**Ongoing US-Canada trade tensions under Section 338 of the Tariff Act of 1930 continue to shape expectations around any near-term tariff reduction.** In July 2026, President Trump imposed 50% additional duties on roughly $20 billion of Canadian imports, citing discrimination against US dairy, motor vehicles, and alcoholic beverages. Negotiations collapsed in August, triggering the tariffs on August 22. Canada responded with matching retaliatory duties effective September 8. Subsequent September proclamations added products to the tariff lists while removing others and imposed import bans on select Canadian goods effective September 29, with further 50% auto and steel threats eyed for January 2027. These developments, including the absence of resumed high-level talks or concessions, have kept trader consensus on an announcement of decreased Canada tariffs by late 2026 at low implied probabilities. Key upcoming factors include any bilateral meetings, USMCA-related discussions, or shifts in retaliatory measures that could alter the trajectory.