Thursday, October 29, 2026
The news that moves freight
Ocean Oct 29, 2026 · 7 min read

Canada sees limited progress as Mexico eyes interim deal

Canada says “limited progress”. Mexico may get its deal first. A Canadian official told Reuters on 28 October that US talks on 50% steel and 25% auto tariffs have made “limited progress”. PM Mark Carney said Canada is “not at that position right now”. Our view: no Canadian relief is coming before the 3 November midterms. Mexico is closer. Reuters says Mexico and the US are weighing an interim deal before the vote. For forwarders, Canadian steel, autos and Section 338 goods keep their duties, and 100 more product codes join the 50% list on 30 October. Our call: the 50% Section 338 duty is still in force on 31 December.

Ottawa says the talks are stuck. Mexico City is trying to close before the vote. On Wednesday 28 October a Canadian government official told Reuters: “While discussions have continued, there has been limited progress.” The talks are about US tariffs of up to 50% on Canadian steel and 25% on Canadian autos. The same day, Prime Minister Mark Carney said: “If those deals present themselves, we will pursue them, but we’re not at that position right now.”

On the same day, Reuters reported that Mexico and the United States are assessing whether they can reach an interim trade deal before the US midterm elections on 3 November.

So the two US neighbours are on different tracks, six days before the vote.

What we think this means

Our view is simple. Canada is not getting tariff relief before the midterms, and probably not this year. Canadian freight should be priced as if every current duty stays in place into 2027.

Mexico is closer to a deal. But we read “interim” as a political framework with a headline, not an immediate cut in what importers pay at the border. Any real change for Mexican steel, aluminium and autos will need a proclamation and customs guidance. That usually lags the announcement.

What the Canadians actually said

The Reuters report, by Promit Mukherjee and David Shepardson, puts the Canadian comments next to softer ones from earlier in the week. On Monday, Carney had described “a slight intensification” in the talks. On Sunday, President Trump said the dispute would be resolved “soon”, without giving details.

Wednesday’s language is a step back from that. “Limited progress” is not how officials talk when a text is nearly agreed.

The US side sounds more upbeat. A US official told Reuters the talks are significant and include Commerce Secretary Howard Lutnick and Canada’s trade minister Dominic LeBlanc. The White House said the US Trade Representative and the Commerce Department are working together on the key issues.

Reuters also notes that tariffs have become a political liability for Trump ahead of 3 November. Some experts told the agency the administration may be less willing to make concessions after the vote. That cuts against any hope that Canada simply waits out the election.

The background matters. In August, Trump imposed 50% tariffs on a wide range of Canadian imports, saying Canada discriminated against American goods. Canada hit back with its own tariffs. Last week Trump removed the 50% rate from some Canadian farm and forestry products, while adding other Canadian products to the list (Reuters via AOL).

What Canadian freight is paying now

There are two separate layers of US duty on Canadian goods.

The first is Section 232. This is the national-security law behind the tariffs of up to 50% on steel and 25% on autos that are at the centre of the talks.

The second is Section 338. This is a rarely used trade law that lets the president add duties on goods from a country he says discriminates against US trade. According to the Zonos customs guide, it adds an extra 50% on top of the normal duty rate for listed Canadian products. It took effect at 12:01 a.m. Eastern on 22 August 2026, after a three-day delay from the original 19 August date.

Three points matter most for forwarders.

First, USMCA (the US–Mexico–Canada free-trade agreement) gives no protection. The trade-compliance firm GHY puts it plainly: “Covered goods remain subject to the duty and the exclusions even when they qualify for USMCA preferential treatment.”

Second, the list keeps changing. A CBP (US Customs and Border Protection) bulletin on 15 September added 122 tariff classifications. On 29 September, outright import bans took effect for some dairy, alcohol and motor-vehicle headings (GHY). Then a proclamation signed on 23 October changes the list again from 12:01 a.m. Eastern on Friday 30 October. It removes 22 HTS codes (the 8- or 10-digit numbers customs uses to classify goods) and adds 100. About 43 of the new codes are Chapter 57 carpets and rugs (Zonos). GHY says the removals include plywood sheets, some paper products, certain machinery and refrigeration equipment, and some packing crates and boxes. The additions include certain valves, carpets and waste products. At GHY’s last update, CBP guidance for this change was still pending.

