U.S. Announces New 50% Tariffs on Many Canadian Products Starting August 19, 2026

On July 20, 2026, President Trump signed three Proclamations pursuant to Section 338 of the Tariff Act of 1930, 19 U.S.C. § 1338 (“Section 338”), that will result in the imposition of an additional 50% tariff on various Canadian goods entering the United States after 12:01 a.m. eastern time on August 19, 2026, barring any negotiated result in the interim 30 days. If the tariffs do go into effect, they will apply even for designated products produced in accordance with the requirements of the US-Mexico-Canada Agreement (“USMCA”). 

What Products Are Covered

Some press reports suggest that only 5% of imports from Canada are covered by the new tariffs, but importers should be cautious and check the specific schedules (linked below), because there are hundreds of classification subheadings included. The three proclamations address discriminatory practices in the alcoholic beverage, dairy, and automotive sectors in Canada, and some of the tariffs in turn impose tariffs on Canadian exports in the same sectors. But the proclamation regarding discrimination in the auto sector imposes tariffs across hundreds of product classifications across a wide range of goods and does not increase tariffs on imports of autos and auto parts from Canada which are already subject to specific tariffs under Section 232 of the Trade Act of 1962 or “Section 232.” We summarize the highlights here:

• Proclamation Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States with Respect to Alcoholic Beverages: The 50% tariff is imposed on Canadian beer, wine, gin, rum, vodka and other alcoholic beverages, wooden tableware and drink skewers, paper products, and hockey sticks, under 9903.03.12.
• Proclamation Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States with Respect to Dairy: The 50% tariff is imposed on Canadian dairy products across Chapters 4, 5, 12, 13, 17, 19, 22, 33, and 35, under heading 9903.03.13.
• Proclamation Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States with Respect to Motor Vehicles: As noted, autos and auto parts are already subject to tariffs under a Section 232 proclamation; therefore, this Section 338 proclamation imposes the 50% tariff on a wide range of Canadian products in more than 400 tariff classifications, including plants, textiles, furniture, and consumer products, under heading 9903.03.14. Automobiles, heavy duty vehicles, and auto parts identified under Section 232 are excluded from these tariffs, including those which qualify for duty-free entry under USMCA and do not actually generate Section 232 tariff liability.

Links to the full appendices with the specific classifications subject to the tariffs are included here, here, and here. A combined summary is provided at the end of this alert identifying impacted tariff chapters and importantly, the tariff chapters which are not impacted by these proclamations. Importers should closely review these appendices to determine whether the new Section 338 tariffs will apply to their imported products. 

These Section 338 tariffs do not apply if a product is already subject to tariffs under Section 232 of the Trade Agreement Act of 1962, such as those charged for steel, aluminum, copper, kitchen cabinets, semiconductors and pharmaceuticals.  Imported civil aircraft and aircraft parts are also exempt. As noted, for the goods explicitly covered by the proclamations, the Section 338 tariffs do apply regardless of whether a good qualifies for duty-free treatment under the USMCA, which is a departure from some other tariffs imposed on goods from Canada. Antidumping and countervailing duties will continue to apply (in addition to any Section 338 tariffs) if relevant. 

The Basis for Section 338 Tariffs and Potential Litigation

Section 338 empowers the President to declare tariffs on imports of a foreign country to “offset” the “commercial disadvantages” from a foreign country’s discriminatory practices against the commerce of the United States. Accordingly, Section 338 tariffs do not reach all imported products and are intended to relate only to products where there is a corresponding tariff or prohibition on U.S. imports into the foreign country. The President may declare tariffs up to 50% or prohibit the import of the foreign country’s products. Tariffs imposed under Section 338 may remain in place until withdrawn and Congress is not obligated to ratify the proclamation. As a result, importers should expect that Section 338 duties will remain in place until a further Presidential proclamation is issued.

As noted, three separate Section 338 orders were issued, each describing a specific Canadian trade limitation on American products and imposing duties in response. We include quick summaries of the rationales below, in part because the duties may be subject to legal challenge, in which case these rationales for the duties will be scrutinized and tested. 

• Regarding motor vehicles, the Presidential proclamation stated that Canada maintains various tariffs and tariff-rate quotas specifically targeting imports from the United States and not other countries.
• Regarding alcoholic beverages, the Presidential proclamation noted how the import and distribution of alcoholic beverages are managed by the separate Canadian provinces and how many of the Provinces stopped buying beverages produced in the United States in 2025 (in response to tariffs imposed by the United States), while continuing to sell beverages from other countries.
• Regarding the dairy sector, the Presidential proclamation stated that while Canada has tariff-rate quotas for cheeses from both the United States and the EU, Canada does not administer the quotas in the same manner, making it difficult for U.S. producers to take full advantage of the quotas.

Honigman's team is monitoring this rapidly evolving situation and is ready to support our clients. For questions, please contact Angela Gamalski, Daniel Wendt, Chauncey Mayfield, Karl Hochkammer, or another member of the Honigman Executive Order Task Force.

Section 338 Tariffs on Canada – Consolidated Scope as of July 20, 2026