What changed On July 20, 2026, President Trump signed three proclamations under Section 338 of the Tariff Act of 1930, each imposing an additional 50% ad valorem duty on specified Canadian-origin goods. The tariffs enter into effect for goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on August 19, 2026, marking the first time any US president has invoked this authority.
The three proclamations impose the duty on listed Canadian alcohol, dairy, and motor-vehicle/consumer products under new HTS headings 9903.03.12, 9903.03.13, and 9903.03.14 and U.S. Note 51 to Subchapter III of Chapter 99. The 30-day statutory notice period is why the effective date is Aug 19.
Who's affected Importers of Canadian-origin goods across three baskets. The motor-vehicle tranche covers 439 eight-digit tariff lines, the dairy tranche 52 lines, and the alcoholic-beverage tranche 63 lines — roughly 554 tariff lines together. Scope extends well beyond the headline categories: Annex II lists include wine, hockey sticks, cement, plywood, furniture, fishing rods, seeds, clothing, wigs, and swimming pools. The motor-vehicle proclamation (9903.03.14) is the broadest — check Chapters 84 and 85 (machinery/electronics). FTZ operators are affected by an admission-status trap (below). These tariffs apply regardless of USMCA origin, and do not apply to energy, potash, products subject to Section 232, and certain other goods such as fish or critical minerals.
Cost impact
If a good is a product of Canada and classified in a listed subheading, the entry pays the regular duty plus 50%, stacking on top of most other applicable duties, taxes, and fees, including antidumping and countervailing duties. Carve-outs reduce effective rates in some baskets: the motor-vehicle basket's trade-weighted effective Section 338 rate is 36.0% (some lines already pay Section 232 or are aircraft-related at 5%), while alcohol and dairy have no carve-outs and pay the full 50%. Per-SKU impact depends on your HTS line and current duty stack.
What to do 1. Screen every Canadian-origin SKU (finished goods, components, raw materials) against Annex II / U.S. Note 51 for headings 9903.03.12–.14 — confirm the 8-digit HTS, don't rely on category labels. 2. Re-run landed cost on covered SKUs entering on/after Aug 19; do not assume a USMCA certificate exempts you. 3. Check the Section 232 carve-out — if a good already pays Section 232 steel/aluminum/copper duties, it is excluded. 4. Consider accelerating covered imports to clear before 12:01 a.m. ET Aug 19. Goods sitting in an FTZ generally need to be admitted in "privileged foreign status" ahead of August 19, or they inherit the new duty once entered for consumption.
5. Review Canadian supplier contracts for tariff pass-through, price-adjustment, and change-in-law clauses. 6. Watch for CBP implementing guidance (CSMS) confirming reporting order and any annex modifications before Aug 19.
Effective dates - Section 338 50% duty on covered Canadian goods → effective 12:01 a.m. ET, August 19, 2026 (goods entered/withdrawn for consumption on or after) - FTZ "privileged foreign status" admission needed → before August 19, 2026 - Section 122 10% surcharge → already lapsed July 24/26, 2026 (do not stack it on new entries)
Sources - White House Fact Sheet (Section 338 Canada tariffs): https://www.whitehouse.gov/fact-sheets/2026/07/fact-sheet-president-donald-j-trump-imposes-additional-tariffs-on-canada/ - White & Case (first use of Section 338, scope/effective date): https://www.whitecase.com/insight-alert/trump-administration-imposes-50-tariffs-certain-canadian-products-first-use-section - CustomsGenius (HTS headings 9903.03.12–.14, U.S. Note 51): https://www.customsgenius.com/tariff-codes-2026 - Global Trade Alert (tariff-line counts, effective rates): https://globaltradealert.org/blog/section-338-canada-august-2026 ; https://globaltradealert.org/blog/s338-the-return-of-the-authority - Peacock Tariff Consulting (stacking, AD/CVD, HTS structure): https://www.peacocktariffconsulting.com/the-new-section-338-tariffs-on-canada-what-they-are-what-they-cover-and-what-importers-should-do-before-august-19/ - Thomson Reuters (Annex II beyond-headline scope, FTZ trap): https://tax.thomsonreuters.com/blog/section-338-tariffs-on-canada-what-businesses-may-be-missing-beyond-the-headline-categories/ - Holland & Knight (Ch. 84/85 review, Section 232 carve-out): https://www.hklaw.com/en/insights/publications/2026/07/50-percent-opening-bid-canadian-imports-subject-to-section-338-tariffs
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This alert is informational only and is not legal, customs, or trade-compliance advice. Verify current rates and rules against the linked primary sources or with a licensed customs broker before acting. Corrections: errors are corrected in-place with a dated note.