President Trump signed three proclamations on July 20, 2026, invoking Section 338 to impose an additional 50% ad valorem tariff on certain imports from Canada. The action is intended to address what the Administration characterizes as discriminatory treatment of U.S. commerce by Canada involving automotive products, alcoholic beverages, and dairy exports.
Section 338 authorizes the President to impose additional duties of up to 50% on products of a foreign country determined to place a burden or disadvantage on U.S. commerce. This authority has never previously been used.
The additional tariffs will apply to covered goods entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. EST on August 19, 2026. These additional duties are in addition to any other applicable tariffs, duties, or fees.
The three proclamations impose a 50% additional tariff on separate categories of Canadian-origin goods:
Motor Vehicles: In response to Canada’s treatment of U.S. vehicle exports, including measures affecting U.S. automotive products that do not qualify for preferential treatment under USMCA.
Alcoholic Beverages: In response to Canadian provincial restrictions affecting the sale and distribution of U.S. beer, wine, and spirits.
Dairy Products: In response to Canada’s administration of tariff-rate quotas for U.S. dairy exports under USMCA.
It is important to note that these tariffs extend beyond these sectors and apply to a broad range of Canadian-origin products listed in the applicable annexes, including apparel and textiles, machinery, furniture, flooring, travel goods, printed circuit assemblies, sporting equipment, agricultural products, and other manufactured goods.
Much of the media coverage has understated the scope of these actions, which impact a significantly wider range of products than many businesses may realize.
Unlike previous tariff actions where USMCA-qualifying goods received preferential treatment, these Section 338 tariffs do not provide an exemption for USMCA-compliant goods. Canadian-origin products that qualify for USMCA duty-free treatment may still be subject to the additional 50% tariff if included in the applicable annexes. The Section 338 tariffs apply only to goods of Canada and do not apply to goods of Mexico.
The additional Section 338 duties will not apply to certain categories of products, including goods already subject to Section 232 tariffs, energy products, potash, critical minerals, certain fish products, and certain products covered under the WTO Agreement on Trade in Civil Aircraft (excluding drones).
Goods admitted into a Foreign Trade Zone after the effective date must be admitted under privileged foreign status and will be subject to the duty rate applicable upon entry.
Importers should review the applicable proclamations and annexes to determine whether their Canadian-origin products are subject to the new Section 338 duties. Companies should evaluate potential duty impacts, inventory, and shipment timing before the August 19, 2026 effective date.
While the tariffs are scheduled to take effect as announced, the Administration retains authority to modify the tariff rate, product coverage, or implementation details. We will continue to monitor for additional guidance or changes prior to implementation.
For additional details, including the full proclamations and applicable annexes of impacted HTS classifications, please refer to the links below:
Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada