Section 338 Canada Tariffs [What It Changes]

TL;DR

• Section 338 Canada Tariffs are the extra 50% ad valorem duties the United States added on listed Canadian products under Section 338 of the Tariff Act of 1930, with collection starting at 12:01 a.m. Eastern on August 22, 2026.

• The extra rate stacks on top of other duties, taxes, and fees, and USMCA origin does not take a listed SKU off the Section 338 list.

• CBP applies the duty when goods are entered for consumption or withdrawn from warehouse for consumption, not when the truck left Canada.

• Importers, brokers, and small fleets should re-file HTS lines against headings 9903.03.12–9903.03.16, check drawback and Chapter 98 claims, and stop quoting last month's landed cost.

Key Takeaways

• The legal hook is 19 U.S.C. § 1338: extra duties up to 50 percent ad valorem after a discrimination finding, collecting thirty days after the proclamation.

• Three July 20, 2026 proclamations — alcoholic beverages, dairy, and motor vehicles — created the list; a three-day suspension moved the clock from August 19 to August 22.

• CBP CSMS # 69606660 is the filing instruction: 50% on 9903.03.12–9903.03.14; 0% on 9903.03.15 and 9903.03.16.

• A two-truck HVAC shop buying Canadian plywood, a ten-person agency importing Canadian merch, and a clinic stocking Canadian dairy all reprice at the US port, not at the Canadian dock.

• Teams that already route bills of lading through US Tech Automations workflows can add a Chapter 99 HTS check as a step, not a rebuild.

What Section 338 Canada Tariffs are

Section 338 Canada Tariffs are the extra 50 percent ad valorem duties the United States imposed on listed products of Canada under Section 338 of the Tariff Act of 1930, after three presidential proclamations dated July 20, 2026, with the extra rate collecting on goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern on August 22, 2026.

A two-truck HVAC shop does not sit in trade talks. It buys Canadian plywood or furniture when a job calls for them and quotes a landed price. A ten-person agency importing Canadian merch, and a solo clinic stocking Canadian dairy, sit in the same queue. As of August 22, 2026, USMCA origin no longer pulls a listed Canadian SKU out of Section 338. The extra 50% sits on top.

Broker houses circulated the same list the same week. GHY International's client note flagged the 50% Section 338 action on Canadian dairy, alcoholic beverages, and motor vehicles. C.H. Robinson's August 22 advisory is the operations version of that note: effective date, stacking, USMCA, FTZ status, and the three HTS buckets.

If you already run logistics automation workflows or keep hours-of-service gear current with a small-fleet ELD stack, this is not a new TMS. It is a new duty line that has to land in the same file as the load.

What happened, in order

On July 20, 2026, the White House issued three proclamations under Section 338. The White House fact sheet states that each proclamation imposes a 50% tariff on a different set of Canadian imports, covering products ranging from wine to hockey sticks to cement, and that the tariffs apply to all covered goods regardless of whether a good originates under the USMCA.

The same fact sheet says the tariffs will not apply to energy, potash, products subject to tariffs under Section 232, and certain other goods, such as fish or critical minerals, and that the tariffs were designed to take effect 30 days after signing.

Ambassador Greer's USTR statement the same day recites the statute and the three product stories: U.S. alcohol off Canadian shelves, dairy TRQ treatment that USTR says favors the EU relative to the United States, and a cap on U.S. vehicle exports from companies reshoring to the United States.

The original proclamations set 12:01 a.m. eastern time on August 19, 2026 as the start. On August 18, 2026, a temporary suspension proclamation moved that date. It identifies the three July actions as Proclamations 11046, 11047, and 11048, records a 3-day public-interest suspension, and amends each Annex II chapeau so the effective date reads August 22, 2026 instead of August 19, 2026.

CBP then told the trade how to file. CSMS # 69606660, sent August 21, 2026 at 11:16 p.m. EDT, is the guidance message for entries on or after 12:01 a.m. eastern on August 22, 2026, under HTSUS headings 9903.03.12 through 9903.03.16. That message is also listed on CBP's Cargo Systems Messaging Service page.

The statute underneath all of this is old. 19 U.S.C. § 1338 was enacted June 17, 1930, as section 338 of the Tariff Act, 46 Stat. 704. It is not Section 232, not Section 301, and not a USMCA dispute panel. It is a discrimination offset with a hard 50 percent cap and a 30-day fuse.

