Section 338 Tariffs on Canada: A USMCA Claim Won't Exempt You

Update, October 30, 2026. The duty on this list has changed four times since we first wrote about it, and part of the list is now banned outright. The 50 percent duty took effect at 12:01 a.m. eastern time on August 22, 2026, after a three-day suspension (Proclamation 11056). On September 8, the President signed five more proclamations. Three of them (Proclamations 11061, 11062, and 11063) exclude certain Canadian alcohol, dairy, and motorcycle products from importation for goods imported on or after September 29. Two of them (Proclamations 11064 and 11065) changed the alcohol and motor vehicle lists from September 15 and ended the Section 232 exclusion for those two lists. A further motor vehicle change (Proclamation 11076, signed October 23) takes effect today, October 30. An importer has also sued in the Court of International Trade. The one fact that has not moved is the subject of this brief: none of these documents adds a USMCA carve-out.

Key takeaways

• A 50 percent duty has applied to a list of Canadian goods since 12:01 a.m. eastern time on August 22, 2026. The duty covers goods "entered for consumption, or withdrawn from warehouse for consumption," under three proclamations signed July 20 and published in the Federal Register on July 23.
• A USMCA/CUSMA origin claim does not exempt you from this duty. The new tariff schedule note says products "eligible for special tariff treatment under general note 3(c)(i)" (the note that lists the United States-Mexico-Canada Agreement) "shall be subject to the additional ad valorem rate of duty imposed by this heading." None of the five September proclamations or the October proclamation changes that.
• Some goods can no longer enter at all. An import ban has applied since September 29, 2026. The ban covers 47 alcohol lines, many limited to packaged products. The ban also covers 14 dairy and related lines (whey, molasses, non-alcoholic beer) and one motorcycle line (over 800 cc).
• The Section 232 exclusion now covers only the dairy list. From September 15, the duties on the alcohol and motor vehicle lists "shall apply in addition to duties imposed pursuant to section 232." CBP's guidance says that, as of that date, only dairy-list goods can claim the exclusion heading.
• The lists keep moving. The September 15 change added cheese to the alcohol list and furniture, metal fittings, and two small-vehicle lines to the motor vehicle list. The October 30 change removes 22 subheadings from the motor vehicle list and adds 100. Carpets and rugs are the largest group of the 100 (43 lines).
• There is still no expiry date, and the legal challenge is at an early stage. The September and October changes "shall continue in effect unless this action is expressly suspended, revoked, supplemented, amended, or terminated." The court case has a briefing schedule that runs into January 2027.

The short version: a duty your origin paperwork does not turn off

If you import anything from Canada into the US, start with one fact. A properly made claim of USMCA/CUSMA origin does not work against this measure. Most cross-border founders have been told to rely on that claim.

The usual pattern of the last three years was different. The Section 122 surcharge exempted articles "entered free of duty as a good of Canada or Mexico under the terms of general note 11" of the HTSUS. Origin was the condition the exemption depended on. Most practical guides, including our brief on the Section 122 sunset, gave the same advice: get your origin claim right, because the carve-outs are written around it.

These proclamations break that pattern, and they do it explicitly. They were issued under Section 338 of the Tariff Act of 1930 (19 U.S.C. 1338). Trade counsel describe the July 20 action as the first time that statute has been used to impose tariffs. The annexes insert a new U.S. note 51 into chapter 99 of the tariff schedule. That note states that products "eligible for special tariff treatment under general note 3(c)(i) to the tariff schedule, or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional ad valorem rate of duty imposed by this heading." General note 3(c)(i) is the schedule's list of preference programs, and the United States-Mexico-Canada Agreement is on it. So the tariff does not merely fail to exempt USMCA goods. The note names the category those goods belong to and taxes it.

Compare the Section 122 measure, and the contrast is exact. Its proclamation listed exceptions to its surcharge. Item (l) on that list was "articles that are entered free of duty as a good of Canada or Mexico under the terms of general note 11 to the Harmonized Tariff Schedule of the United States (HTSUS)." Note 51's exception list (civil aircraft, personal-use baggage, most chapter 98 entries, and, for the dairy list only, Section 232 goods) contains no equivalent. One document was written with a USMCA exception and the other without.

