Tariff Update: Latest Changes to US, Canada and Mexico Import Duties
October 22, 2026 | ATN Trade & Finance
The North American trade landscape shifted on multiple fronts this month, with a new Mexican auto-parts duty exemption, a court challenge to Canada tariffs, and a key Section 232 adjustment for steel and aluminum. Here is what importers and exporters need to know right now.
US–Canada: 50% Tariffs, A Lawsuit, and the January Deadline
The US Section 338 tariffs of 50% on approximately $20 billion of Canadian goods remain in force — and are now facing their first major legal challenge. On October 20, importer Gellert Global Group, represented by the Liberty Justice Center, filed suit in the US Court of International Trade arguing the tariffs exceed statutory authority. The case is one to watch: if a court issues a preliminary injunction, the tariff structure could be disrupted before the next major escalation arrives.
That escalation is scheduled for January 1, 2027, when a 50% tariff on Canadian automobiles, auto parts, and steel takes effect. Manufacturers and Tier 1 suppliers on both sides of the border are working through supply-chain decisions now, and the January deadline is the single most consequential near-term date for the Canada-US trade corridor.
An import ban on approximately $1 billion of Canadian alcohol, dairy, and motorcycles has been in place since September 29, 2026, adding further friction to cross-border trade in those sectors.
Canada's countermeasures — effective September 8, 2026 — remain active: tiered surtaxes of 15%, 25%, and 50% on more than 600 US products including steel, aluminum, dairy, appliances, agricultural equipment, pulp and paper, electronics, furniture, and apparel. Canada's 25% auto counter-tariffs also remain in place.
US–Mexico: Plan México Cuts Auto Parts Duties to Zero
Mexico moved to offset US tariff pressure with a significant concession of its own. A decree published in the Diario Oficial de la Federación on October 13, 2026 reduced tariffs on SKD and CKD vehicle assembly parts (tariff line 9803.00.01) from 10% to duty-free for five years. The exemption applies to automakers operating under fiscal-deposit authorization — a mechanism designed to keep final assembly competitive in Mexico while managing re-export risk.
For US and international automakers with Mexico assembly operations, this is a material cost reduction on imported component kits. The five-year term takes the exemption through 2031, providing planning certainty that has been scarce in the current trade environment.
Section 232 Steel and Aluminum: October 14 Update
Proclamation 11032, issued October 14, 2026, extended and adjusted the temporary Section 232 regime covering steel and aluminum in Annex I-C — a category that includes mobile industrial equipment and machinery. Under the temporary framework (effective June 8, 2026 through December 31, 2027), USMCA-originating products face the 25% duty only on their non-US content, with an effective minimum rate of 15%. Agricultural equipment and certain residential HVAC products are at a temporary 15% rate for the same period.
The Proclamation expires December 31, 2027, meaning importers of qualifying industrial equipment have a roughly 14-month window at reduced effective rates before the full 25% potentially returns.
USMCA: Annual Reviews Replace the 16-Year Renewal
The July 2026 joint review of USMCA produced an unexpected outcome: the US declined to confirm a new 16-year term, meaning the agreement will now proceed on annual reviews rather than the automatic extension contemplated in the original text. USMCA technically remains in force until 2036, but the shift to annual reviews introduces uncertainty about the future of preferential treatment across all three countries.
The USTR has opened a public consultation for the 2027 review, with comments due January 12, 2027. The consultation is a formal opportunity for US industries to shape the negotiating agenda — and for Canadian and Mexican exporters to monitor closely.
Cross-Cutting: De Minimis, IEEPA Refunds, and Forced-Labor Duties
Three items with broad sectoral impact:
The suspension of de minimis treatment for shipments under $800 was upheld by the US trade court on August 13, 2026, with no country exemptions. Low-value e-commerce shipments — including those from Chinese platforms — continue to face full duties at entry.
IEEPA tariff refunds are processing in two phases: Phase 1 launched April 20 following the Supreme Court's February 20 invalidation of certain IEEPA tariffs; Phase 2 launched July 7. Importers who paid duties under the invalidated authority should confirm refund applications are filed.
Section 301 forced-labor duties — 10% on goods from 60 economies — took effect July 23-24, 2026, replacing the expiring Section 122 global tariff. USMCA-originating goods are exempt from these duties.
The Merchandise Processing Fee was updated October 1, 2026: the rate holds at 0.3464%, but minimums and maximums were adjusted (minimum $34.58, maximum $670.86). USMCA-originating goods remain MPF-exempt.
What this means: North American trade policy is running on two tracks simultaneously. The US-Canada relationship is moving toward escalation — the January 1, 2027 auto and steel tariff deadline is real, the court challenge is a wildcard but not a stay, and Canada's countermeasures are fully embedded. The US-Mexico relationship is moving in the opposite direction: Plan México's duty-free window on assembly parts signals that both governments see Mexico's manufacturing base as worth protecting even under broader trade friction. For importers sourcing from all three countries, the practical takeaway is to map exposure to the January 2027 Canada escalation now, and to check whether Section 232 Annex I-C or Plan México eligibility applies to any current supply lines.
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