U.S. adds 100 Canadian tariff lines, drops 22 on Oct. 30

The United States dropped 22 Canadian product categories from its 50 per cent Section 338 tariffs and added 100 others at 12:01 a.m. Eastern time Oct. 30, according to the White House’s list of covered goods.

The swap is the third change to the tariffs in as many months, trade-services firm Flexport said, and it leaves Canadian exporters of cocoa powder, carpets and paints newly exposed while plywood and packaging makers get relief.

The changes come from a proclamation issued Oct. 23 that modifies Proclamation 11048, the July 20 order that first imposed the duties, the RV Industry Association said in a Oct. 26 summary. The duties apply to goods regardless of whether they qualify under the Canada-U.S.-Mexico Agreement, and they stack on top of separate Section 232 tariffs, the association said.

When we first reported the change, the White House fact sheet did not itemize most of the added products. The annex to the proclamation, which we have now reviewed, does.

The 22 removed lines include plywood sheets not over six millimetres thick (seven lines), corrugated cartons and boxes, paper sacks and bags, coated bleached paperboard, and plastic plates, sheets and bags. Several kinds of refrigeration, filling, packing and produce-cleaning machinery also come off the list, as do seaweeds and algae fit for human consumption.

The 100 added lines are led by carpets and floor coverings, which account for 43 of them, and cocoa powder, which accounts for 13. The annex also adds certain paints, soaps, shampoos and lubricants, some wood panels and joinery, window and wall air conditioners, chest freezers of up to 800 litres, hand-operated iron and steel valves, electromechanical hand tools, canoes up to 7.5 metres, archery equipment and some laboratory and surgical instruments.

Aircraft and aircraft parts that meet the criteria of General Note 6 of the U.S. tariff schedule are excluded from the new additions, the annex said.

The annex does not say why each product was chosen. Republican Sen. Susan Collins of Maine said Oct. 23 she had secured exemptions for nine product categories important to Maine producers, as we reported. Reuters, citing the Wall Street Journal, reported the removals were meant to help Republicans in northern states and could be offset by higher levies elsewhere. No official net figure on the value of goods covered has been published.

Importers are already in court. An importer filed the first legal challenge to the Section 338 tariffs at the U.S. Court of International Trade on Oct. 20, Flexport said, a case we covered when an importer sued over the 50 per cent tariffs. Separately, Washington and Ottawa are working on a narrower deal on steel and autos, as we reported, and White House economic adviser Kevin Hassett said a broader agreement was “very close”. Prime Minister Mark Carney has said Canada will not rush a deal.

For Canadian businesses, the practical test is the tariff schedule itself. The annex tells shippers to refer questions about the scope of particular codes to U.S. Customs and Border Protection. Goods entered for consumption on or after 12:01 a.m. Oct. 30 are subject to the revised list.

Sources: White House proclamation annex; RV Industry Association; Flexport; BDO.

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