferential access has become the primary lever for manufacturers in Mexico managing their US duty exposure, with USMCA utilization rising to approximately 85% by early 2026, per Tetakawi. Goods that certify USMCA origin are also exempt from the 10% additional Section 301 duty that applies to products from 60 economies since July 24, 2026.

The critical carve-out is Section 232. Steel, aluminum, and derivative products from Mexico carry 50% duties regardless of USMCA status — that exemption has never applied to Section 232. Procurement and bill-of-materials planning that relies on USMCA qualification must account for Section 232 exposure separately, particularly in auto, appliance, and industrial manufacturing supply chains where steel and aluminum content is significant.

A partial relief measure is in place under Proclamation 11032, which runs from June 8, 2026 through December 31, 2027. For qualifying Mexican and Canadian products under that proclamation, the 25% base Section 232 duty applies only to non-US content rather than the full value of the good, resulting in effective duty rates above 15% but potentially below the headline 25%. Agricultural equipment and certain residential HVAC systems moved to a temporary 15% effective rate under this regime. US Commerce defined how "US content" is counted for this purpose, effective for entries from October 14, 2026.

On USMCA's durability: the US did not confirm a 16-year renewal term at the July 2026 review, meaning the agreement now moves to annual reviews. Each party retains the right to withdraw with six months' notice. The next round of USTR public consultations for the 2027 review closes January 12, 2027. USMCA's terms and the 0% rate for qualifying goods remain in effect regardless. For the auto sector specifically, US Customs and Border Protection has a pending investigation into railway tank cars from Mexico — a Commerce determination is due November 9, 2026, which could result in antidumping cash deposit requirements.

One forward-looking item for Mexico-based importers: Mexico's own customs valuation reform takes effect January 1, 2027. Declared values below the transaction value of identical or similar goods will trigger audits and the possibility of precautionary seizures, with under-declarations of 20% or more on temporary imports (including IMMEX) potentially treated as smuggling. Supply chain and compliance teams with IMMEX structures should review declared values against current market benchmarks well ahead of the January 1 implementation date.

What this means: Thursday's Section 338 changes on Canadian goods are an immediate operational item — not a policy preview but an active compliance event requiring HTS re-screening against the revised proclamation annexes before goods clear US customs on October 30. For manufacturers sourcing plywood or packaging machinery from Canada, the tariff clock resets favorably Thursday morning. For companies sourcing paint, flooring, air conditioners, freezers, or consumer cleaning products from Canada, it resets in the other direction. On Mexico, USMCA qualification remains the single most important duty management tool available, but Section 232 exposure on steel and aluminum is real and does not yield to USMCA certification — a distinction that matters most in Q4 as annual supply contracts are negotiated and landed cost models are updated for 2027.

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