Section 338 Tariffs
Latest Update:
The 50% Section 338 tariffs on Canadian goods take effect August 19, 2026. On July 20, 2026, President Trump signed three proclamations under Section 338 of the Tariff Act of 1930, imposing an additional 50% ad valorem duty on roughly 554 tariff lines of Canadian-origin goods across three categories — motor vehicles, alcoholic beverages, and dairy. This is the first time in history a U.S. president has used Section 338 to impose tariffs. USTR estimates the action covers nearly $20 billion in annual imports.
What Importers Need to Know Right Now:
- Effective date: 12:01 a.m. ET, August 19, 2026, for goods entered for consumption or withdrawn from warehouse for consumption on or after that time.
- Rate: A flat 50% additional duty, stacked on top of existing duties.
- No USMCA relief. The tariffs apply to covered goods regardless of USMCA origin. A duty-free USMCA classification does not exempt your product.
- Three HTSUS codes house the actions: 9903.03.12 (alcohol), 9903.03.13 (dairy), and 9903.03.14 (motor vehicles).
- Scope is broader than the headlines. Beyond cars, wine, and cheese, the annexes reach products such as hockey sticks, cement, plywood, furniture, fishing rods, and more. Read the annexes at the 8-digit level — a category-level guess is not enough.
- Key carve-outs: Goods already subject to Section 232 duties, energy, potash, certain critical minerals, fish, and civil aircraft covered by the WTO agreement are excluded.
- Litigation is likely. The statute has never been tested in court, and legal challenges are widely anticipated. A repeal bill (H.R. 2464) has been introduced but has not advanced beyond committee.
The Section 338 Tariff Guide: How to Check Your Exposure
This step-by-step guide walks importers through determining whether their Canadian-origin goods are covered by the Section 338 tariffs, what rate applies, and what exclusions might help. Work through the steps in order.
This guide is a plain-language summary prepared for informational purposes. It does not constitute legal or customs advice. Confirm HTS classifications and applicable rates with a licensed customs broker or trade counsel before making import decisions.
STEP 1 — Confirm the Country of Origin
Section 338 currently applies only to products of Canada.
If your goods do not originate in Canada, this action does not apply to them — proceed with your other applicable duties. If your goods are of Canadian origin, continue to Step 2.
Watch for transshipment.Origin is determined by where the goods are produced, not merely where they ship from. Canadian-origin goods routed through a third country remain subject to Section 338.
STEP 2 — Identify Which Proclamation (and HTS Code) Covers Your Product
The three proclamations are organized by category, each with its own Chapter 99 HTSUS classification:
Category | HTSUS Code | Covers |
|---|---|---|
Alcoholic Beverages | 9903.03.12 | Wine, spirits, beer, and related products listed in the annex |
Dairy | 9903.03.13 | Cheese and dairy products listed in the annex |
Motor Vehicles & Broader List | 9903.03.14 | Passenger vehicles plus a wide range of additional goods |
Do not stop at the headline categories. The motor-vehicle proclamation in particular carries a broad annex reaching products far beyond cars — cement, hockey sticks, plywood, furniture, fishing rods, seeds, clothing, wigs, and swimming pools have all been reported among covered lines. Roughly 554 tariff lines are affected in total (about 439 motor-vehicle lines, 63 alcohol lines, and 52 dairy lines).
Identify your product at the 8-digit HTS level and check it against Annex I and Annex II of the relevant proclamation. A chapter-level assumption is not enough to confirm coverage or exemption.
STEP 3 — Apply the 50% Rate
If your product is covered, a 50% additional ad valorem duty applies to the entered customs value.
Critically, this duty stacks on top of your existing obligations — base MFN (Column 1) duty and any other applicable program duties. There is no reduced-rate tier under Section 338 as there is under some Section 232 annexes; covered goods face the full 50%.
STEP 4 — Check the Exclusions
Certain goods are carved out of the Section 338 tariffs even if they otherwise appear Canadian-origin and in scope. Confirm whether any of these apply:
- Section 232 goods. Products already subject to Section 232 duties (steel, aluminum, copper, autos/parts, and their derivatives) are excluded — Section 232 governs them instead.
- Energy and potash.
- Certain critical minerals.
- Fish and certain other listed goods.
- Civil aircraft covered by the WTO Agreement on Trade in Civil Aircraft.
No USMCA exemption. Note what is not on this list: USMCA-compliant goods. Section 338 applies regardless of whether a good qualifies for preferential USMCA treatment. Supply chains built around USMCA duty-free entry are directly exposed.
