U.S. Imposes Section 338 Tariffs on Certain Canadian Imports (CBP Guidance Available)

Published July 20, 2026 | Updated Sept. 11, 2026

Key Points

• NEW: On September 8, 2026, Canada imposed roughly $20 billion in new retaliatory tariffs on U.S. exports, including steel, dairy, and agricultural equipment, after breaking off trade talks the prior month.
• NEW: In response, the U.S. signed another 3 proclamations banning certain Canadian motor vehicles, dairy products, and alcoholic beverages from entering the U.S. altogether, effective September 29, 2026.
• NEW: The U.S. also modified the product scope, via 2 proclamations, of the motor vehicle and alcoholic beverage tariffs, removing items such as rock salt and cement and adding others, including all-terrain vehicles (ATVs) and additional dairy products, effective September 15, 2026.
• Goods already imported but not yet entered for consumption, or withdrawn from warehouse, before September 29 remain subject to the existing 50% duty rather than the new ban.
• USMCA origin does not exempt covered goods from either the duty or the import ban, and both apply in addition to Section 232 tariffs.
• Previously, Trump signed three Section 338 proclamations on July 20, 2026, adding a 50% duty on specific Canadian dairy, alcohol, and motor vehicle goods.
• Previously, the 50% duty took effect August 22, 2026, following a 3-day suspension, and CBP issued implementation guidance on August 21, 2026, confirming the new HTSUS filing headings – CBP Guidance available below.
• CBP Guidance available: CSMS # 69851916 – Modifying Section 338 Additional Duties on Certain Goods of Canada

O​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​on September 8, 2026, President Trump signed five additional Section 338 proclamations. Per the accompanying White House fact sheet, the administration’s position is that Canada broke off trade talks in August and, on September 8, imposed roughly $20 billion in new retaliatory tariffs on U.S. exports covering steel, dairy, and agricultural equipment.

Import bans (effective September 29, 2026). Because the administration found Canada maintained or increased its discriminatory treatment of U.S. alcohol, dairy, and motor vehicle commerce even after the 50% duties took effect, the new proclamations exclude certain Canadian motor vehicles, dairy products, and alcoholic beverages from entering the U.S. entirely, effective for goods imported on or after 12:01 a.m. Eastern time on September 29, 2026.

Transition rule. Covered goods that are imported, but not yet entered for consumption or withdrawn from warehouse for consumption, before September 29 remain subject to the existing 50% Section 338 duty rather than the new ban.

Scope modifications (effective September 15, 2026). Separately, the administration modified the scope of the July 20 motor vehicle and alcoholic beverage tariffs, removing certain products, such as rock salt and cement, from coverage and adding others, ranging from all-terrain vehicles (ATVs) to additional dairy products.

USMCA and Section 232 stacking confirmed. The fact sheet reiterates that these Section 338 actions apply regardless of USMCA origin and apply in addition to Section 232 tariffs.

Other measures. The fact sheet also notes the administration has directed USTR and the General Services Administration to remove an estimated $50 billion in Canadian-origin products from GSA’s Multiple Award Schedules.

Previously, on July 20, 2026, President Trump signed three separate proclamations under Section 338 of the Tariff Act of 1930, imposing an additional 50% ad valorem duty on specific Canadian goods in the dairy, alcoholic beverage, and motor vehicle sectors. According to the White House Fact Sheet, which summarizes the three proclamations, the tariffs respond to what the administration identifies as discriminatory treatment of U.S. products by Canada.

Importers with exposure to any of the three sectors should confirm, product by product, whether their goods fall under the new import bans, the revised tariff scope, or neither, since the treatment and effective dates now differ by category.

Sectors Targeted (Proclamations)

1. Dairy. (Updated) – As the administration found Canada maintained its dairy TRQ practices even after the 50% duty took effect, a new proclamation excludes certain Canadian dairy products from importation entirely, effective September 29, 2026. Dairy products already imported but not yet entered for consumption, or withdrawn from warehouse for consumption, before that date remain subject to the existing 50% duty. Separately, additional dairy products were added to the list of goods covered by the underlying tariff.

Previously (August 22) – The administration’s finding centers on Canada’s tariff-rate quota (TRQ) system for cheese. Canada allows EU retailers to access its CETA cheese TRQ, but excludes retailers from the equivalent USMCA cheese TRQ, a distinction the proclamation says disadvantages U.S. cheese exporters relative to their European counterparts even though Canada has trade agreements with both. Proclamation

2. Alcoholic beverages. (Updated) – The administration cited a further escalation in Canada’s alcohol restrictions as grounds for a new proclamation excluding certain Canadian alcoholic beverages from importation entirely, effective September 29, 2026, with the same transition rule for goods already in transit before that date. A separate proclamation also revised the scope of the underlying 50% duty on alcoholic beverages, effective September 15, 2026.

