What Section 338 actually does
Section 338 is a U.S. law that lets the President add tariffs of up to 50% on products from another country if he declares that country is treating U.S. products unfairly compared with how it treats products from other countries. The logic is simple: if a country puts U.S. products at a disadvantage, the U.S. can add tariffs on that country's products to offset it.
This is a distinct legal authority from Section 232 and Section 301, which have driven most other tariff actions in recent years. Two things follow from that. The 50% is the statutory maximum the President can impose under Section 338, and the statute requires collection to begin thirty days after the proclamation, which is how July 20 produced an August 19 effective date. That date is the statutory floor, so there is no built-in slack to give back.
Coverage extends well beyond dairy, alcohol, and motor vehicles
Only products on the Section 338 tariff lists are affected. Three proclamations were signed on July 20, 2026 and published on July 23. Proclamation 11046 covers alcoholic beverages, 11047 covers dairy, and 11048 covers motor vehicles. Each proclamation carries its own Annex II, and the annexes are where the actual product coverage lives.
The motor vehicle annex is the broad one. Despite its name, it reaches cement, wigs, plywood, furniture, cosmetics, textiles and apparel, jewelry, toys, stationery, and much more, running from Chapter 4 through Chapter 97 of the tariff schedule. The alcohol annex also reaches past beverages — hockey equipment, for example, is in that one rather than in the motor vehicle list.
That distinction matters for compliance. The dairy, alcohol, and motor vehicle framing explains why the action was taken. The annexes define what it covers. A business that only checks whether it sells cars, wine, or cheese can easily miss exposure sitting in the motor vehicle annex.
Country of origin determines coverage
The tariff is based on where a product originates, so origin documentation matters more here than shipping route. The 50% applies to covered products of Canada, meaning goods that actually originate there.
Take a Vietnam-origin product that transits through a Canadian merchant. Under ordinary country-of-origin rules it would stay outside the Canada Section 338 tariff. Two cautions apply: the proclamations do not define an origin methodology, and CBP has not addressed transshipment for this tariff, so treat this as a reasonable expectation rather than settled guidance. And Section 338 reaches Canadian-origin goods whether they are imported directly or indirectly, so routing a Canadian-origin product through a third country does not remove the duty. Keep origin documentation solid for anything moving through Canada.
USMCA does not exempt covered goods
USMCA-qualifying goods normally receive preferential treatment on U.S.-bound shipments. Section 338 duties apply anyway. A USMCA certificate of origin reduces the ordinary duty rate as it always did, and the 50% sits on top of the reduced rate. The certificate creates no exemption from this tariff.
Where USMCA does matter is the separate Section 301 forced-labor tariff described below. Goods entered duty-free under a USMCA claim are exempt from that 10% tariff. Goods that don't claim USMCA pay it. Either way, Section 338 applies on top if the product is on one of the three annexes.
How the 50% interacts with other duties
The 50% is additional to the ordinary duty rate that already applies to the product. A good normally entering at 3% now faces 3% plus 50%. Antidumping and countervailing duty orders are a separate authority and continue to apply on top where they exist — see antidumping and countervailing duties.
It also stacks with the Section 301 forced-labor tariff. USTR's July 2026 forced-labor action put a 10% tariff on goods from 60 economies — including Canada — that fail to meet certain import-prohibition standards. That 10% applies to Canadian goods generally, but heading 9903.05.93 exempts products of Canada that are entered duty-free under USMCA. So a Canadian-origin product that's also on a Section 338 annex can face 50% (Section 338) plus 10% (Section 301 forced-labor) if it isn't entered under USMCA, or 50% alone if it is.
The important interaction runs the other way. Goods already subject to Section 232 duties fall outside this tariff entirely. Section 232 currently covers steel, aluminum and copper and their derivative articles, passenger vehicles and light trucks, vehicle parts, medium- and heavy-duty vehicles and their parts, wood products, semiconductors, and patented pharmaceuticals. If a product is dutiable under one of those Section 232 actions, Section 338 does not also apply to it. Goods covered by the WTO Agreement on Trade in Civil Aircraft are likewise outside this tariff.
One authority people expect to see in the stack is not in it: the Section 122 global surcharge expired on July 24, 2026 and no longer applies to anything. See U.S. tariff changes for the full current tariff landscape.
Timing: what triggers the tariff
The tariff applies to covered goods entered for consumption, or withdrawn from warehouse for consumption, at or after 12:01 a.m. eastern time on August 19, 2026. Entry or withdrawal timing controls, regardless of when the goods were shipped, invoiced, or sold.
What's excluded
Two kinds of exclusion apply, and they work differently.
Certain product categories were carved out of the action from the start. These include energy products, potash, fish, and critical minerals.
Separately, goods that are already dutiable under a Section 232 action, and goods covered by the WTO Agreement on Trade in Civil Aircraft, are excluded by U.S. Note 51(c) and (d) to Subchapter III of Chapter 99, which operate through headings 9903.03.15 and 9903.03.16.
Because coverage is built from specific product lists with exclusions layered on top, checking at the HTS level tells you far more than asking whether a product came from Canada.
No fixed expiration date
There is no statutory expiration for this action. The President can modify, suspend, or terminate it at any point, so treat the current 50% rate and product scope as a moving target.
The statute also allows escalation. If Canada maintains or increases the conduct the proclamations describe, Section 338 authorizes the President to bar the covered articles from importation altogether. The motor vehicle proclamation states this directly.
