Trump reshuffles Canada tariffs 11 days before midterms, swapping plywood and packaging for carpets and valves

President Donald Trump signed a proclamation Friday reshuffling the list of Canadian goods subject to his 50% Section 338 tariffs, removing some products that had drawn complaints from lawmakers in his own party while adding new categories, with the changes set to take effect October 30, four days before the November 3 midterms. The move lands as a new federal lawsuit directly challenges the legal basis for the entire Canada tariff regime.

The proclamation, published by the White House on October 23, is the latest adjustment to duties Trump first imposed on Canadian goods this summer after, as the administration put it, "Canada walked away from a near-final trade deal" and imposed retaliatory tariffs on roughly $20 billion of U.S. exports. Trump has now signed multiple proclamations under Section 338 of the Tariff Act of 1930, a rarely-invoked statute that lets a president respond to foreign discrimination against U.S. commerce with levies up to 50%.

What goes in, what comes out

Plywood and certain packaging materials are among the products that will no longer face the 50% tariff, effective October 30. Meanwhile, cocoa powder, carpets, and air conditioners will now be subject to the levies. The administration said it was removing items such as plywood sheets, some paper products, certain machinery and refrigeration equipment, and certain packing crates and boxes, replacing them with certain valves, carpets, waste products, and others.

The political backstory on some of those exemptions is direct. Sen. Susan Collins (R-ME) said the removal of packaging materials, refrigeration equipment, and some agricultural machinery was made to ease the duties' costs for her home state. Collins's office confirmed her role. Her spokeswoman Phoebe Keller told CNBC that the senator "requested exemptions for products that are important to Maine," adding that Collins would "continue working directly with Administration officials to seek additional relief from tariffs and encourage a broader trade agreement with Canada."

In Friday's proclamation, Trump said he decided to tweak the list after senior executive branch officials advised him that doing so would still offset the alleged discrimination while serving the public interest. The Section 338 tariffs apply to all covered goods regardless of whether a good originates under the U.S.-Mexico-Canada Agreement, and they apply in addition to tariffs imposed under Section 232 of the Trade Expansion Act of 1962.

A legal challenge that could unravel more than any exemption list

The product rotation may matter less than what landed in federal court this week. The latest changes came the same week a lawsuit was filed with the Court of International Trade seeking their removal. According to the suit, filed by the Liberty Justice Center on behalf of food importing company Gellert Global Group, Trump did not meet the requirements under Section 338 to implement the tariffs, and it also casts doubt on Trump's use of the statute given more recent legislation. Beyond removing the tariffs, the filing parties asked the court to block collection and order refunds for importers.

A ruling against the Section 338 statute would do far more for Canadian companies than any exemption list. The Court of International Trade has jurisdiction over federal civil actions arising from trade laws, and a decision there could be appealed directly to the U.S. Court of Appeals for the Federal Circuit. No hearing date had been set as of Friday evening.

Canadian Prime Minister Mark Carney, who has been pushing for a deal, has publicly signaled impatience. Carney has said, "We could sign it this afternoon if the U.S. were there."

The midterm clock

Trump signed the proclamation on October 23, 2026, eleven days before the November 3 midterms. The timing is not subtle. Several of the products rolling off the tariff list, including packaging crates and agricultural equipment, are concentrated in competitive districts and in Maine, where Collins faces voters this cycle. The new additions and removals will take effect October 30, four days before the election.

Market reaction was muted. EWC, the iShares MSCI Canada ETF, dipped just 0.41% to $60.69 after Trump reshuffled the tariffs, as markets recognized the headline outpaced the actual change. Traders appear to be pricing in continued volatility in the product list rather than any resolution.

Section 338 is a rarely invoked trade authority, and its use here fits the established pattern of this administration treating tariff schedules as a living negotiating instrument rather than settled policy. The statute allows a president to install tariffs up to 50% to address discrimination against U.S. commerce. In ordering the tariffs originally, Trump alleged Canada unfairly imposed duties and quotas on U.S. car imports while halting the purchase of alcohol imports and setting tariff-rate quotas for certain dairy products.

Congress: noise, but no vote

On the Hill, the reshuffle produced statements but no legislative action. Collins's public positioning is that she is working the phones inside the administration rather than pushing legislation. Updating current trade or tariff law would require Senate buy-in, complicating any prospects for a Congressional response before the election. Republicans in tariff-sensitive districts have largely avoided outright opposition, instead lobbying for exemptions product by product.

Democrats have called the whole episode proof of the administration using tariffs as an election-year pressure valve. None offered legislation on Friday.

What to Watch

• Court of International Trade, Gellert Global Group v. United States: A ruling that Section 338 was improperly invoked would invalidate the entire Canada tariff structure simultaneously, far outweighing any exemption list. Watch for the court to set a briefing schedule in the next two to three weeks.
• Canadian retaliation: Ottawa has previously answered U.S. tariff actions with targeted retaliation lists and formal complaints, so any Canadian counter-notice is the natural follow-on. Carney's government could announce a new response before October 30.
• Collins and Maine: The senator has not said whether the exemptions she secured are sufficient. Her next public statement on the tariffs will signal whether she backs the proclamation or keeps pressing for more.
• Post-election posture: A ruling against Section 338 or a deal after the election would remove tariffs that this proclamation only reduces. Whoever controls the House come January will inherit a bilateral trade relationship still without a settled agreement.
• October 30 implementation: The effective date is close enough that importers are already making logistics decisions. Any last-minute amendment to the proclamation before that date would itself be news.

Sources: White House Fact Sheet, Oct. 23, 2026 | Supply Chain Dive | CNBC | 247 Wall St. | Inside Trade | Newsquawk | Yahoo News / Supply Chain Dive