President Trump Imposes Additional 50% Section 338 Duties on Certain Canadian Imports

On July 20, 2026, President Trump issued three proclamations under Section 338 of the Tariff Act of 1930 imposing an additional 50% ad valorem duty on three separate lists of products of Canada. The duties will apply to covered merchandise entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time on August 19, 2026. The Office of the U.S. Trade Representative states that the three actions collectively cover nearly $20 billion in Canadian imports.

Basis for the Three Actions

Each proclamation responds to a different Canadian trade measure affecting U.S. exports:

Dairy products. The dairy proclamation addresses Canada’s administration of tariff-rate quotas for cheese. The President found that Canada’s eligibility rules for the USMCA cheese quota disadvantage U.S. commerce compared with the treatment afforded to European Union cheese under the Canada-EU Comprehensive Economic and Trade Agreement, including by permitting retailers to access the EU quota but not the USMCA quota.

Alcoholic beverages. The alcoholic-beverages proclamation responds to restrictions imposed by Canadian provinces and territories on the purchase, distribution, and retail sale of U.S. distilled spirits, wine, beer, and other alcoholic beverages. The proclamation notes that Alberta and Saskatchewan lifted their restrictions in June 2025, while restrictions remained in other provinces and territories.

Motor vehicles. The motor-vehicles proclamation responds to Canada’s tariff and quota system for U.S. vehicles. This includes a 25% tariff on U.S. vehicles that do not qualify for preferential USMCA treatment, duties on certain non-Canadian and non-Mexican content in qualifying vehicles, and company-specific tariff-rate quotas.

Products and Entries Affected

The products subject to the additional duties are identified by Harmonized Tariff Schedule of the United States provisions in Annexes I and II to each proclamation. Importers should review all three sets of annexes because the Canadian imports selected for additional duties are not necessarily limited to dairy products, alcoholic beverages, or motor vehicles. According to the White House, the product lists include goods ranging from wine to hockey sticks and cement.

The White House has also stated that:

• Covered goods remain subject to the Section 338 duties even when they qualify as originating goods under the USMCA.
• Energy, potash, products subject to Section 232 duties, and certain other products—including fish and critical minerals—are outside the announced coverage.
• Exact applicability nevertheless depends on the HTSUS classification, country-of-origin determination, and language of the relevant proclamation and annexes.

Except where otherwise provided, the 50% Section 338 duties are in addition to other applicable duties, taxes, fees, exactions, and charges. The proclamations expressly provide that the new duties will not apply to articles subject to Section 232 duties or, with limited exceptions, articles covered by the WTO Agreement on Trade in Civil Aircraft.

Duration and Implementation

The proclamations do not establish a scheduled expiration date. The corresponding HTSUS modifications will remain in effect unless the action is expressly reduced, modified, or terminated. Industry and administration reporting have described these actions as the first use of Section 338 to impose tariffs.

For covered merchandise admitted into a U.S. foreign-trade zone on or after the effective date, the proclamations generally require admission in privileged foreign status, unless the merchandise is eligible for domestic status. U.S. Customs and Border Protection is authorized to issue implementing rules, entry instructions, guidance, and technical corrections to the HTSUS and proclamation annexes.

Recommended Actions for Importers

Importers of products of Canada should take the following steps before August 19:

1. Screen Canadian imports against all three proclamations. Review the HTSUS provisions and Chapter 99 instructions in Annexes I and II to each action rather than relying solely on general product descriptions.
2. Calculate potential landed-cost exposure. Identify covered merchandise expected to be entered or withdrawn from warehouse on or after August 19 and model the additional 50% duty alongside all other applicable duties and fees.
3. Do not assume USMCA qualification provides an exemption. Covered goods may be subject to the Section 338 duty even when they qualify for preferential treatment under the USMCA.
4. Confirm classification and origin. Review tariff classifications, bills of materials, country-of-origin determinations, and supporting records with customs brokers and trade counsel.
5. Review commercial arrangements. Examine purchase orders, supply agreements, Incoterms, tariff pass-through provisions, and pricing-adjustment clauses to determine which party bears the additional duty.
6. Evaluate inventory and customs-planning options. Consider the implications for bonded warehouses, foreign-trade zones, entry timing, sourcing, and alternative suppliers while awaiting CBP implementation guidance.

If you have any questions or concerns, please contact your Buckland Representative.

Sources and additional information:

IMPOSING ADDITIONAL DUTIES TO OFFSET CANADIAN DISCRIMINATION AGAINST THE COMMERCE OF THE UNITED STATES WITH RESPECT TO DAIRY
IMPOSING ADDITIONAL DUTIES TO OFFSET CANADIAN DISCRIMINATION AGAINST THE COMMERCE OF THE UNITED STATES WITH RESPECT TO ALCOHOLIC BEVERAGES
IMPOSING ADDITIONAL DUTIES TO OFFSET CANADIAN DISCRIMINATION AGAINST THE COMMERCE OF THE UNITED STATES WITH RESPECT TO MOTOR VEHICLES

Annex I
Annex II