Trump exempts some Canadian goods from 50% tariffs, keeps others
Trump administration exempts some Canadian products from 50% Section 338 tariffs.
Why it matters: These evolving tariffs affect cross-border commerce and prompt legal challenges questioning presidential authority over trade policy, crucial for legal professionals advising clients engaged in U.S.-Canada trade.
- On October 23, 2026, Trump signed a proclamation modifying the 50% tariffs on Canadian goods under Section 338.
- Effective October 30, tariffs were lifted on plywood sheets, certain machinery, refrigeration equipment, paper products, and packing materials.
- The same proclamation added items like valves, carpets, and waste products to the tariff list.
- The tariffs apply regardless of USMCA rules and are in addition to Section 232 duties.
- Gellert Global Group filed a lawsuit challenging the President's authority to impose these tariffs under Section 338.
On October 23, 2026, President Donald J. Trump signed a proclamation modifying the list of Canadian products subject to 50% tariffs under Section 338 of the Tariff Act of 1930. These modifications took effect on October 30.
The updated tariff schedule removed products including plywood sheets, various paper products, certain machinery and refrigeration equipment, and packaging crates and boxes from the 50% tariff list. Simultaneously, it added products such as certain valves, carpets, and waste items to the list. These tariffs apply irrespective of the U.S.-Mexico-Canada Agreement (USMCA) and are in addition to tariffs under Section 232 of the Trade Expansion Act of 1962.
Initially imposed in August 2026, these 50% tariffs targeted $20 billion in Canadian goods, citing Canadian discrimination against U.S. exports of dairy, autos, and alcohol. Canada responded by imposing retaliatory tariffs, escalating trade tensions.
Further modifications came in September 2026, including import bans on nearly $1 billion worth of Canadian alcohol and dairy products. The October action aims to balance easing burdens for U.S. businesses and advancing public interest, according to the White House.
Such trade restrictions have drawn criticism from U.S. lawmakers, like Senator Susan Collins of Maine, who highlighted dependence on Canadian specialized equipment and materials. Meanwhile, legal challenges have emerged, notably a lawsuit filed October 20 by New Jersey importer Gellert Global Group contesting the President's authority to impose sweeping tariffs under Section 338. The plaintiff argues that subsequent trade laws supersede Section 338’s provisions and that Congress’s procedural requirements were bypassed.
The White House has committed to vigorously defending the tariffs amid these legal disputes, underscoring the ongoing uncertain landscape for cross-border commerce between the U.S. and Canada.
By the numbers:
- $20 billion — worth of Canadian goods initially subjected to 50% tariffs in August 2026
- 50% — ad valorem duties imposed under Section 338 tariffs
- October 30, 2026 — effective date of the latest tariff modifications
Yes, but: Legal challenges argue that Congress’s later trade laws override Section 338, potentially limiting the President’s tariff authority.
What's next: The legal case filed by Gellert Global Group is pending, and further trade regulation updates may emerge as tensions persist.