Previously (August 22) – Since March 2025, Canadian provinces and territories have restricted or halted the purchase, distribution, and retailing of U.S. alcohol. Ontario’s LCBO and Quebec’s SAQ pulled U.S. products from shelves and catalogues that month. Only Alberta and Saskatchewan have since reversed course, in June 2025. The proclamation cites an 81% drop in U.S. alcohol exports to Canada (from roughly $718 million to $137 million, March 2025 through February 2026 versus the prior year) while imports from countries like Chile, Japan, Argentina, Ireland, New Zealand, and Australia rose in the same window. Proclamation

3. Motor vehicles. (Updated) – Finding that Canada’s motor vehicle tariff scheme remained in place, a new proclamation excludes certain Canadian motor vehicle products from importation entirely, effective September 29, 2026, with the same transition rule for goods already in transit. A separate proclamation modified the scope of the underlying 50% duty, effective September 15, 2026, removing certain products, such as rock salt and cement, and adding others, including all-terrain vehicles (ATVs).

Previously (August 22) – Since April 2025, Canada has applied a 25% tariff on U.S. motor vehicles that don’t qualify for USMCA preferential treatment, and a 25% tariff on non-originating content for vehicles that do qualify, along with automaker-specific TRQs. The proclamation states Canada has reduced these quotas for companies that shifted production out of Canada. U.S. motor vehicle exports to Canada fell approximately 22% (from about $25.9 billion to $20.3 billion) over the year, while imports from Mexico, Japan, Korea, and Germany increased. Proclamation

U.S.-Canada Trade Tensions Escalate (Previously)

On August 25, 2026, the White House released a statement accusing Canada of unfairly restricting U.S. commerce and choosing retaliation over negotiations. The U.S. pointed to Canada’s 25% tariffs and quotas on U.S. motor vehicles, restrictions on American alcoholic beverages, and restrictive dairy tariff-rate quotas. It also criticized Canada’s latest $27.6 billion in counter-tariffs on U.S. goods, including 50% tariffs on certain steel and aluminum products and 25% tariffs on fish and tools. President Trump called Canada “the most difficult and unreasonable” trading partner. Read the full White House statement.

CBP Guidance (Applicable to September 15)

CBP has issued guidance implementing these changes for goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern time on September 15, 2026, under HTSUS headings 9903.03.12 and 9903.03.14. At a high level:

• 122 classifications added. The attached HTS list provides the complete set of HTSUS classifications subject to Section 338 duties as of September 15, 2026, including 122 additional classifications now subject to HTSUS 9903.03.12 or 9903.03.14 (shown in bold on the list). There are no changes to the classifications subject to HTSUS 9903.03.13.
• Certain classifications removed. Two classifications (2208.30.60 and 2208.70.00) are removed from HTSUS 9903.03.12, and eight classifications, including rock salt (2501.00.00), cement (2523.29.00), and fishing rods (9507.10.00), are removed from HTSUS 9903.03.14. See the attached list for the complete detail.
• 0% carve-out narrowed. As of September 15, 2026, only goods classified under HTSUS 9903.03.13 remain eligible to claim the 0% additional rate under HTSUS 9903.03.15. Goods under 9903.03.12 or 9903.03.14 can no longer claim that carve-out.
• Chapter 98 treatment detailed. The additional duty under 9903.03.12–9903.03.14 does not apply to goods properly entered under a Chapter 98 provision, with exceptions for subchapter XXIII and subheadings 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80. For those exceptions, the additional duty applies only to the value of the repairs, alterations, processing, or foreign assembly involved, not the full entered value.
• Foreign trade zones confirmed. Covered goods admitted to a U.S. FTZ must generally be admitted under “privileged foreign status” under 19 C.F.R. 146.41, unless eligible for “domestic status” under 19 C.F.R. 146.43, and will be assessed duty at entry for consumption based on the applicable HTSUS classification.
• Drawback confirmed available on the additional duties imposed under HTSUS 9903.03.12 through 9903.03.14.

Importers and brokers with alcoholic beverage or motor vehicle exposure should cross-check current classifications against the attached HTS list before filing entries on or after September 15, 2026, since coverage has changed in both directions.

