Tariff Reshuffle on Canadian Goods Gives Importers One Week to Re-Plan

President Donald Trump signed a proclamation on 23 October that removes the 50% Section 338 tariff from some Canadian goods and applies it to others, from 30 October. The Canadian outlet Global News reported that 22 products were exempted and 100 added. For importers, the change arrives with one week's notice.

What changed

Exempted products include plywood sheets, certain paper products, corrugated and plastic packaging, refrigeration and freezing equipment, agricultural machinery and seaweed products, according to Global News and a White House fact sheet reported by other outlets. The White House said certain valves, carpets and waste products would be added to the list.

Sen. Susan Collins of Maine announced exemptions for blueberry, potato, apple and seaweed producers before the White House did, and described nine product categories. CNBC reported that the White House said the change was part of efforts to address Canada's discriminatory treatment of US commerce. Coverage noted the timing, less than two weeks before the 3 November midterm elections. The reports reviewed do not show the administration linking the changes to the elections.

How the tariffs began

On 20 July, Trump signed three proclamations under Section 338 of the Tariff Act of 1930 imposing an additional 50% duty on specified Canadian goods. They cited Canadian measures on motor vehicles, dairy and alcoholic beverages as discriminatory, according to law firm Covington. The duties took effect on 22 August and cover roughly $20 billion in annual imports, according to a logistics provider's summary. Baker McKenzie described it as the first use of the authority in decades.

Goods already subject to Section 232 tariffs are excluded, but goods that would otherwise enter duty-free under the US-Mexico-Canada Agreement can still be caught, Baker McKenzie noted. Canada responded with counter-tariffs of 15%, 25% and 50% on C$27.6 billion of US goods, effective 8 September. Customs authorities then changed the scope of the Canadian list on 15 September, adding 122 classifications.

Why an exemption changes more than a price

The immediate effect is on landed cost. But advisers say the consequences go further, and several steps follow from the timing.

First, classification. EY advised cross-border businesses to map their tariff codes against each proclamation's annexes, and to check how duties stack with Section 301 and normal rates. An exemption benefits only goods whose codes match the new list.

Second, pricing and contracts. A financial advisory firm's playbook recommends SKU-level decisions on whether to pass costs through, share them or absorb them, plus tariff-adjustment and change-in-law clauses in supplier and customer contracts. It also suggests forecasting more than one scenario.

Third, timing of inventory. When changes take effect after a week, importers must decide whether to delay or accelerate shipments. This is analysis, not a reported finding, and the right answer depends on each company's contracts and product mix.

Finally, the rules can change retroactively or only going forward. Flexport reported that a separate Commerce Department exclusion for certain goods with no steel, aluminium or copper content applies retroactively to 6 April. By contrast, the Canadian exemptions take effect on 30 October, and the reports reviewed mention no retroactive relief.

A year of shifting rules

The Canadian reshuffle sits in a broader pattern. The Supreme Court ruled on 20 February that the International Emergency Economic Powers Act does not authorise tariffs. Refunds are not automatic: law firm Offit Kurman said importers of record must act, and that only IEEPA duties are refundable. The temporary Section 122 surcharge expired on 24 July. A Section 301 tariff tied to forced-labour practices began the same day, at 10% for Canada, and excludes USMCA-compliant and Section 232 goods, according to Osler and Wipfli.

What is not established

Reports differ on the scope of the exemptions: Collins cited nine categories, while Global News counted 22 products. The reports reviewed do not cite an implementing notice from US Customs and Border Protection, and the full list of added products was not available. The effect of the changes on prices, trade volumes or Canada's response is not yet known. The sources are law firms, advisers and news reports, and some figures come from secondary summaries.

What to watch next

Importers should watch for official customs guidance and the formal proclamation annexes before 30 October. The reports reviewed do not say whether Canada will adjust its own counter-tariffs, which include packaging paper, steel and agricultural equipment, according to a trade association summary. Further changes could follow the 3 November election, as talks between Washington and Ottawa continue. Companies with exposure should also keep records, since refunds, where available, depend on documents showing who paid duties and when.