Trump Updates Section 338 Tariffs on Canada: Valves and Carpets In, Plywood Out

President Donald Trump on October 23 signed a Proclamation that rewrites which Canadian products carry the additional Section 338 tariffs, pulling plywood, certain paper products, selected machinery and refrigeration equipment, and some packing crates and boxes off the duty list and putting certain valves, carpets and waste products on it instead. The change takes effect October 30, 2026, and applies to all covered goods regardless of USMCA origin, stacking on top of existing Section 232 tariffs. It is the second scope revision in under two months and the clearest signal yet that Washington intends to keep the duties in place while it re-targets them at Canadian export sectors.

The action is the latest turn in a trade cycle that began in July. Proclamation 11048, signed July 20, first imposed additional ad valorem duties on Canadian motor-vehicle products to offset what the United States called Canada's discrimination against U.S. commerce in the motor-vehicle sector. The duties were scheduled to take effect August 22 after a three-day suspension lapsed once the administration concluded Canada had not followed through on removing the alleged discrimination. Proclamation 11065 of September 8 amended the covered scope, and today's Proclamation makes a second, broader swap of which categories sit inside the tariff's reach.

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Section 338 of the Tariff Act of 1930 (19 U.S.C. 1338) is an older, rarely used authority that lets the President impose additional duties on a foreign country's products when that country is found to place restrictions on U.S. commerce. It sits alongside the more familiar Section 232 national-security tariffs, and the orders are explicit that the Section 338 duties apply in addition to any Section 232 duties already in place. For a Canadian exporter whose product is covered by both, the total landed cost rises by the sum of the two, not the larger of them.

Neither the White House proclamation nor its accompanying fact sheet publishes a single total tariff rate for the newly added categories, so the immediate price impact depends on which product lines within valves, carpets and waste products fall under the coverage. What is clear is the direction of the change for each side. Canadian producers of plywood, selected paper, machinery and refrigeration equipment, and packing crates and boxes get relief on those goods; producers of valves, carpets and waste products face a new and as-yet unspecified additional duty. U.S. importers and end-users who buy the newly covered categories absorb higher landed costs, while U.S. buyers of the removed categories get some relief.

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The re-targeting matters beyond the product lists. Valves, carpets and waste products are not motor vehicles, so the scope of the retaliation has widened well past the original auto-sector dispute. That broadening tells importers that Canada's entire export basket, not just vehicles, is exposed to incremental Section 338 duty risk while the underlying disagreement over motor-vehicle market access remains unresolved. For supply chains on both sides of the border, the lesson is that category coverage can change with each new proclamation, which makes multi-quarter sourcing and pricing decisions harder to lock in.

The administration frames the action as part of a broader push to bring production back to the United States. The fact sheet highlights reshoring investment announcements and casts the duties as pressure that reshapes trade flows in favor of domestic manufacturers. Canadian officials have described the sequence as an escalation through USMCA dispute mechanisms, and Canada has contested the underlying motor-vehicle finding through the agreement's processes. Both positions matter because the resolution path is as important as the tariff rates: a negotiated removal of the underlying discrimination would unwind the Section 338 duties, while continued disagreement points to further re-targeting.

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The next dated catalyst is October 30, when the revised scope takes effect and the newly covered goods begin paying the additional duties at the border. From there, the watch items are the level of any Section 232 stacking on individual product lines, whether Canada's retaliation list changes in response, and the status of the USMCA dispute process. For a U.S. business that sources the newly added categories from Canada, October 30 is the near-term cost inflection. For one that buys the removed categories, it is a reprieve that should be priced while it lasts, because scope revisions have already moved twice in two months.

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