22 Off, 100 On

On Friday afternoon, Senator Susan Collins of Maine announced that Canadian corrugated cartons, plastic crates, sacks and farm packing machinery would no longer pay the US 50 percent tariff. The same day, the White House published the full proclamation. It took 22 products off the list and put 100 new ones on: carpets, paints, vinyl flooring, shampoo, valves, thin MDF, wooden packing boxes, municipal waste and more.

The new list takes effect at 12:01 a.m. Eastern on Friday, October 30. In British Columbia that is 9:01 p.m. on Thursday. In Alberta it is 10:01 p.m. For the next four days, the same trailer of goods can owe nothing or owe half its value in duty, depending on which side of that minute it reaches the US port. This post covers what changed, which loads should hurry, which should wait, and what has not moved at all.

What Happened on Friday

The duty in question is the extra 50 percent the United States has charged on a list of Canadian goods since August 22, under Section 338 of the Tariff Act of 1930. That law lets a president impose duties of up to 50 percent to offset what the administration calls discrimination against US commerce. We covered the first round in Two Bills, One Morning and Canada's answer in The Bill Arrives at 12:01 a.m.

Friday's proclamation, signed October 23, amends the existing order rather than starting a new one. The rate stays at 50 percent and the rules stay the same. What changes is the list. The White House fact sheet names plywood sheets, some paper products, certain machinery and refrigeration equipment, and certain packing crates and boxes as removals, "replaced with certain valves, carpets, waste products, and others." The proclamation says the farm-related exemptions are "consistent with the interest of the United States."

The politics are hard to miss. Collins is in a tied race ahead of the November 3 US midterms, and her announcement covered nine categories of products Maine farmers use: cartons, crates, sacks, cleaning and grading machinery, packing equipment and seaweed products among them. It did not mention the 100 additions. For a Canadian shipper the motive matters less than the result: the list is now different, and it changes on a fixed clock.

What Comes Off, What Goes On

Two things in those columns should stop anyone from screening by category name. Refrigeration and freezing equipment comes off, and chest freezers go on. Coated paperboard and paper sacks come off, and kraft paper, larger paper sacks and labels go on. Those are not contradictions. They are different tariff lines, and the only way to know which side your product is on is its HTS code checked against the annexes to the proclamation, not a news summary, including this one.

The Line Is 9:01 p.m. Pacific

The new list applies to goods "entered or withdrawn from warehouse for consumption" on or after 12:01 a.m. Eastern on October 30. The date that matters is the entry, not the pickup and not the invoice. For most trucked shipments into the US, that moment is when the load arrives at the US port of entry. Your customs broker can confirm exactly how your entries are timed, and you should ask before Thursday rather than after.

One thing we have not seen is an in-transit exception. Nothing published so far gives goods already on the road the old treatment, and CBP's implementing guidance was still pending when we wrote this. Plan as if the minute is absolute.

Hurry, Hold, or Leave It Alone

Once you know which side of the list each product sits on, the decision for this week is simple to state and harder to execute.

The Packaging Trap

Paper and packaging sit on both sides of this change, and it is the most likely place for confusion this week. Corrugated boxes, plastic crates, molded pulp and some sacks come off. Kraft paper, large paper sacks, self-adhesive paper and pressure-sensitive labels go on. Wooden packing boxes, tariff line 4415.10.30, are an addition, not a removal, even though some early summaries of the proclamation suggested that wooden crates were exempted. Fordaq's line-by-line reading of the annex makes the point clearly: plastic crates come off, wooden ones go on.

The good news for most shippers is that this duty applies to packaging imported as goods in its own right, for example a Canadian box plant selling cartons to a US farm. The carton or crate your product ships in is normally classified with the product it carries, not entered as a separate import. "Normally" is doing real work in that sentence. Reusable containers and unusual packing can be treated differently, so if your packaging is anything other than ordinary, ask your broker before Thursday.

What It Does to the Lanes

Corrugated cartons, plastic crates, bags and sacks are textbook dry van freight. They are light and bulky, and they fill a trailer long before they reach its weight limit. Some of that southbound volume should come back now that the duty is gone, but not on Friday morning. Buyers who switched suppliers when the duty landed have contracts and new habits, and that freight returns over months, not days.

The added goods will do the opposite. Expect a short pull-forward this week as importers try to get carpets, flooring, paint and valves across before the line, followed by a quieter stretch on those products. Freight pulled forward leaves an empty lane behind it, so this week's volume says little about November's.

For carriers, every change to southbound volume feeds the price of the round trip. When less freight heads south, the northbound leg has to carry more of the truck's cost, and that is landing on top of record diesel and the rate reset already under way. A net US$2.5 billion of trade coming off the list is modest relief for the lanes, not a turning point.

What Has Not Changed

• CUSMA still gives no shelter. The White House says the duty applies "regardless of whether a good originates under the U.S.-Mexico-Canada Agreement." Keep filing CUSMA claims for the rest of your freight, but they do not remove this duty.
• The duty still stacks. It applies in addition to any Section 232 duty on steel, aluminum, timber and other covered goods. Get the combined figure per HTS line from your broker, in writing.
• The September 29 bans are not mentioned. Friday's fact sheet says nothing about the import bans on Canadian packaged alcohol, some dairy and motorcycles, which cover nearly US$1 billion of goods. Plan as if they still apply.
• Ottawa answered with money, not tariffs. On October 21, Prime Minister Mark Carney and Ontario Premier Doug Ford announced a $6.2 billion, five-year package, including $3.7 billion for steelmakers and $1.8 billion for automakers. "Their approach has changed," Carney said. "So must ours."
• A deal is talk, not law. The President says an agreement with Canada is "very close." On October 8, US Trade Representative Jamieson Greer said Washington was "holding fast." Neither is a rate you can quote.
• The lawsuit is real, and unresolved. On October 20, Gellert Global Group, a New Jersey family business that imports Canadian cheese, challenged the Section 338 tariffs at the US Court of International Trade. It is represented by the Liberty Justice Center, which also brought the challenge that led the Supreme Court to strike down the earlier emergency-law tariffs in February, after which the administration had to refund billions to importers. The White House says it will "vigorously defend" these tariffs. Nothing has been decided, but clean entry records cost nothing and matter if refunds ever come.

How Keylink Is Handling the Changeover

We run our own trucks on Canada and US lanes out of Abbotsford and Calgary. Paper, packaging, flooring and building products are the kind of dry van freight our trailers carry, so this week's clock is our scheduling problem as much as yours.

Questions We Get Asked

Sources and Further Reading