U.S. Section 338 Duties on Designated Canadian Goods Are Scheduled for August 19

Effective date and scope

President Donald Trump’s three Section 338 proclamations are scheduled to impose additional 50% ad valorem duties on designated Canadian goods at 12:01 a.m. Eastern on August 19, 2026. The motor-vehicle measure, Proclamation 11048, was signed July 20 and published July 23 in the Federal Register. U.S. Customs and Border Protection will administer the duties.

U.S. Trade Representative Jamieson Greer said the three actions concerning Canadian treatment of U.S. motor vehicles, alcoholic beverages and dairy cover nearly $20 billion in Canadian imports. The motor-vehicle proclamation lists 439 HTSUS subheadings representing about $19.3 billion in 2024 imports; the dairy and alcohol actions cover 52 and 63 subheadings, respectively, representing about $97.2 million and $1 billion, according to a White & Case analysis.

Product coverage and importer exposure

The motor-vehicle proclamation exempts products already subject to Section 232 duties. Canadian automobiles and most covered auto parts therefore do not face an additional 50% duty under this action. The listed motor-vehicle basket largely consists of agricultural, industrial, plastics, electronics, machinery, consumer and forestry products rather than Canadian-made vehicles.

A Global Trade Alert analysis using 2025 customs values estimates that $17.7 billion in trade remains exposed after Section 232 and aircraft carve-outs. It identifies plastic bags as the largest tariff line subject to the full 50% rate, at about $700 million. The analysis estimates the covered trade equals roughly 5% of U.S. goods imports from Canada.

The duties apply whether or not a product qualifies for USMCA preferential treatment, and they are additive to other duties unless a proclamation provides an exclusion. U.S. importers are legally responsible for payment. They may absorb the duty, seek lower supplier prices, change suppliers, or pass costs downstream; the eventual effect on prices and margins will depend on contracts, substitution, exchange rates and the duration of the measures.

Dispute and negotiations

The administration says Canada’s vehicle, alcohol and dairy policies discriminate against U.S. commerce. Greer set out the administration’s rationale in a July statement. The proclamations’ findings that the duties will offset harm and serve the public interest are presidential findings rather than independently demonstrated economic outcomes.

Canada says its April 2025 vehicle surtax was a countermeasure responding to U.S. Section 232 vehicle tariffs. The Canada Gazette order imposes 25% on non-CUSMA-qualifying U.S. vehicles and on the non-Canadian and non-Mexican value of qualifying vehicles. Prime Minister Mark Carney has said Canada considers U.S. sectoral tariffs inconsistent with CUSMA and has kept countermeasures available without specifying their form.

Canada and the United States continued negotiations before the deadline. Canada identified Trade Minister Dominic LeBlanc, Chief Trade Negotiator Janice Charette and Ambassador Mark Wiseman among officials involved in intensive discussions. August 16-17 reporting by CBC News, based largely on unnamed sources, said the parties remained materially apart. No postponement, exemption agreement or implementing amendment had been officially announced as of August 17.

Legal analysts disagree over Section 338 procedures, the effect of later trade statutes on the authority, and likely judicial review. The administration’s first use of Section 338 for tariffs also leaves open how CBP will resolve classification, aircraft-use and Section 232 overlap questions for individual shipments.