The mechanism contains an irony. The dairy proclamation's stated grievance is about Canada's cheese tariff-rate quota rules. According to the proclamation, retailers can use the quota opened under the Canada-EU agreement but not the one opened under USMCA. The complaint is specific to USMCA. The remedy taxes goods without regard to USMCA origin.

What each proclamation targets, and what it actually taxes

Each proclamation is named for a Canadian practice the US says it is offsetting. What each one taxes is a separate list in its annexes. Sometimes the name and the list overlap and sometimes they do not. For that reason the title is useless as a screening tool in either direction.

Read the "named for" row against the list rows, because the titles fail in both directions. If you are in dairy or alcohol, the title understates your exposure. Those lists tax your industry and then reach goods that have nothing to do with it. Since September 15, the alcohol list has also taxed cheese. If you are in none of the three industries, the title overstates your safety. The motor vehicle list reaches furniture, cosmetics, apparel, and, from October 30, carpets. Section 338 is a retaliation statute. The title tells you why the US is acting, and the annex tells you what pays for it.

The launch counts are ours, not a summary's. The Federal Register prints the annexes as page images, so most coverage describes them second-hand. The White House posts the annexes as text, so we counted the lines directly. The July 20 count put 52 tariff lines in the dairy annex (28 of them in chapter 4: milk, cream, whey), 63 in the alcohol annex (49 in chapter 22), and 440 in the motor vehicles annex. The motor vehicles annex had a single chapter 87 line, for motorcycles. The later changes are counted the same way, from the White House annex texts. For the September 15 change we also use the figure in CBP's own guidance: "122 additional HTSUS classifications now subject to HTSUS 9903.03.12 or HTSUS 9903.03.14."

One limit applies to every count here, and it comes from the annexes themselves: "The product descriptions that are contained in this Annex are provided for informational purposes only and are not intended to delimit in any way the scope of the action." Treat every category named here as a prompt to look up your own HTS lines, not as a finding about them. The tariff lines govern. The annexes add that scope questions "should be referred to U.S. Customs and Border Protection."

What changed after August 22

The original proclamations were the start of the action, not the whole of it. Here is the sequence, from the Federal Register and the White House texts.

August 18: a three-day suspension. Proclamation 11056 (91 FR 54789) suspended all three actions "for a period of 3 days." The stated reason was that "Canada has expressed a commitment to remove the discriminations or unreasonable and unequal impositions at issue." The suspension moved the start date from August 19 to August 22.

August 22: the duty took effect. The later proclamations give the administration's account in the same words each time: "On August 21, 2026, Canada reneged on its commitment, ceased negotiating in good faith, and did not remove the discrimination or unreasonable and unequal imposition at issue …" That sentence is the administration's finding, not a neutral record of the talks.

September 8: an import ban. Section 338 has a second, harsher tool. If a country "maintains or increases the discrimination," the President may exclude its goods from importation. Proclamations 11061, 11062, and 11063 (91 FR 58311, 58319, and 58325, published September 14) use that tool. Each says listed products "are excluded from importation into the United States, effective with respect to goods imported on or after 12:01 a.m. eastern time on September 29, 2026." Goods already imported but not yet entered before September 29 "will remain subject to the 50 percent duty rate" set by the July proclamations. Each proclamation also has a fallback. If a court invalidates the ban for an import, "the 50 percent ad valorem duty" applies to that import instead.

September 15: the alcohol and motor vehicle lists changed. Proclamations 11064 and 11065 (91 FR 58331 and 58339) added and removed lines. The more important change is one sentence: the duties "shall apply in addition to duties imposed pursuant to section 232 of the Trade Expansion Act of 1962 …" CBP's guidance put the result plainly: "As of September 15, 2026, only goods subject to HTSUS 9903.03.13 are eligible to claim HTSUS 9903.03.15." Heading 9903.03.13 is the dairy list. Heading 9903.03.15 is the 0 percent Section 232 exclusion. So for alcohol-list and motor-vehicle-list goods, Section 232 duties and this duty now stack.

