50% Section 338 Duties on Certain Canadian Goods Are Now In Force

Delayed three days at the last minute, live since 12:01 a.m. ET on August 22. USMCA does not exempt them — and Canada's retaliation is now in force too: 629 tariff items at 15%, 25% and 50%, effective September 8.

An additional 50% ad valorem duty now applies to certain goods from Canada, for merchandise entered for consumption — or withdrawn from warehouse for consumption — on or after 12:01 a.m. ET on August 22, 2026. The duties come from three proclamations signed on July 20, 2026 under Section 338 of the Tariff Act of 1930.

The original effective date was August 19. A proclamation issued on August 18 suspended it for three days while the two governments talked, and the duties took effect when that pause expired. Negotiations continue, so the rate can still be modified, suspended again or revoked.

The three proclamations sit under their own HTSUS provisions. 9903.03.12 covers beer, wine and spirits plus certain wood and paper items. 9903.03.13 covers dairy, caseins, sugar-containing products and nonalcoholic beverages. 9903.03.14 was filed as the motor vehicle proclamation but is far broader in practice — agricultural goods, leather, textiles, metals, machinery and printed circuit boards.

Together they cover roughly US$20 billion in annual imports from Canada, and the headline categories are not the whole list: cement, plywood, furniture, clothing, cosmetics and sporting goods all appear among the covered lines. Read the tariff numbers rather than the sector labels.

Three points matter for planning. USMCA preference does not exempt a shipment — qualifying goods are not excluded. Section 338 carries no fixed expiration date. And for cargo already moving, entry timing decides the rate.

Duty drawback and the Chapter 98 returned-goods provisions may reduce exposure on some shipments, depending on what the goods are and where they end up.

Canada's counter-tariffs: the list is out

Canada suspended trade negotiations on August 25 and published its retaliation list the same day. The countermeasures take effect at 12:01 a.m. on September 8, 2026 and match the U.S. action dollar for dollar — $27.6 billion of U.S. goods, at rates set item by item to mirror the U.S. rate on the same product.

The list, as updated on August 26, runs to 629 tariff items: 413 of them at 50%, 195 at 25% and 21 at 15%. The sector labels in the press release undersell how it is distributed. Iron and steel and articles of iron or steel are by far the largest block — 274 lines between them. Then dairy and eggs (51), machinery (50), carpets (32), aluminum (29), tools (25), furniture and lighting (22), wood (20), apparel (18) and paper and paperboard (17). As with the U.S. proclamations, the tariff number decides, not the sector heading.

Update, September 8: the countermeasures are now in force, and the enacting order splits the list in two — the steel and aluminum lines are administered under a separate order. What that means in practice, and the in-transit exemption, are covered in our piece on the surtax as it actually took effect.

Two administrative points change what you should do this week:

• Origin is decided by the marking rules, not by CUSMA preference. A good is caught if it is eligible to be marked as a good of the U.S. under the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. Goods that merely transit the United States are a different question from goods that originate there.
• Cargo already in transit to Canada on September 8 is not caught. Canada's countermeasures do not apply to U.S. goods that are in transit to Canada on the day they come into force. For anything on the covered list, the shipping date is now worth more than the entry date — CBSA will publish the administrative detail in its Customs Notices.

Canada's existing counter-tariffs, including those on autos, stay in place, and the remission framework remains open for exceptional cases.

We arrange clearance into both the United States and Canada. Send us your HTS codes and we will check your products against both covered lists and tell you what your timing means for duty. Contact us.