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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 27, 2026 | ATN Trade & Finance

Three days from now, the scope of the 50% Canadian tariff expands again. Mexico continues to operate under a different and less aggressive set of duties — for now. And the Section 232 pharmaceutical tariffs that took effect in late September are still working through supply chains. Here is the current state of US, Canada, and Mexico import duties, including what changes on October 30.

The Section 338 Tariffs on Canada: What They Cover

The headline tariff number on Canada is 50%, imposed under Section 338 of the Tariff Act of 1930 as additional ad valorem duties on approximately 554 Harmonized Tariff Schedule lines. These tariffs took effect on August 22, 2026, and apply even to goods that otherwise qualify for preferential treatment under the US-Mexico-Canada Agreement. They stack on top of the existing 10% Section 301 baseline, meaning the effective additional duty burden for most covered Canadian goods is 60% above the pre-tariff rate.

The goods covered go well beyond the categories that dominated early news coverage. Motor vehicles, dairy, and alcohol are in scope, but so are apparel, textiles, furniture, plastics, toys, paper products, consumer electronics components, and cosmetics. The administration's stated rationale is Canada's withdrawal from a near-finalized trade agreement and the imposition of approximately C$20 billion in retaliatory tariffs on US goods. A separate import exclusion effective September 29 prevents certain Canadian dairy, alcohol, and motor vehicle products from entering foreign trade zones, bonded warehouses, or in-bond movement — a procedural restriction that further limits importers' options for deferring duties.

What Changes October 30

The list of goods subject to Section 338 tariffs is not static. Effective October 30, 2026 — three days from today — several product categories move in and out of scope.

Removed from the tariff list: plywood sheets, some paper products including corrugated cartons and boxes, certain machinery and refrigeration equipment, plastic boxes and crates, and seaweed and algae products. Added to the tariff list: certain valves, carpets, and waste products. These changes were published in the Federal Register with HTS-level specificity in the tariff annexes. US Customs and Border Protection guidance on processing the October 30 changes was still pending as of this writing. Importers of the removed goods who have been paying the 50% additional duty since August 22 should consult their customs broker immediately about refund procedures; importers of the newly added goods need to reprice affected shipments before the end of this week.

Canada's Retaliatory Tariffs

Canada responded to the Section 338 tariffs on September 8, 2026, imposing approximately C$27.6 billion in additional duties on US goods at rates of 15%, 25%, and 50% depending on the category. Goods in transit at the time of the announcement were reportedly exempt. The US Trade Representative confirmed that no broader US-Canada negotiating talks are currently planned — the two countries are not at the table. The economic effect is concentrated in border-state industries: Maine, Michigan, and New Hampshire have been cited as the hardest-hit US states, with lumber, agricultural equipment, and manufactured goods most affected by the Canadian measures.

Mexico: A Different and Calmer Story

Mexico's tariff situation has evolved through three distinct legal frameworks since the beginning of the year, and the current state is notably less aggressive than Canada's.

The original IEEPA tariffs on Mexico were struck down by the US Supreme Court on February 20, 2026. The administration replaced them four days later with Section 122 tariffs at 10%, invoking a statutory authority tied to balance-of-payments concerns. Those Section 122 tariffs expired on July 24, 2026, after the 150-day statutory maximum. What replaced them, and remains in effect today, is a set of Section 301 investigations on Mexico launched March 11–12, 2026. Section 301 duties are currently in effect but apply with important carve-outs: USMCA-qualifying goods are exempt, and Mexico negotiated terms rather than pursuing the tit-for-tat escalation that characterized the Canada situation.

Mexico is not subject to Section 338. The extra 50% that Canada faces does not apply south of the border. The Section 301 baseline adds duties on non-USMCA goods, but for importers who can demonstrate USMCA origin — which requires meeting the agreement's rules of origin, including 75% regional value content for passenger vehicles and light trucks — the Section 301 tariffs are bypassed.

Mexico has also imposed its own unrelated tariff measures: beginning January 1, 2026, Mexico applied duties of 10% to 50% on 1,463 tariff lines from countries without free-trade agreements with Mexico. These are not retaliatory against the US specifically — they apply to non-FTA trading partners — but they affect the input cost calculus for manufacturers sourcing components from third countries through Mexico.

USMCA: Still in Force, But Not a Full Shield

USMCA underwent its six-year review on July 1, 2026. The United States declined to extend the agreement at that review, a significant signal about the administration's posture toward the deal. Despite that, USMCA remains in force — a withdrawal would require six months' notice — and origin certification under USMCA continues to provide a 10-percentage-point benefit on general goods for both Canada and Mexico.

The limitation is critical: USMCA status does not help against Section 232 or Section 338 tariffs. Section 232 steel and aluminum tariffs apply to both Canada and Mexico at 50%, with no USMCA exemption. Section 338 tariffs on Canada also apply regardless of USMCA qualification. For businesses that built supply chains around the assumption that USMCA would neutralize Section 232 or protect against future tariff actions, the current environment is a direct refutation of that assumption.

Section 232 Pharmaceuticals

Separate from the North America-specific measures, Section 232 pharmaceutical tariffs took effect September 29, 2026. The standard rate is 100%, with lower rates for specific trading partners: 15% for the EU, Japan, South Korea, Switzerland, and Liechtenstein; 0% for the UK. Generic drugs and biosimilars are exempt. This tariff applies globally and is not specific to Canada or Mexico, but it adds to the cumulative cost-of-goods increase for any business with pharmaceutical inputs or products crossing US borders.

What this means: The picture as of October 27 is layered and asymmetric. Canada faces the most aggressive tariff posture — a 50% Section 338 additional duty stacking on top of existing rates, with no USMCA relief, and an expanding scope that changes again in three days. Mexico faces meaningful tariff pressure through Section 301 but retains the USMCA pathway for qualifying goods and has not triggered the escalatory response that Canada did. For businesses sourcing from either country, the near-term priorities are: verify whether any goods fall in the October 30 Section 338 changes; assess whether USMCA origin certification is achievable and worth the cost for Mexico-sourced inputs; and review any pharmaceutical supply chain exposure to the September 232 tariffs. The absence of active US-Canada negotiations means the Section 338 regime is not going to negotiate itself away in the near term.

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