STEP 5 — Confirm the Effective Date and In-Transit Timing
The duties apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on August 19, 2026.
If you have Canadian shipments in transit around that date, work with your broker on entry timing and warehouse-withdrawal strategy, and monitor CBP for any implementing guidance (CSMS messages) that may refine documentation or in-transit treatment.
What Is Section 338? A Plain-Language Overview
Section 338 of the Tariff Act of 1930 (codified at 19 U.S.C. § 1338) is a nearly century-old provision of the Smoot-Hawley Tariff Act. It authorizes the President, by proclamation alone, to impose new or additional duties of up to 50% on the products of any foreign country that the President determines has discriminated against U.S. commerce — for example, by placing unreasonable or unequal burdens on American goods compared with goods from other countries.
Until July 2026, Section 338 had never been used to actually impose tariffs. It sat dormant on the books for almost 100 years, referenced occasionally as negotiating leverage but never triggered.
Why Section 338 Matters to Importers
What makes Section 338 different — and harder to plan around — is how little process it requires:
- No investigation required. Unlike Section 301 (which requires a formal USTR investigation) or Section 232 (which requires a national-security finding by the Commerce Department), Section 338 lets the President act on a proclamation alone, with no hearing, comment period, or agency report.
- Fast timeline. Duties can take effect as little as 30 days after the proclamation is signed.
- Escalation power. If the President determines the discrimination continues, the statute allows escalation all the way to a full embargo — excluding the country's products from importation entirely, backed by forfeiture of goods imported in violation.
- Amendable at any time. Proclamations can be suspended, revoked, expanded, or amended whenever the President chooses.
For importers, that combination means Section 338 actions can appear with far less warning than other tariff tools, which typically telegraph their arrival through public investigations and dockets.
How Section 338 Fits Into the 2026 Tariff Landscape
Section 338 emerged as a tool after the Supreme Court’s February 20, 2026 decision invalidating the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. With the IEEPA reciprocal tariffs struck down and the temporary 10% Section 122 tariff expiring July 24, 2026, the administration turned to a set of alternative statutes — including the first-ever tariff use of Section 301 against 60 trading partners and, against Canada specifically, the first-ever use of Section 338.
If courts uphold the Section 338 action, trade attorneys expect it to become a frequently used tariff authority going forward.
Section 338 Tariff FAQ
Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338) authorizes the President to impose additional duties of up to 50% on products from a country the President finds has discriminated against U.S. commerce. It can be triggered by proclamation alone, without an investigation or hearing. In July 2026 it was used to impose 50% tariffs on certain Canadian goods — the first time it has ever been used to impose tariffs.
The 50% duties apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on August 19, 2026.
A flat 50% additional ad valorem duty, applied on top of existing duties (base MFN plus any other applicable program duties).
Roughly 554 tariff lines across three proclamations: motor vehicles (and a broad additional list), alcoholic beverages, and dairy. Beyond the headline categories, covered goods reportedly include products such as cement, hockey sticks, plywood, furniture, and fishing rods. Importers should check their specific HTS classification against the proclamation annexes at the 8-digit level.
No. The Section 338 tariffs apply to covered goods regardless of whether they qualify for preferential USMCA treatment. A duty-free USMCA classification does not provide relief.
Goods already subject to Section 232 duties, energy, potash, certain critical minerals, fish, and civil aircraft covered by the WTO Agreement on Trade in Civil Aircraft are excluded.
Section 301 requires a formal USTR investigation, and Section 232 requires a national-security finding by the Commerce Department. Section 338 requires neither — the President can act by proclamation alone, with as little as 30 days’ notice, which makes it faster and harder to anticipate.
Yes. The statute allows the President to amend, expand, or escalate the tariffs at any time, up to and including a full embargo on the country’s products if the President determines the discrimination continues. Proclamations may also be suspended or revoked.
Litigation is widely anticipated because the statute has never been tested in the tariff context, and legal scholars have outlined arguments that the administration misapplied it. A bill to repeal Section 338 (H.R. 2464) has been introduced but has not advanced beyond committee. Importers should monitor developments, as outcomes could change the picture quickly.
Identify your product’s HTS classification at the 8-digit level and check it against Annex I and Annex II of the relevant proclamation. Because coverage, exclusions, and timing turn on precise classification, most importers work with a licensed customs broker to confirm exposure and model the landed-cost impact.
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