How the extra 50% actually attaches

The mechanism is a Chapter 99 add-on, not a rewrite of the product's Chapter 1–97 classification.

According to C.H. Robinson, the additional 50% duty applies only to specified Canadian products listed in the Annex of the proclamation, and these duties are in addition to existing duties, taxes, and fees unless a specific exemption applies. The extra duty is 50 percent ad valorem.

According to C.H. Robinson, a temporary 3-day suspension postponed implementation until August 22 at 12:01 a.m. Eastern Time, and Section 338 duties apply to USMCA-qualifying goods since they are not excluded. USMCA origin does not exempt covered goods.

CBP's own headings make the same point in tariff language. According to CSMS # 69606660, heading 9903.03.12 carries a 50% additional ad valorem rate of duty, 9903.03.13 carries 50%, 9903.03.14 carries 50%, 9903.03.15 carries 0%, and 9903.03.16 carries 0%. Duties apply from 12:01 a.m. Eastern on August 22.

The 0% headings are the carve-outs, not a holiday. CSMS lists 9903.03.15 for articles of aluminum, steel or copper or derivative aluminum or steel articles; passenger vehicles and light trucks and their parts; medium- and heavy-duty vehicles and their parts; wood products; semiconductor articles; and patented pharmaceutical articles, as provided in subdivision (c) of U.S. note 51. Heading 9903.03.16 covers civil aircraft (other than military aircraft and unmanned aircraft), engines, parts, components, subassemblies, and ground flight simulators, as provided in subdivision (d) of U.S. note 51.

Those civil-aircraft lines track the WTO Agreement on Trade in Civil Aircraft, in force since 1 January 1980. The proclamations exclude unmanned aircraft from that courtesy.

Section 232 is the other hard stop. Each proclamation says the extra duties shall not apply to articles already subject to 19 U.S.C. § 1862. CBP keeps a trade-remedies desk for those programs. The Bureau of Industry and Security still runs the underlying 232 investigations.

USMCA is still real. It is just not a Section 338 waiver. The agreement entered into force on July 1, 2020. CBP's USMCA page still requires a certification of origin with the nine minimum data elements in USMCA Annex 5-A. None of that language punches a hole in 9903.03.12–9903.03.14.

The clock is entry, not departure. CBP's basic importing page is the same reminder it always is: the importer and CBP share compliance, and the duty is paid on the entry the United States actually takes. A trailer that left Ontario on August 21 and entered for consumption on August 22 is an August 22 entry.

Timeline and HTS map

Sources: White House fact sheet; temporary suspension proclamation; CSMS # 69606660.

Sources: CSMS # 69606660; HTSUS (2026 Revision 17).

C.H. Robinson maps those headings to the three proclamations: 9903.03.12 for the alcoholic-beverages annex (beer, wine, spirits, plus certain wood and paper products), 9903.03.13 for the dairy annex (dairy, caseins, sugar-containing products, nonalcoholic beverages), and 9903.03.14 for the motor-vehicle annex, which it calls the most extensive of the three and which also lists agricultural and food products, leather, plywood, wood products, furniture, textiles, metals and derivatives, industrial machinery, certain printed circuit boards, and various other products.

That last annex is why a shop that never touches cars can still take a 50% hit. The motor-vehicle proclamation is a discrimination finding about Canadian auto measures; the annex is the offset list, and the offset list is wider than the finding.

The live classification book is the Harmonized Tariff Schedule, currently 2026 HTS Revision 17. Chapter 99 carries the extra duties; Chapter 1–97 still names the goods. Entries go through the Automated Commercial Environment.

The numbers the proclamations actually cite

The White House and USTR published the export-side figures they used as the discrimination record. Those figures are not your invoice. They are the government's stated basis for the 50% offset.

According to the White House fact sheet, Canadian imports of U.S. motor vehicles decreased by approximately 22%, or $5.6 billion, from April 2025 through March 2026 compared with the same period in 2024-2025.

The motor-vehicles proclamation states the same window as a drop from approximately $25.9 billion to approximately $20.3 billion, and says Canada has, since April 9, 2025, kept a 25 percent tariff on non-USMCA U.S. vehicles and a 25 percent rate on non-Canada/Mexico content of USMCA-qualifying vehicles, up to 85 percent of vehicle value.

