Tariff Update: Latest Changes to US, Canada and Mexico Import Duties
October 19, 2026 | ATN Trade & Finance
North America's tariff landscape has shifted significantly since August, with the US-Canada trade war reaching import-ban territory and new Section 232 and Section 301 regimes reshaping the cost of importing from Mexico. Here is the current state of play.
US–Canada: From Tariffs to Import Bans
The US-Canada trade relationship has deteriorated through a series of escalating Section 338 actions. On July 20, 2026, the Trump administration imposed 50% ad valorem tariffs on specific Canadian dairy, alcoholic beverages, and motor vehicles. The duties took full effect on August 22 after a brief suspension, and they apply regardless of USMCA origin status — a break from past practice that caught many Canadian exporters off-guard. Energy products, potash, and goods already subject to Section 232 tariffs are exempt.
The situation escalated further on September 15, when two proclamations adjusted the product scope — adding all-terrain vehicles, more dairy categories, structural iron and steel, aluminum shapes, welding products, industrial hardware, and certain furniture to the 50% list, while removing rock salt, Portland cement, and fishing rods.
The most severe step came on September 29, 2026: outright import bans took effect on covered Canadian motor vehicles, dairy products, and certain alcoholic beverages. Goods imported before September 29 but not yet formally entered remain subject to the 50% tariff rather than the ban. Canada responded on September 8 with approximately $20 billion in new retaliatory duties on US exports, including 50% on certain steel and aluminum products and 25% on additional goods. No negotiations are currently underway; the White House has called Canada "the most difficult and unreasonable" trading partner.
US–Mexico: Section 301 Replaces the Section 122 Surcharge
The tariff architecture for Mexican imports was significantly restructured after the Supreme Court struck down IEEPA-based tariffs on February 20, 2026. The Section 122 surcharge (10%) that replaced IEEPA expired on July 24, 2026 and was replaced by a Section 301 action imposing an additional 10% tariff on products from 60 economies, including Mexico. Critically, goods that can prove USMCA origin are exempt from the Section 301 tariff — making up-to-date certificates of origin more important than ever.
Section 232 tariffs on steel, aluminum, and copper remain in place at up to 50% for all countries including Mexico, with no USMCA exemption. However, a new temporary regime under Proclamation 11032 (effective June 8, 2026 to December 31, 2027) provides relief for qualifying goods in Annex I-C (mobile industrial equipment and machinery): Mexican and Canadian producers pay 25% only on non-US content, with a minimum effective duty of 15%. Agricultural equipment and certain residential HVAC systems were reduced to 15% under this same regime.
Mexico's Domestic Move: Auto Parts Go Duty-Free
On October 13, 2026, Mexico published a decree in the Diario Oficial making parts and components for vehicle assembly (tariff line 9803.00.01 — SKD/CKD kits) duty-free for five years beginning October 14, down from a 10% rate. This applies to automakers operating under Ministry of Economy authorization as part of the government's "Plan México" industrial policy. There is no country-of-origin restriction, making the benefit available to US, Chinese, and other foreign manufacturers assembling vehicles in Mexico.
CBP Fee Update
Effective October 1, 2026, the Merchandise Processing Fee minimum rose to $34.58 and the maximum to $670.86 per formal entry. USMCA-originating goods remain MPF-exempt.
What this means: The US-Canada import bans on September 29 marked a new and more severe phase of that trade war — importers dealing in Canadian dairy, autos, or alcohol face legal prohibition, not just cost increases. For US-Mexico trade, the Section 301 exemption for USMCA-qualifying goods puts heavy pressure on supply chains to maintain airtight origin documentation. Mexico's auto-parts duty-free window is a meaningful incentive for vehicle assembly investment, with no origin restriction attached.
Sources:
- US Expands Section 338 Actions on Canada — C.H. Robinson
- US Imposes Section 338 Tariffs on Canadian Imports — GHY International
- From Duties to Import Bans: Trump Escalates Section 338 Actions — Troutman Pepper Locke
- Section 338 Tariffs on Canada — STR Trade
- Trade Alert: US-Mexico Trade, October 2026 — Eilan Trade
- Mexico Tariffs 2026: What Manufacturers Actually Need to Know — Tetakawi
- 2026 Tariff Updates — OIA Global
- Timeline of the 2025–2026 United States Trade War with Canada — Wikipedia