Plywood and some packaging materials leave the 50% tariff on Canadian goods on October 30, while cocoa powder, carpets and air conditioners join it. USMCA-qualifying goods were never exempt, and a court challenge leaves refunds an open question.
Key Takeaways
For three months, a buyer sourcing plywood or paper packaging from Canada has been paying a 50% duty that most North American supply chain plans never modeled. From October 30 that duty disappears for some of those goods. On the same day it starts applying to cocoa powder, carpets and air conditioners. The list has now changed several times since July, and each revision lands with about a week of notice. For importers, the cost of the tariff is no longer just the duty. It is planning against a product list that keeps moving.
The proclamation, signed on Friday, October 23, drops plywood, certain industrial machinery and select packaging and paper materials from the 50% levy, while a range of other imports, including cocoa powder, carpets and air conditioners, become subject to it. According to Supply Chain Dive, the president said senior officials had advised that the revised list would still offset Canada's alleged discrimination while serving the public interest. The tariffs rest on Section 338 of the Tariff Act of 1930, which allows duties of up to 50% against countries that discriminate against U.S. commerce.
The path to this point has been short and steep. The 50% duties were first ordered in July on what amounted to about $20 billion of Canadian imports. They took effect in August after trade talks broke down. Canada answered in September with matching retaliatory tariffs, and the administration expanded the list and added import bans on goods including specialty cheeses, boats and furniture.
Plywood shows how much was riding on a single line of the annex. When the duties were announced, the Kitchen Cabinet Manufacturers Association found that nearly every HTS 4412 plywood subheading was covered, along with softwood veneer used as core stock. Canadian-origin hardwood plywood imports were worth about $197 million in 2025, out of roughly $1.41 billion in total U.S. hardwood plywood imports. Indonesia, at about $424 million, and Vietnam, at about $300 million, were the larger suppliers. Panel buyers who shifted volume away from Canada since August now have to decide whether to shift it back.
The detail many importers missed in July is that these duties ignore the trade agreement most Canadian freight moves under. C.H. Robinson's client advisory on the original proclamations noted that USMCA-qualifying goods are not excluded. The 50% applies on top of existing duties, taxes and fees. Goods already subject to Section 232 tariffs are excluded, as are energy, potash, fish, critical minerals and certain other products, and goods placed in a Foreign Trade Zone must be admitted under privileged foreign status. The advisory also pointed out that Section 338 duties are not time limited, unlike earlier tariffs.
That combination undoes a planning assumption many North American networks were built on. A supplier that qualifies under rules of origin is no longer a duty-free supplier if its product appears in the annex, and the annex is a list that can be rewritten by proclamation. Classification now decides exposure at the subheading level, which means procurement, customs and operations teams need the same product data, not three different versions.
The legal ground under the tariffs is also being tested. On October 20, food importer Gellert Global Group, represented by the Liberty Justice Center, sued in the U.S. Court of International Trade. The suit argues that Section 338 had not been used to impose tariffs in the 96 years since it was enacted, that it has been superseded by Section 301 of the Trade Act of 1974, and that the product list was expanded without a required 30-day waiting period. It asks the court to strike the tariffs, block their collection and order refunds for importers. Not every trade lawyer expects it to succeed. James Kim of ArentFox Schiff, quoted by Supply Chain Dive, noted that the Supreme Court found IEEPA did not authorize tariffs, while "Section 338 expressly does."
Even if refunds come, the experience with IEEPA duties shows they arrive slowly and do not repair everything. Helen of Troy, the owner of Hydro Flask, expects about $80.5 million in tariff refunds following the Supreme Court's February ruling. It received an initial $9.2 million in the quarter ended May 31, recognized $26.9 million in the quarter ended August 31, and expects the rest by the end of February 2027. Chief Financial Officer Brian Grass said the company has "not been made whole" for the cumulative impact on its business. An importer paying Section 338 duties today should assume the cash is gone and treat any refund as upside, while keeping the entry records that a claim would need.
The October 30 revision is unlikely to be the last. Importers and shippers with Canadian exposure can protect themselves with these steps:
The carve-out will save some importers real money from Friday. The lesson of the last three months is that the list itself is now a recurring operating risk, and the companies that handle it best will be the ones that can see their own exposure the day a proclamation is signed, not the week after it takes effect.
Report
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