According to the White House fact sheet, Canadian imports of U.S. alcoholic beverages decreased by about 81%, or $582 million, from March 2025 through February 2026 compared with the same period in 2024-2025.

The alcoholic-beverages proclamation gives the same window as a drop from approximately $718 million to approximately $137 million. It states that Ontario and Quebec pulled U.S. alcohol in March 2025 and that only Alberta and Saskatchewan later lifted bans, in June 2025.

The dairy proclamation does not publish a matching dollar drop. It is a TRQ-allocation finding: Canada maintains a cheeses-of-all-types TRQ under USMCA and a cheese-of-all-types TRQ under CETA, and the proclamation finds that Canada's eligibility criteria let retailers into the CETA TRQ but not the USMCA TRQ.

According to USTR, President Trump is imposing a 50 percent tariff on nearly $20 billion in imports from Canada, which will take effect in thirty days.

Sources: motor-vehicles proclamation; alcoholic-beverages proclamation; USTR Greer statement; 19 U.S.C. § 1338.

Drawback, FTZ, and Chapter 98

CSMS # 69606660 states that the additional duty is subject to drawback. C.H. Robinson also flags drawback and Chapter 98 returned-goods provisions where they apply. If the goods stay in the United States, drawback is not a plan.

Foreign-trade-zone rules are stricter. Each proclamation requires covered products, except goods eligible for "domestic status" under 19 CFR 146.43, to be admitted as privileged foreign status under 19 CFR 146.41. C.H. Robinson restates that as a hard instruction. Domestic status is for U.S. goods, previously imported goods with duty and tax paid, or goods entered free of duty and tax.

Chapter 98 is a partial off-ramp. CSMS says the extra duty does not apply to a proper Chapter 98 claim, except subchapter XXIII, subheadings 9802.00.40, 9802.00.50 and 9802.00.60, and heading 9802.00.80, where the extra duty still attaches to the foreign repair, processing, or assembly value.

CBP still collects everything else that already applied. CSMS is explicit: products under 9903.03.12–9903.03.16 remain subject to antidumping, countervailing, and other duties, taxes, and fees. CBP's trade homepage is the front door for those programs.

Dispatchers who already extract commercial invoices in US Tech Automations can flag 9903.03.12–9903.03.16 lines before the ACE summary, then park a drawback or Chapter 98 checklist on the same record.

A TMS comparison still matters for the load, not for the duty. If your shop is choosing between platforms, the AscendTMS vs McLeod question is unchanged. The new work is the HTS line, the entry date, and the quote you sent the customer last Tuesday.

USTA analysis

USTA analysis: take the two figures USTR and the proclamations already published and do the arithmetic in the open.

Input A, from USTR: a 50 percent tariff on nearly $20 billion in imports from Canada.

If that nearly-$20-billion base is entered at the additional 50% ad valorem rate, extra duty = 0.50 × $20,000,000,000 = $10,000,000,000.

That $10 billion is a ceiling on the government's own import base, not a collection forecast. Headings 9903.03.15 and 9903.03.16 are 0%. Section 232 goods are out. Chapter 98 claims and drawback pull more out. Goods that never enter for consumption never pay. The analysis does not invent a collection number. It shows what 50% of the stated base is, so a reader can see the scale before exemptions.

For a small importer, extra duty on a listed SKU is 0.50 × entered value, stacked on fees already on the line. A $40,000 furniture entry in 9903.03.14 that is not in a 0% carve-out is $20,000 of new duty before other charges. That is 50% of a number already on the commercial invoice.

Reprice open quotes at entry date, not ship date. Match each SKU to 9903.03.12–9903.03.16. If you run documents through US Tech Automations today, add three fields to intake: Chapter 99 heading, US entry date, and whether the SKU is on the 0% list.

US Tech Automations is the home for that workflow layer. The product side is the same agentic-workflow platform teams already use to move invoices and entry packets.