October 30: the motor vehicle list changes again. Proclamation 11076, signed October 23, removes 22 subheadings and adds 100. The changes apply to goods "entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on October 30, 2026." The added lines are mostly carpets and rugs (chapter 57), sweetened cocoa powder, and wood, paper, and chemical products. The removed lines include some plastics, plywood, packaging paper, and machinery. The Federal Register lists the proclamation for publication on October 30, 2026 (FR Doc. 2026-22292). The page citation was not yet available when we checked.

Who this affects

• Anyone importing physical goods of Canadian origin into the US. That is the whole population at risk, and your industry is not a reliable filter. Furniture, cosmetics, apparel, and now carpet importers are inside a measure named for cars. Dairy and alcohol importers are inside it and also exposed to lines well outside their own category.
• Importers of Canadian beer, wine, spirits, whey, or large motorcycles. Many of these lines moved from a 50 percent duty to a ban on September 29. A ban is not a higher rate. Goods on the ban list cannot be imported at any price.
• Cross-border sellers who cleared goods duty-free on a CUSMA claim. Your claim was probably correct and is still worth maintaining for other duties. Your claim will not zero out this duty.
• US founders sourcing inputs or finished goods from Canadian suppliers. Landed cost on covered lines changed on August 22, again on September 15, and again on October 30 for the motor vehicle list. Supplier USMCA compliance does not change that.
• Anyone holding covered goods in a bonded warehouse or foreign trade zone. The trigger for the duty is withdrawal for consumption, not arrival. Covered goods admitted to a foreign trade zone on or after the effective date "must be admitted as 'privileged foreign status'," unless they are eligible for "domestic status" under 19 CFR 146.43. Privileged foreign status locks in the tariff treatment at admission.
• Less affected, but check the details. Goods on the dairy list that already pay Section 232 duties are still excluded from this duty. That exclusion no longer applies to the alcohol and motor vehicle lists. The White House said at launch that energy, potash, fish, and critical minerals sit outside the action. Civil-aircraft goods other than drones, goods for personal use in a traveler's accompanied baggage, and most chapter 98 entries are also outside. If you sell services across the border, nothing here clears customs.

What to do now

1. Pull your HTS codes and check them against the current lists. The current lists are the July annexes as amended on September 15 and October 30, plus the three import-ban annexes. Reading "dairy" or "motor vehicles" in a headline and closing the tab is the most expensive mistake available. Ask your customs broker to run your top lines against all of them in one pass, and get the answer in writing.

2. Check the entry date on every shipment. The duty attaches to goods entered, or withdrawn from warehouse, on or after the effective date of each list. The original proclamations and their annexes contain no on-the-water exception. We searched all three texts and all six original annexes for one and found none. The Section 301 forced-labor action finalized in July did the opposite. That action exempted goods "loaded onto a vessel at the port of loading and in transit on the final mode of transit" before its start date, if they entered by July 28. Here, the entry date alone decides whether the 50 percent applies. For the import ban, the test is the date the goods were imported, and goods imported before September 29 pay the duty instead.

3. Do not abandon your CUSMA claim. The claim does not help against this measure, but it still helps against other duties. You cannot rebuild origin records in a hurry when a verification letter arrives. Keep certifying origin correctly.

4. Recheck any Section 232 assumption. Until September 15, a good that paid Section 232 duties was excluded from all three lists. Since then, that exclusion applies only to the dairy list. If you import alcohol-list or motor-vehicle-list goods that also carry Section 232 duties, both duties now apply. The other exclusions remain. Civil-aircraft articles meeting general note 6 are excluded (unmanned aircraft are not). So are "products for personal use included in accompanied baggage of persons arriving in the United States." Goods "for which entry is properly claimed under a provision of chapter 98" are excluded too, with specified exceptions. If you use chapter 98 entries, talk to your broker this week.

5. Take the filing instructions from CBP. CBP issued entry guidance in CSMS message 69606660 on August 21, 2026, and changed it in CSMS message 69851916 on September 11, 2026. The USITC tariff database now returns results for headings 9903.03.12 and 9903.03.15. Both were missing when we checked in July and August. CBP covered the import ban in CSMS message 70050970 on September 28, 2026, and the October 30 change in CSMS message 70314289 on October 29, 2026. Your broker should confirm the current instructions before filing.

