On July 20, 2026, President Trump issued three separate tariff proclamations against Canada under Section 338 of the Tariff Act of 1930, 19 U.S.C. § 1338. Each proclamation imposes an additional 50% ad valorem duty on certain Canadian-origin goods, which is the maximum rate the statute allows, targeting Canadian exports involving motor vehicles, alcoholic beverages, and dairy.
This marks the first-ever invocation of Section 338 by any administration. The White House has framed the action as a response to Canada’s “discriminatory treatment” of U.S. automobiles, alcohol, and dairy, pointing specifically to Canada’s 2025 retaliatory 25% tariff on U.S.-origin autos and to provincial moves to remove U.S. liquor from store shelves. The additional 50% duty takes effect at 12:01 a.m. ET on August 19, 2026, 30 days after the proclamations were signed, consistent with Section 338’s statutory cap of 50% and its required 30-day minimum delay period.
Rather than operating as three stand-alone tariff schedules, the proclamations work through a single new U.S. Note 51 to subchapter III of Chapter 99 of the HTSUS. The alcoholic-beverage proclamation created heading 9903.03.12, the dairy proclamation added heading 9903.03.13, and the motor-vehicles proclamation added heading 9903.03.14. Each heading applies “the rate of duty set forth in the applicable subheading, plus 50 percent ad valorem” to the goods identified in the relevant Annex II.
The scope of the three measures is set out in those annexes. Heading 9903.03.12 covers alcoholic beverages and is centered on Chapter 22, including beer, wine, vermouth, and spirits, all when products of Canada. Heading 9903.03.13 covers dairy-related goods, including concentrated milk and cream, whey products, casein, and lactose. Heading 9903.03.14 is the broadest of the three and reaches a much wider range of goods associated politically with the motor-vehicle dispute, including products from agriculture, plastics, leather, textiles, apparel, machinery, furniture, paper, sporting goods, and works of art.
Notably, the new duties apply even to USMCA-origin goods; there is no CUSMA carve-out, meaning goods that would otherwise qualify for preferential treatment under the USMCA are not shielded from the additional 50% duty.
U.S. Note 51 also contains important exclusions. The Note text excludes goods already subject to Section 232 tariffs on steel, aluminum, and copper, as well as passenger vehicles and light trucks under heading 9903.94.xx, wood products, semiconductors, and patented pharmaceuticals. The White House Fact Sheet further identifies exclusions for energy, potash, fish, and certain critical minerals, reflecting a policy choice to spare sectors where U.S. supply chains are particularly sensitive.
Also excluded are articles covered by the WTO Civil Aircraft Agreement, other than unmanned aerial vehicles (UAVs), which remain subject to the new duties. For goods held in foreign-trade zones, admission must be under “privileged foreign status” as defined at 19 C.F.R. § 146.41, rather than the alternative “non-privileged foreign status” that would otherwise let the duty rate float with any later tariff changes.
The administration has stated that these three Section 338 proclamations are separate from, and do not resolve, the still-pending “wildfire” tariff threat against Canada, which remains outstanding.
Source documents: the White House Fact Sheet; the proclamations for alcoholic beverages, motor vehicles, and dairy; and Annex II for heading 9903.03.12, heading 9903.03.13, and heading 9903.03.14.