Signal vs Speculation

Demonstrated fact (sourced): Three July 20, 2026 proclamations imposed an additional 50% ad valorem duty on listed Canadian products under Section 338. An August 18 suspension moved the start from August 19 to August 22 at 12:01 a.m. Eastern. CBP is collecting on consumption entries under 9903.03.12–9903.03.16. USMCA origin is not an exemption. Drawback is available. FTZ admissions of covered goods must be privileged foreign status except for domestic-status merchandise. USTR put the covered import base at nearly $20 billion.

Our read: If the 50% rate holds for 12–36 months, small U.S. buyers of listed Canadian plywood, furniture, textiles, dairy, beer, and machinery will switch origin, absorb the duty, or pass it through. Section 338 lets the President suspend, revoke, supplement, or amend the proclamations when the public interest requires it; that is in the statute, not a forecast. C.H. Robinson noted that Section 338 tariffs are not time limited as other tariffs have been. Until a later proclamation cuts the rate, plan as if 50% is the rate.

FAQs

Do Section 338 Canada Tariffs apply to USMCA-origin goods?

Yes. The White House fact sheet and C.H. Robinson both state that covered goods take the extra duty even when they originate under USMCA. A USMCA certificate can still matter for other preference claims; it does not zero out 9903.03.12–9903.03.14.

When did the extra 50% duty start collecting?

It started at 12:01 a.m. Eastern on August 22, 2026, for consumption entries. The July proclamations had said August 19. The August 18 suspension moved Annex II to August 22. CSMS # 69606660 is the filing instruction.

Which HTSUS headings carry the 50% rate?

9903.03.12, 9903.03.13, and 9903.03.14 each carry a 50% additional ad valorem rate, tied to subdivisions (b)(1), (b)(2), and (b)(3) of U.S. note 51. 9903.03.15 and 9903.03.16 carry 0%. The live book is the HTS, currently 2026 Revision 17 on the USITC site.

Can an importer claim drawback on the extra 50%?

CBP's CSMS states that the additional duty is subject to drawback. C.H. Robinson also flags drawback and Chapter 98 returned-goods provisions as tools that may reduce duty exposure where they apply. Drawback is not a rebate on goods you consume in the United States.

What happens if listed Canadian goods go into a Foreign Trade Zone?

They must be admitted as privileged foreign status, except merchandise eligible for domestic status under 19 CFR 146.43. On later entry for consumption, they take the ad valorem rate that matches the HTSUS classification, including the Section 338 add-on if the heading still calls for it.

Are passenger vehicles excluded from the extra 50%?

Passenger vehicles, light trucks, and their parts are on 0% heading 9903.03.15, along with medium- and heavy-duty vehicles and parts, specified wood products, semiconductors, patented pharmaceuticals, and 232 metal articles. Unmanned aircraft are not in the civil-aircraft 0% heading. Confirm the SKU against the HTS list.

Glossary

• Section 338. Section 338 of the Tariff Act of 1930, codified at 19 U.S.C. § 1338, authorizing additional duties up to 50 percent ad valorem to offset foreign discrimination against U.S. commerce, with collection starting thirty days after the proclamation.

• Ad valorem. A duty charged as a percentage of entered value. The Section 338 extra rate on listed Canadian goods is 50 percent ad valorem.

• Entered for consumption. The CBP event that starts the duty clock. Goods withdrawn from warehouse for consumption are on the same clock.

• HTSUS Chapter 99. The part of the Harmonized Tariff Schedule that carries many additional, temporary, or trade-remedy duties, including 9903.03.12–9903.03.16 for this action.

• Privileged foreign status. The FTZ admission status (19 CFR 146.41) required for covered Canadian goods that are not eligible for domestic status, locking in the duty treatment for later entry.

• Drawback. A refund, in whole or in part, of duties paid when statutory conditions are met, often on export or destruction. CBP says the Section 338 additional duty is subject to drawback.

• USMCA. The United States-Mexico-Canada Agreement, in force July 1, 2020. Origin under USMCA does not exempt listed goods from Section 338 Canada Tariffs.

• Section 232. 19 U.S.C. § 1862 national-security import adjustments. Articles already subject to Section 232 duties are outside the extra Section 338 rate.

Section 338 Canada Tariffs are now a filing fact, not a headline. Recheck the list, recut the quote, and put the Chapter 99 heading on the same workflow that already moves the bill of lading. If you want that HTS-and-entry check sitting next to the documents you already route, use the agentic workflow build on the same platform.