Third, timing turns on entry, not loading. GHY notes: “Treatment turns on the entry date, so timing of entry for consumption or withdrawal from warehouse matters.” “Entry for consumption” is the point when goods formally clear into the US market. Zonos adds that there is no grandfathering for goods already in transit.

One warning. The guides do not fully agree on how Section 338 stacks with Section 232 for steel, aluminium and copper products. Zonos says goods on the alcohol and general lists pay the 50% on top of Section 232 duties, while GHY’s page contains conflicting statements. Check the proclamation text and CBP guidance with your broker before quoting a landed cost.

Mexico’s different strategy

Reuters, via GV Wire, says the interim deal under discussion could give Mexico some tariff relief. It would also address Washington’s concerns about auto content and Chinese investment. Mexico wants a “significant reduction” in US tariffs on its auto, steel and aluminium industries. Those are the main unresolved issues.

President Claudia Sheinbaum told her morning press conference on Wednesday: “In areas where we can reach an agreement and strengthen both countries, we are making progress.” There is no formal deadline, but officials on both sides have said they hope for a deal before the midterms.

Mexico starts from a stronger base than Canada. At a press conference in Mexico City reported by AlCircle, Economy Minister Marcelo Ebrard said: “We pay an average effective tariff of 3 per cent.” The same report says more than 80% of Mexican goods enter the US tariff-free under USMCA. The problem is the sector duties: 50% on steel and aluminium, and 25% on vehicles, with an exemption for US content. AlCircle reports the average tariff on Mexican vehicles works out at around 15% once the US-content system is applied.

Ebrard has also been careful about timing. “We’ll have to wait and see what decision they make in the coming weeks,” he said, according to AlCircle. “It’s hard to say what day they’ll make it.” The Rio Times reported on 17 October that Mexico is pushing for a 15% cap on car tariffs, the rate South Korea gets.

The wider frame is the USMCA review. The agreement remains in force. But in July Washington declined to extend it for another 16 years, which moved it into annual reviews. Rules of origin, China, labour and environmental terms are all still open (Reuters via GV Wire). Mexico has kept negotiating separately and chosen cooperation over retaliation, while Canada has promised dollar-for-dollar retaliation.

What forwarders should do

For Canada–US freight: - Quote on current duties. Do not build “deal discount” assumptions into Q4 or early-2027 contracts. - Re-screen every Canadian product code against Friday’s changes. A shipment of plywood or packing crates could get cheaper overnight. A shipment of rugs or valves could cost 50% more in duty if it is entered on or after 30 October. - Watch entry timing on loads that cross the border around midnight Thursday. The entry date sets the rate. - Tell customers that USMCA paperwork does not remove the Section 338 duty.

For Mexico–US freight: - Expect headlines before or around 3 November. Treat them as signals, not rate changes, until a proclamation and CBP guidance appear. - Keep importers of Mexican steel, aluminium and vehicle parts ready to re-cost quickly. If the vehicle rate moves toward the 15% Mexico wants, landed costs on that lane fall fast. - Any deal tied to Chinese investment or auto content may tighten origin checks. Shippers with Chinese inputs in Mexican-made goods should get their bills of materials in order now.

The lane impact could diverge. If Mexico gets relief on autos and metals and Canada does not, some sourcing of metal-intensive goods may shift south. That will not happen in weeks, but buyers will start running the numbers.

Our call

We do not see a signed US–Canada deal before the 3 November midterms. Wednesday’s “limited progress” makes that clearer, not less clear.

Our prediction: the 50% Section 338 duty is still in force on Canadian goods on 31 December 2026. We also predict the product list is amended at least once more before then, by a proclamation adding or removing named products, on top of Friday’s change.

On Mexico, we expect any announcement before 3 November to be a framework. Our call is that Mexico, not Canada, is first to get a published cut in US auto, steel or aluminium tariffs, and that it takes effect after the midterms, not before.

Sources