On August 21, 2026, U.S. Customs and Border Protection (“CBP”) issued guidance implementing the 50% Section 338 tariff on certain Canadian products effective August 22, 2026, following a temporary suspension. See CSMS #69606660.
The 50% Section 338 Canada tariff was initially announced on July 20, 2026, under three Presidential Proclamations to offset Canadian discrimination against the commerce of the United States with respect to alcoholic beverages, dairy, and motor vehicles. A list of the relevant HTS classifications subject to the 50% Section 338 tariff can be found here.
Certain products are excluded from the 50% Section 338 tariff, including certain goods that are already subject to Section 232 tariffs. However, there is no general “in-transit” exemption.
Importantly, unlike the 10% Section 301 forced labor tariff on Canadian products, the 50% Section 338 tariff applies regardless of whether the Canadian products qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA).
Please also note that the 50% Section 338 tariff will stack with the 10% Section 301 forced labor tariff where a product of Canada falls within the scope of both measures. However, Canadian products qualifying for preferential treatment under the USMCA and thus exempt from the 10% Section 301 forced labor tariff will remain subject to the 50% Section 338 tariff.
We expect that a court challenge is forthcoming regarding the implementation of this tariff and will provide an update.
Separately, on August 24, 2026, President Trump announced on his social media platform referring to Canadian products that “[t]ariffs on all Cars, Trucks, both large and small, Automotive Parts and Steel” would rise to 50%, effective January 1, 2027. Further implementation details have not yet been announced.
Companies importing products from Canada should promptly:
Determine whether their imported products are covered by the new Section 338 tariff.
Review sourcing strategies and evaluate potential tariff exposure.
Confirm whether any product-specific exclusions apply.
Confirm whether any other exclusions apply.
Should you have any questions concerning coverage, rates, and handling, please reach out to one of our trade professionals listed here.