Tariff Update: Latest Changes to US, Canada and Mexico Import Duties
October 21, 2026 | ATN Trade & Finance
Three trade frameworks are moving simultaneously in North America: the US-Canada tariff war is actively escalating with litigation now in play, US-Mexico bilateral talks have stalled, and a mid-October metals rule change quietly shifted how Section 232 duties are calculated for USMCA suppliers. Here is where each strand stands.
US-Canada: 50% Tariffs, Retaliation, and a Legal Challenge
The sharpest bilateral tariff regime in modern North American history is now eight weeks old. The US imposed 50% tariffs on approximately $20 billion of Canadian goods — those that would otherwise enter duty-free under USMCA — effective August 22, using Section 338 of the Smoot-Hawley Tariff Act of 1930, a provision no prior administration had ever invoked. Covered categories include wood, plastics, textiles, machinery, electronics, furniture, and sporting goods. On September 15, the scope expanded further to include cheeses, metal products, paper products, and additional furniture lines.
Canada retaliated on September 8 with 15% to 50% duties across 629 tariff codes covering approximately CA$27.6 billion (roughly US$19.9 billion) of US exports, hitting steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Ottawa has announced a CA$7.5 billion domestic support package for affected sectors.
The September 29 escalation added a direct import ban on nearly $1 billion of Canadian goods, including packaged alcoholic beverages, motorcycles over 800cc, whey products, and molasses. No formal bilateral negotiations are underway; talks collapsed in late August after last-minute changes to US terms. Looking ahead, Trump has announced that tariffs on Canadian vehicles, auto parts, and steel will rise to 50% on January 1, 2027.
On October 20, a federal lawsuit was filed in the US Court of International Trade (Case No. 26-cv-4636) by Gellert Global Group Corp., a cheese importer, represented by the Liberty Justice Center. The suit argues Section 338 was effectively abandoned by Congress in favor of a broader trade framework, and that even if still valid, the 50% rate is not tied to the statute's requirement that tariffs offset a specific burden. The outcome could affect all importers operating under these tariffs.
US-Mexico: Talks Stalled, USMCA Intact
Mexico's situation is materially different. USMCA remains in force and USMCA-originating goods retain their duty-free treatment for most categories. The US declined at the July 1 six-year joint review to extend the agreement for a fresh 16-year term; it now moves to annual reviews through 2036, with the first 2027 cycle accepting public comments until January 12, 2027.
Bilateral talks aimed at reducing US duties on Mexican steel, aluminum, and automobiles have stalled. Commerce Secretary Howard Lutnick reportedly objected to the scope of a potential deal, and while both governments deny the breakdown, USTR Jamieson Greer's year-end interim deal target now looks unrealistic.
On the Mexican side, a significant change took effect October 14: vehicle assembly kit imports (SKD/CKD kits under tariff line 9803.00.01) were cut from 10% to duty-free for five years, a relief measure for automakers operating assembly programs under Ministry of Economy authorization.
October 14 Metals Rule: Section 232 Calculation Update
A technical but commercially significant change took effect October 14 under Proclamation 11032. For USMCA-originating Canadian and Mexican goods covered by Section 232 (steel, aluminum, and copper), the 25% tariff now applies only to non-US content, rather than the full value of the product — as long as US-origin metal content meets the revised 85% threshold (down from 95%). The effective minimum duty is 15%. Agricultural equipment and certain residential HVAC systems have moved to a dedicated 15% rate under the same proclamation, which runs through December 31, 2027.
What this means: The tariff environment in North America is bifurcated: Canada faces an active escalation cycle with no negotiating table in sight and a January 2027 auto tariff cliff approaching, while Mexico retains meaningful USMCA benefits despite stalled deal talks. For importers and supply chain teams, the October 14 metals rule change is actionable now — cost models based on full-value Section 232 assessments should be updated to reflect content-based calculations where the 85% US-origin threshold can be met.
Sources:
- U.S.–Canada Tariffs: Timeline of Key Dates and Documents — Blakes
- 2025–2026 Canada–United States Trade War — Wikipedia
- U.S. Import Tariff Tracker: Current Rates & 2026 Updates — USA Customs Clearance
- Mexico Negotiations Stall Following Canada Breakdown — Yahoo Finance
- Trade Alert Oct 2026: CBP MPF, Section 301, USMCA — Eilan Trade