6. Treat every date as provisional. Section 338 lets the President "suspend, revoke, supplement, or amend" these proclamations at any time. Since July, the President has used Section 338 for a suspension, three import bans, and three list changes. The September and October changes "shall continue in effect unless this action is expressly suspended, revoked, supplemented, amended, or terminated." Relief is possible, but nothing on the calendar promises it.

This is general information about a trade and customs change for founders, not legal, tax, or customs advice. Confirm the specifics for your goods with US Customs and Border Protection or a licensed customs broker before you rely on it.

The court challenge

On October 20, 2026, Gellert Global Group Corp., a food importer headquartered in New Jersey, sued the President and other officials in the US Court of International Trade (Court No. 26-04636). The complaint has four counts. The first says Section 338 "has been impliedly repealed or, at a minimum, is controlled by Section 301 of the Trade Act of 1974." The second says the action "exceeds the authority granted by Section 338 of the Tariff Act of 1930." The third says that if the statute does authorize the tariffs, it violates the nondelegation doctrine. The fourth targets the September 15 list changes. That count says collecting duty on articles first listed in Proclamations 11064 and 11065 "violated Section 338's 30-day waiting period."

The case went to a three-judge panel on October 23. On October 28, the court set an expedited schedule for the importer's summary judgment motion. The government's response is due December 11, 2026, and the importer's reply is due January 11, 2027. Oral argument has no date yet. As of October 30, 2026, the court had not ruled on the merits. The duty, the ban, and the list changes all still apply while the case runs.

The other thing that moved this summer

While the July proclamations were being signed, the tariff underneath them changed too. The Section 122 balance-of-payments surcharge expired on schedule on July 24, 2026. The same week, the Section 301 forced-labor action moved from proposal to final action, with rates set by economy and a list of product exemptions. Canada is in the 10 percent group. We keep the rate structure and the exemption categories in our Section 122 handover brief, updated for the final action, rather than repeat them here.

Within a single week, one authority sunset, a second was finalized, and a third was invoked three times. Trade counsel describe that third authority, a 1930 statute, as never having been used for this purpose before. If you are trying to hold a landed-cost model together, the lesson is not about any one of them. The number of separate tariff authorities that can reach the same shipment has been going up, and they do not share exemptions. An origin claim answers some of them. None of them was built around your assumptions.

What this changes about "get your origin claim right"

We have been telling founders that the durable move is documentation, not rate-watching. The thing that survives sunsets and appeals is being able to prove where a good was made. That advice was correct for the measures it was written about, and we would give it again for those.

Section 338 adds a boundary. Origin documentation is a defense against duties that are structured around origin. A retaliation statute aimed at a country's conduct does not have to be structured that way, and this one is not. The correct version of the rule is narrower than the one in circulation. Keep the paperwork, and stop assuming it is a general-purpose shield.

"Which country is my business from?" is still the wrong question at customs. Your incorporation never qualified goods for CUSMA treatment. A claim about the goods did. CUSMA itself remains in force, a separate question we cover in whether CUSMA is still in effect. Here, even a good claim is not enough. What remains true is the layer underneath. When duty rates change on a few days' notice, the businesses that adjust fastest keep customs, tax, banking, and platform records that agree with each other.

Where customs notices and broker letters arrive

When a list changes on a week's notice, speed depends on paperwork that reaches you. A notice about a held shipment, a CBP request for information, or a letter from your broker can arrive by mail at your business address. Customs and tax systems cross-check those addresses. We explain which address belongs on each record in the import-export business address guide. We cover who receives a refund when duties are unwound in who gets the tariff refund. If you also sell on marketplaces, see Etsy's DDP rule for cross-border sellers. The Virtual Business Address receives mail in a business or trade name. The Virtual Mailing Address is for personal mail, in individual names only.

Both plans include a photo of every envelope as it arrives. Opening and scanning a piece is one flat fee, only when you ask. Henry, our AI assistant, explains each letter you ask us to open. Pricing comes by email with the next steps, and our fair use policy lists our fees and limits. USPS Form 1583 is required before any provider can receive mail for you.

A mailing address does not make you an importer of record, classify your goods, or serve as a customs address. For mail in your company's name, get your Virtual Business Address. Ordering is free, and nothing is charged today.

