The United States has quietly reshuffled its tariff package on Canadian goods, swapping some products off the list and adding others. But according to BMO Capital Markets, the overall trade impact remains roughly the same as before.
BMO, a Canadian investment bank, calculates that the original 50% tariffs under Section 338 of the US trade law covered about $20.75 billion of Canadian exports to the US. That list included some goods that normally qualify for duty-free treatment under the United States–Mexico–Canada Agreement (USMCA). Now, after five new US proclamations signed on Tuesday, the covered list is being re-cut. The changes take effect next Tuesday.
What's coming off, what's going on
Some everyday items are being removed from the tariff list. Rock salt, toilet paper, and cement are among the goods that will no longer face the 50% levy. That's a relief for those specific industries and for consumers who might have seen higher prices on these basics.
But the US is also adding new restrictions. BMO notes that while the reshuffle trims the value of goods covered to $18.60 billion, new restrictions will lift the affected total back up to $19.54 billion. In other words, the US is swapping some targets for others, and the net effect on the total trade hit is modest.
The change means that while the specific products facing tariffs are different, the overall scale of the trade dispute remains similar. For Canadian exporters, the uncertainty continues, even if the exact list of affected goods has shifted.
Why the US is using Section 338
Section 338 of the US Tariff Act of 1930 is a rarely used trade tool that allows the president to impose tariffs on countries that are seen as discriminating against US commerce. It's a more aggressive measure than the typical anti-dumping or safeguard tariffs, and it's been dusted off in the current trade tensions with Canada.
The use of Section 338 is notable because it bypasses some of the usual WTO dispute mechanisms. It's a unilateral move that can be applied quickly, which is part of why the US has turned to it in this dispute. The tariffs are set at a flat 50%, which is a significant hit for any exporter.
The inclusion of USMCA-covered goods in the original list was particularly contentious, as it seemed to undercut the trade deal that the three countries had just negotiated. The reshuffle may be an attempt to address some of those concerns, but the overall level of tariffs remains high.
What it means for investors
For everyday investors, the key takeaway is that the trade dispute between the US and Canada is not going away. The reshuffle is more of a tactical adjustment than a de-escalation. The total value of Canadian exports affected is still around $19.5 billion, which is a substantial amount.
This matters for investors in a few ways. First, companies that export to the US from Canada—particularly in sectors like agriculture, manufacturing, and natural resources—could see their costs rise or their sales volumes fall if they are on the tariff list. Conversely, companies that were on the original list but are now removed, like those producing rock salt, toilet paper, or cement, may get some relief.
Second, the ongoing trade tensions are a factor in currency markets. The Canadian dollar has already been under pressure due to the trade spat, as seen in the loonie's recent slide. A prolonged dispute could keep the currency weak, which has mixed effects: it makes Canadian exports cheaper for foreign buyers, but it also raises the cost of imported goods for Canadians.
Third, the uncertainty itself is a drag on business investment. When companies don't know what tariffs will apply from one month to the next, they are less likely to make long-term plans. This can weigh on economic growth on both sides of the border.
What to watch next
Investors should keep an eye on a few things. The new tariff list takes effect next Tuesday, so watch for any immediate reactions from affected industries. Also, watch for any further US proclamations—this reshuffle shows that the administration is willing to adjust the list, so more changes could come.
Negotiations between the US and Canada are ongoing, but there's no sign of a quick resolution. The fact that the US is tweaking rather than removing tariffs suggests that the pressure is meant to stay on. For now, the trade hit remains similar, and investors should plan for continued volatility in trade-sensitive sectors.
In the broader context, this is part of a pattern of US trade actions that have affected not just Canada but also other partners. For instance, copper prices have been sensitive to tariff decisions, and gold is holding near record highs as investors seek safety amid trade uncertainty. The reshuffle is a reminder that trade policy remains a key driver of market moves.
For the average investor, the advice is to stay diversified and not overreact to any single tariff change. The overall picture is one of persistent trade friction, but markets have been absorbing these shocks for years. Keep an eye on your portfolio's exposure to Canadian exporters and US importers, and consider how a weaker Canadian dollar might affect your international investments.
