In a significant development for importers and manufacturers, the Trump Administration has announced the unprecedented use of Section 338 of the Tariff Act of 1930 to impose an additional 50% tariff on certain Canadian-origin products, effective August 19, 2026.
While much of the trade community’s recent focus has been on Sections 122 and 301, the Administration has now turned to a rarely discussed authority—Section 338, a provision that has never previously been used to impose tariffs.
Historic Use of Section 338
President Trump has also issued three proclamations invoking Section 338 of the Tariff Act of 1930 to impose an additional 50% tariff on specified imports from Canada.
According to the Administration, the action is intended to address what it characterizes as discriminatory treatment of U.S. commerce by Canada, including measures affecting U.S. exports of:
- Motor vehicles;
- Alcoholic beverages; and
- Dairy products.
Section 338 authorizes the President to impose duties of up to 50% on products from a foreign country determined to be placing burdens or disadvantages on U.S. commerce. Notably, this authority has never been utilized.
Scope of the New Tariffs
Duty Rate
- Additional tariff: 50%
- Effective date: August 19, 2026
- Application: In addition to all other applicable duties, taxes, and tariffs
The products covered are identified in Annex I of the proclamation and span a broad range of sectors, including:
- Honey and food products
- Flowers and live plants
- Essential oils
- Dough and bakery products
- Vinyl tile floor coverings
- Travel goods
- Apparel
- Wood products
- Certain machinery
- Printed circuit assemblies
- Furniture
- Ice skates
- Golf equipment
- Sculptures and decorative items
Some preliminary estimates indicates that the covered products represent approximately 5% of Canadian exports to the United States, with an estimated annual value of roughly $20 billion.
Exceptions
The additional Section 338 tariffs generally do not apply to:
- Products already subject to Section 232 duties; and
- Most articles covered under the WTO Agreement on Trade in Civil Aircraft (excluding drones).
USMCA Considerations
One of the most notable aspects of the proclamations is the apparent absence of a USMCA exemption.
Currently, the proclamations do not appear to exclude goods that qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA). As a result, qualifying USMCA-origin products listed in the annexes may still be subject to the additional 50% Section 338 duty.
Importers should carefully review the proclamations and annexes to determine whether their products fall within the scope of the new measures.
Foreign Trade Zone Treatment
Goods admitted into U.S. Foreign Trade Zones after the effective date that are covered by the proclamations must be admitted under Privileged Foreign Status, making them subject to the applicable duty rate in effect at the time of FTZ admission.
What Importers Should Do Now
With nearly a month before implementation, companies should:
- Review Annex I product coverage in detail;
- Assess potential exposure to the additional 50% duty;
- Evaluate sourcing alternatives and inventory strategies;
- Consider implications for USMCA-qualified merchandise;
- Review Foreign Trade Zone procedures and entries; and
- Monitor developments closely, as the Administration has reserved the right to modify the measures.
While negotiations between the United States and Canada remain possible before the August 19 effective date, importers should prepare based on the tariffs as currently announced.
Additional Resources
Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada – The White House
This is a developing situation. Our team will continue to monitor implementation guidance and any developments arising from subsequent administrative actions.