CBP Guidance (Applicable to Aug. 22)

On August 21, 2026, CBP issued implementation guidance (CSMS # 69606660) confirming filing instructions for the suspension and the August 22 effective date. At a high level:

• Effective date confirmed. The guidance applies to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern time on August 22, 2026.
• New Chapter 99 headings for filing. Entries must use HTSUS headings 9903.03.12 through 9903.03.16, which correspond to the dairy, alcohol, and motor vehicle provisions plus two carve-out categories. Check the attached Section 338-Canada HTS List for the specific HTSUS classifications covered by each heading.
• 9903.03.12–9903.03.14 carry the 50% additional ad valorem duty and cover the dairy, alcohol, and motor vehicle goods identified in the underlying proclamations.
• 9903.03.15 and 9903.03.16 are listed at a 0% additional rate, covering specific excluded categories, including steel, aluminum, and copper derivative articles, certain passenger and commercial vehicles and parts, wood products, semiconductors, patented pharmaceuticals, and civil aircraft and related components.
• Stacking confirmed. Covered goods remain subject to any existing antidumping, countervailing, or other applicable duties, taxes, fees, and charges in addition to the new Section 338 duty.
• Chapter 98 and FTZ treatment addressed. The guidance sets out how Chapter 98 provisions interact with the additional duty and confirms that covered goods admitted to a foreign trade zone must generally be admitted under “privileged foreign status.”
• Drawback is available on the additional duty.
• Entry summary sequencing specified. CBP laid out the required order for reporting Chapter 98 and Chapter 99 HTSUS numbers alongside Section 301, 122, 232, and 201 trade remedy provisions on entry summaries.

Section 338 Tariff Changes At a Glance

• (NEW) Import Bans: As of September 29, 2026, certain covered motor vehicle, dairy, and alcoholic beverage products move from the 50% duty to an outright import ban, CBP Guidance pending.
• Rate on Certain Products for Effective Date of August 22: An additional 50% ad valorem duty, on top of any existing duties, taxes, fees, and charges.
• Effective date: 12:01 a.m. Eastern time on August 22, 2026, for goods entered for consumption or withdrawn from warehouse for consumption on or after that date, following the 3-day suspension of the original August 19 effective date.
• USMCA does not provide relief. These tariffs apply regardless of whether a good qualifies for preferential treatment under USMCA.
• Three separate proclamations, three separate product lists. Each proclamation has its own Annex I and Annex II. Annex I sets out exceptions and other implementation details, while Annex II identifies the specific HTSUS classifications and Chapter 99 modifications covered. Products range across categories including wine, hockey sticks, and cement, in addition to the headline dairy, alcohol, and auto categories, so importers should not assume their goods are unaffected just because they don’t ship dairy, alcohol, or vehicles.
• Exemptions: The 50% duty does not apply to energy products, potash, goods already subject to Section 232 tariffs, aircraft covered under the WTO Agreement on Trade in Civil Aircraft, or certain other excluded goods such as fish and critical minerals.
• Foreign trade zones: Covered goods admitted to a U.S. FTZ on or after the effective date must be admitted under “privileged foreign status,” meaning the duty rate is locked in at time of admission rather than at withdrawal.

Recommended Actions for Importers

Refer to: Section 338 Tariffs: How Canadian Exporters Should Prepare Before August 22

1. Screen every Canadian import against all three proclamations, and now the September 29 import bans and scope changes. Don’t rely on general product descriptions. Work through the actual HTSUS provisions and Chapter 99 instructions in Annex I and Annex II to each proclamation and the new 9903.03.12–9903.03.16 headings in CBP’s guidance, to confirm what’s actually in scope, since coverage extends well beyond the headline dairy, alcohol, and vehicle categories.

2. Model your landed-cost exposure now, and identify anything shifting to an outright ban. Identify covered merchandise expected to be entered for consumption, or withdrawn from warehouse, on or after August 22, and layer the additional 50% duty on top of every other duty and fee that already applies. Separately flag any goods that will become subject to the September 29 import ban rather than the duty.

3. Don’t count on USMCA to shield you. Covered goods remain subject to the Section 338 duty, and now the import bans, even when they qualify for USMCA preferential treatment. USMCA origin does not create an exemption here.

4. Revisit classification and origin with your broker. Confirm tariff classifications, bills of materials, and country-of-origin determinations are current and well documented, particularly for goods near the boundary of a covered provision, the 9903.03.15/.16 carve-outs, or the September 15 scope changes.

5. Check who’s actually on the hook. Review purchase orders, supply agreements, Incoterms, and any tariff pass-through or price-adjustment clauses to determine whether you or your supplier absorbs the additional duty, or whether an import ban makes the shipment unworkable altogether.

6. Get ahead on customs planning. Talk through bonded warehouse and FTZ strategy, entry timing, and sourcing alternatives with your compliance team now that CBP’s filing instructions are published, and given that some products will shift from tariffed to banned as of September 29.

Section 338 Background

This is a different legal mechanism than the Section 232 national security tariffs already in place on steel, aluminum, copper, and autos, and it’s also separate from the retaliatory tariffs Canada and the U.S. have exchanged since 2025. Section 338 lets the President impose duties of up to 50% when a trading partner is found to discriminate against U.S. commerce relative to how it treats other countries, and, if the discrimination continues, to exclude the foreign country’s products from importation altogether. This is the first major use of that authority in the current tariff cycle, and it matters because the legal basis, product scope, and exclusions are all different from what importers have dealt with under Section 232 or the earlier IEEPA actions.

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