What CBP has published so far
As of August 17, 2026, CBP has issued no Cargo Systems Messaging Service message and no implementing guidance for this action, so the proclamation annexes and U.S. Note 51 are the authoritative sources for coverage. One practical note: the Federal Register renders the annex tables as images rather than as searchable text, so the White House annex PDFs are the better place to look up a code.
This is also the first time Section 338 has been used to impose tariffs. Trade counsel broadly expects the action to be tested at the Court of International Trade, and no case had been filed as of this writing. Importers who keep clean entry records preserve a refund claim if the action is later struck down.
What this means for your shipments
If you import, sell, or ship products of Canadian origin, or route non-Canadian goods through Canada, confirm the following before August 19:
- Whether the product's HTS classification appears on one of the three Annex II lists, matched at eight digits, rather than relying on the three headline categories
- The confirmed country of origin for each affected SKU, as distinct from the country of shipment
- Whether the product is already dutiable under a Section 232 action, which takes it outside this tariff
- Whether the product falls under a listed exclusion for energy, potash, fish, critical minerals, or civil aircraft goods
- Whether the shipment is entered under a USMCA claim, since that removes the separate 10% Section 301 forced-labor tariff (it does not remove Section 338)
- What ordinary duty rate applies, since the 50% is added to it
- Whether any shipment now in transit will be entered on or after August 19, because entry timing controls and there is no grandfather
Does the Section 338 tariff apply to everything shipped from Canada?
No. It applies only to the products listed in Annex II to each of the three proclamations. The motor vehicle proclamation carries the broadest list, reaching categories such as cement, wigs, plywood, furniture, textiles and apparel, jewelry, and toys.
My product is Canadian-made but not dairy, alcohol, or a vehicle. Could it still be covered?
Yes. The motor vehicle annex reaches well beyond vehicles, and the alcohol annex reaches beyond beverages. Check the specific HTS classification against the annexes, matched at eight digits.
My ten-digit code is not on the list. Am I clear?
Not necessarily. The annexes are published at eight digits with no statistical suffix. Compare the first eight digits of your classification.
If a product ships from Canada but was made somewhere else, is it covered?
Generally not, because coverage follows country of origin. CBP has not addressed transshipment for this tariff, so keep origin documentation solid for anything routed through Canada. Note also that a Canadian-origin good routed through a third country remains covered.
Does a USMCA certificate of origin exempt my shipment?
No. USMCA preferential treatment reduces the ordinary duty rate, and the 50% applies on top of the reduced rate. USMCA does matter for a different tariff, though — the Section 301 forced-labor tariff below.
Is 50% the full tariff, or are other duties added on top?
It is additional. The 50% is added to the product's ordinary duty rate, and to any antidumping or countervailing duties that apply. It also stacks with the 10% Section 301 forced-labor tariff on Canadian goods — unless the shipment is entered duty-free under USMCA, in which case that particular 10% doesn't apply. Goods already dutiable under a Section 232 action are outside this tariff instead of paying both. The Section 122 global surcharge expired on July 24, 2026 and no longer factors in.
My goods are already on the way. Are they grandfathered?
No. The tariff attaches on entry for consumption or withdrawal from warehouse. Goods that left Canada before August 19 but are entered on or after it pay the duty.
When exactly does the tariff take effect?
At 12:01 a.m. eastern time on August 19, 2026, for covered goods entered for consumption or withdrawn from warehouse for consumption at or after that time.
Are any products or categories excluded?
Yes. Energy products, potash, fish, and critical minerals were carved out of the action. Separately, goods already dutiable under a Section 232 action, and goods covered by the WTO Agreement on Trade in Civil Aircraft, are excluded under U.S. Note 51(c) and (d).
Has CBP issued guidance?
Not yet. As of August 17, 2026 there is no CSMS message or implementing guidance, so the proclamation annexes and U.S. Note 51 govern.
Does this tariff have an end date?
No fixed expiration is set. It remains in effect until the President modifies, suspends, or terminates it. The statute also permits escalation to an outright import ban if the underlying conduct continues.
Primary sources
- Proclamation 11046, alcoholic beverages, signed July 20, 2026, published July 23, 2026
- Proclamation 11047, dairy, signed July 20, 2026, published July 23, 2026
- Proclamation 11048, motor vehicles, signed July 20, 2026, published July 23, 2026
- Annex II to each proclamation, which creates U.S. Note 51 to Subchapter III, Chapter 99, and headings 9903.03.12, 9903.03.13, and 9903.03.14
- U.S. Note 51(c) and (d), and headings 9903.03.15 and 9903.03.16, for the Section 232 and civil aircraft exclusions
- Section 338 of the Tariff Act of 1930, 19 U.S.C. 1338
Section 338 tariffs on Canada
A 50% additional tariff on select Canadian-origin goods takes effect August 19, 2026 under Section 338 of the Tariff Act of 1930.
Beginning August 19, 2026, the U.S. will impose an additional 50% tariff under Section 338 of the Tariff Act of 1930 on certain products of Canada. The tariff applies only to specified products, based on the country of origin of the goods (where the goods are made, not where they are shipped from).
On July 20, 2026, President Trump signed three proclamations invoking Section 338 against Canada. The tariffs take effect August 19, and they reach further — and work differently — than the headlines about dairy, alcohol, and motor vehicles suggest. This guide covers what's actually in scope, how it interacts with USMCA and other tariffs already in place, and what to check on your own shipments before the effective date.
This guide reflects the proclamations and CBP guidance as of August 2026. CBP has not yet issued implementing guidance for this action — confirm current status with your customs broker before shipping or filing.
Status at a glance (last updated August 17, 2026):