FAQ

What is a Section 338 tariff? Section 338 of the Tariff Act of 1930 (19 U.S.C. 1338) lets the President impose additional duties on a country's goods to offset its discrimination against US commerce. The statute caps the duties at "not to exceed 50 per centum ad valorem or its equivalent." The duties apply "thirty days after the date of such proclamation." If the country keeps up or increases the discrimination, the statute also allows the President to exclude its goods from importation. Trade counsel describe the July 20, 2026 proclamations as the first time the statute has been used to impose tariffs.

When did the Section 338 tariffs on Canada take effect? The duty has applied since 12:01 a.m. eastern time on August 22, 2026, to goods entered for consumption, or withdrawn from warehouse for consumption, on or after that moment. The original date was August 19. A proclamation signed August 18 suspended the duties for three days. Later changes took effect on September 15 (alcohol and motor vehicle lists) and October 30 (motor vehicle list). The import ban applies to goods imported on or after September 29.

Which Canadian products are banned from import? Three proclamations signed September 8, 2026 ban certain Canadian products imported on or after September 29. The alcohol annex lists 47 lines in chapter 22: beer, wine, cider, and spirits, many limited to packaged products. The dairy annex lists 14 lines, including whey, molasses, and non-alcoholic beer. The motor vehicle annex lists one line: motorcycles with engines over 800 cc. Check your exact HTS codes against the annexes.

Is the rate 50 percent, or is 50 percent just the ceiling? Here the rate and the ceiling are the same. Fifty percent is the statutory maximum in Section 338, and the proclamations impose "an additional ad valorem duty of 50 percent." The match is unusual. In the Section 122 action, the widely quoted 15 percent was only the ceiling, and the applied rate was 10 percent.

Does USMCA or CUSMA exempt my goods? No, and the tariff schedule says so directly. The new U.S. note 51 provides that products "eligible for special tariff treatment under general note 3(c)(i)" (the general note that lists the USMCA) "shall be subject to the additional ad valorem rate of duty imposed by this heading." The White House fact sheet said the same in plain language. The tariffs "apply to all covered goods regardless of whether a good originates under the U.S.-Mexico-Canada Agreement (USMCA)." None of the later proclamations added an exemption. Keep your origin claim current for other duties.

Are my products clear if they have nothing to do with dairy, alcohol, or cars? Not on that basis. The proclamation titles describe the Canadian practices being offset. The goods being taxed are listed separately in the annexes, and the two only partly overlap. The alcohol list now includes cheese. The motor vehicle list reaches furniture, cosmetics, apparel, metal fittings, and, from October 30, carpets and rugs. Check your HTS codes against every current list.

Does this duty stack with Section 232 and other tariffs? Yes, for most goods. Trade counsel stated at launch that the duty "will also stack on top of any other applicable duties." Since September 15, the alcohol and motor vehicle lists also stack on Section 232 duties. The proclamations say the duties "shall apply in addition to duties imposed pursuant to section 232." Only goods on the dairy list can still claim the Section 232 exclusion heading, according to CBP.

When do the tariffs expire? There is no expiry date. The September and October changes "shall continue in effect unless this action is expressly suspended, revoked, supplemented, amended, or terminated." Section 338 also lets the President "suspend, revoke, supplement, or amend any proclamation under section 338 whenever the President deems that the public interests require such action." The pending court case could also change the outcome.

Bottom line

Three proclamations signed on July 20, 2026 put an additional 50 percent duty on a list of Canadian goods. The duty has been in effect since 12:01 a.m. eastern on August 22. Since then, the action has grown. An import ban started on September 29, the Section 232 exclusion was narrowed on September 15, and the motor vehicle list changed again on October 30. Two things still break the pattern founders have learned. A USMCA/CUSMA origin claim does not exempt the goods, and the rule is written into the tariff schedule. And the titles are not the product lists: the alcohol list now taxes cheese, and the motor vehicle list taxes furniture and carpets.

The steps available now are small and specific. Check your HTS lines against every current list, including the ban lists. Confirm the entry date on anything already moving. Take the filing details from CBP's own messages rather than from a summary. Then watch the court case, which has briefing scheduled into January 2027.