On July 20, 2026, the White House issued three presidential proclamations under Section 338 of the Tariff Act of 1930. These directives impose a sweeping 50% additional ad valorem dutyon certain imports from Canada. The tariffs are a measure designed to offset Canadian trade discrimination against U.S. commerce across three specific sectors: motor vehicles, alcoholic beverages, and dairy products.
Implementation:
- Effective Date: The new duties apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time on August 19, 2026.
- Cumulative Nature of the Tariffs: The 50% duty is in addition to any existing duties, taxes, fees, and charges already applicable to the products. (Exemptions apply for articles subject to Section 232 of the Trade Expansion Act or the WTO Agreement on Trade in Civil Aircraft).
- Foreign Trade Zones (FTZs): Any goods subject to these duties that are admitted into a U.S. FTZ on or after the effective date must be admitted under “privileged foreign status” and will face the additional tariff upon entry for consumption.
Summary of the Proclamations by Sector
1. Proclamation Regarding Motor Vehicles
- Section 338 Finding: The action responds to Canada’s April 2025 implementation of a 25% tariff on U.S. motor vehicles that do not qualify for USMCA duty-free treatment, as well as highly restrictive Tariff-Rate Quotas (TRQs) explicitly penalizing U.S. automakers who shifted manufacturing out of Canada.
- Customs Entry Impact: Specified products from Canada (detailed in Annex II of the proclamation) will face the 50% tariff surcharge.
2. Proclamation Regarding Alcoholic Beverages
- Section 338 Finding: The action responds to moves initiated in March 2025 by Canadian provinces and territories (most notably Ontario and Quebec) that halted the purchase, distribution, and retail sales of U.S. distilled spirits, wine, and beer. The administration cites that Canada did not levy these bans against other foreign nations.
- Customs Entry Impact: Specified products from Canada (detailed in Annex II of the proclamation) will face the 50% tariff surcharge.
3. Proclamation Regarding Dairy
- Section 338 Finding: The action responds to Canada’s TRQ allocation measures under the USMCA. Canada’s current rules prevent retailers from utilizing TRQs for U.S. cheese of all types, a restriction that is not applied to European Union cheeses imported under the Canada-EU Comprehensive Economic and Trade Agreement (CETA).
- Customs Entry Impact: Specified products from Canada (detailed in Annex II of the proclamation) will face the 50% tariff surcharge.
The Harmonized Tariff Schedule (HTSUS) codes subject to these additional actions are outlined in “Annex II” of the proclamations. Importers should immediately review this annex and upcoming Federal Register notices to see if their specific Canadian supply lines are targeted.
U.S. Customs and Border Protection (CBP) has been directed to issue rules, regulations, and instructions to administer these duties. The trade is pending additional guidance on entry procedures.
Please note based on the current guidance goods in transit or forecasting shipments from Canada that will clear customs on or after August 19, 2026, must consider the financial impact of a potential 50% duty increase and plan their logistics strategies accordingly. An important note that in previous in transit exemptions the term “vessel” only applies to ocean shipments.
If you have any questions please contact the JSC Compliance department.
