Section 338 duties on Canada: 50% on a product list far wider than cars and cheese
Three July proclamations revived a 1930 statute that had sat unused for most of a century, and the annexes reach a long way past the motor vehicles, alcohol and dairy in their titles.
Effective
22 August 2026, moved from 19 August by a three day suspension
Legal basis
Section 338 of the Tariff Act of 1930. Proclamations 11046 (alcoholic beverages), 11047 (dairy) and 11048 (motor vehicles), signed 20 July 2026 and published 23 July 2026.
What changed
Section 338 of the Tariff Act of 1930 had gone essentially unused since it was written. On 20 July 2026 three proclamations brought it out: 11046 covering alcoholic beverages, 11047 covering dairy, and 11048 covering motor vehicles, all published on 23 July. Each imposes an additional 50% ad valorem duty on named Canadian origin goods.
The effective date moved, and that has caused real confusion. The duties were announced for 19 August 2026. A proclamation on 18 August then suspended them for three days while talks continued, and they took effect at 12:01 a.m. eastern time on 22 August 2026 for goods entered for consumption or withdrawn from warehouse on or after that moment. Plenty of mid August summaries still cite 19 August, so check the publication date of whatever you are reading before you act on it.
The titles are misleading about scope. Coverage sits in each proclamation Annex II, matched at eight digit HTS level, and the motor vehicle annex in particular runs from chapter 4 through chapter 97. Cement, plywood, furniture, cosmetics, textiles and apparel, jewellery, toys, stationery, wigs, fishing rods, swimming pools and hockey sticks all appear on it. If you sell physical consumer goods sourced in Canada, the odds that none of your codes are listed are worse than the headlines suggest.
USMCA does not save you, and this is the point importers get wrong most often. A good can qualify for USMCA preference, enter at a zero ordinary rate, and still carry the full 50%. Preferential origin reduces the MFN duty. It does nothing to a Section 338 duty.
The carve outs are narrow. Energy products, potash, fish, critical minerals, goods already subject to Section 232 duties, and goods covered by the WTO Agreement on Trade in Civil Aircraft sit outside scope. Everything else named on the annexes is in.
It stacks. The 50% sits on top of the ordinary duty rate and on top of any antidumping or countervailing duty already owed. It also stacks with the Section 301 forced labour duty that puts Canada in the 10% tier, except where a shipment is entered duty free under USMCA, in which case that particular 10% does not apply. CBP has issued entry filing instructions covering the reporting order when several chapter 98 and chapter 99 provisions apply, and has confirmed these duties are generally eligible for drawback.
Who it affects
- Anyone importing Canadian consumer goods, which is a far larger group than the three headline categories imply. Furniture, apparel, cosmetics and toys are all named on the annexes.
- Importers who built their compliance around USMCA certification and assumed preferential origin meant protection. It does not mean that here.
- US sellers who moved sourcing to Canada precisely to escape Asian tariff exposure. That hedge stopped working on 22 August.
- Anyone who read a mid August briefing and diarised 19 August. Entries filed against the wrong date create reconciliation work rather than savings.
How settled is this
In force since 22 August 2026. This is the first significant modern use of Section 338, which makes the legal ground far less well trodden than Section 232 or Section 301 and a challenge more likely rather than less. The proclamations also landed in the middle of USMCA renegotiation, so the annexes read as a bargaining position as much as a settled policy and could be amended at short notice in either direction.
A worked cost example
A US retailer buys 120 upholstered armchairs from an Ontario workshop at $340 each. The goods qualify under USMCA and had been entering at a zero ordinary rate. Nothing about the chairs changed on 22 August. The arithmetic did.
A zero rated USMCA entry went from no duty at all to half the invoice value overnight, and the preference certificate that makes the first two lines zero does nothing whatever to the third. Check the eight digit code against Annex II of all three proclamations, not only the one whose title sounds relevant to what you sell.
What importers should do
- 1 Pull the eight digit HTS code for every Canadian sourced SKU and check it against Annex II of all three proclamations. The motor vehicle annex is the widest, so do not skip it on the grounds that you do not sell cars.
- 2 Stop treating a USMCA certificate as a complete tariff answer on Canadian goods. It still governs the ordinary rate and the forced labour duty, and it does nothing to the 50%.
- 3 Confirm which effective date your broker filed against. Entries lodged for 19, 20 or 21 August should not carry the duty, and if they do that is a correction worth making now rather than at liquidation.
- 4 Check the exclusions before concluding you are caught. Goods already paying Section 232 metals duties fall outside Section 338, which is the unusual case where one tariff regime spares you another.
- 5 Ask your broker about drawback. CBP has confirmed these duties are generally eligible, which matters if any of the goods leave the country again.
- 6 Track the USMCA talks, not the tariff schedule. Scope attached to a live negotiation moves faster than scope attached to an investigation.
Duty Calculator
Model a Canadian origin order with the 50% layer applied, so the landed cost is on the table before the purchase order goes out.
Questions importers keep asking
Does USMCA exempt my goods from the Section 338 duty?
No, and this catches importers out more than anything else about the measure. USMCA preference reduces the ordinary duty rate, often to zero, but a Section 338 duty is additional and applies regardless of preferential origin. A certificate that saves you six points on the MFN rate still leaves the full 50% payable.
Was the effective date 19 August or 22 August 2026?
22 August. The duties were announced for 19 August, then a proclamation on 18 August suspended them for three days while negotiations continued, and they took effect at 12:01 a.m. eastern time on 22 August 2026. Summaries written before that suspension still cite 19 August, so check what date your source is working from.
My product is nothing like a car, a bottle of wine or a block of cheese. Am I safe?
Not necessarily. Coverage is set by the Annex II lists attached to each proclamation, matched at eight digit HTS level, and the motor vehicle annex alone runs from chapter 4 to chapter 97. Furniture, cosmetics, apparel, toys, plywood and stationery all appear on it. Check the code rather than the category.
What is excluded from the Section 338 duties?
Energy products, potash, fish, critical minerals, goods already subject to Section 232 duties, and goods covered by the WTO Agreement on Trade in Civil Aircraft. The Section 232 carve out is worth knowing about: a steel or aluminium article already paying metals duties does not also pay the 50%.
Primary sources
Related changes
What to re-check, and when
This page is about the Section 338 duties on Canadian goods, and no published instrument names a closing date for the measure itself, so this site records no scheduled end for it: it runs until the authority behind it revokes or amends it, which is a finding about the measure rather than a gap in the record, while any temporary provision sitting alongside it carries its own date in the passage above that describes it, and what is dated below is the reading rather than the measure.
The claims on this page about the Section 338 duties on Canadian goods were last read on 28 August 2026, against the sources it names, and what to check first is the sentence under this one.
Watch the USMCA negotiation rather than the tariff schedule on this one. Annexes written as leverage get amended, widened or withdrawn faster than scope grounded in a formal investigation.
Last verified 28 August 2026 (2026-08-28).