U.S.-Canada Tariff Escalation: New Section 338 Tariffs and Canadian Retaliatory Tariffs
Effective August 22, 2026, the United States began imposing additional 50% tariffs on certain products of Canada under Section 338 of the Tariff Act of 1930. The duties were imposed through three Presidential Proclamations, issued on July 20, 2026, addressing alleged Canadian discrimination against U.S. products including dairy, alcoholic beverages, and motor vehicles.
The tariffs were originally scheduled to take effect on August 19. On August 18, President Trump temporarily suspended their implementation for three days while negotiations with Canada continued, moving the effective date to 12:01 a.m. Eastern Time on August 22, 2026.
That temporary reprieve has now expired, and U.S. Customs and Border Protection (CBP) has issued guidance explaining how importers, customs brokers, and filers should handle affected entries.
What Is Section 338?
Section 338 of the Tariff Act of 1930, codified at 19 U.S.C. § 1338, gives the President authority to impose additional duties of up to 50% when a foreign country discriminates against U.S. commerce or imposes certain unreasonable or unequal restrictions that place U.S. commerce at a disadvantage.
Although Section 338 has existed for nearly a century, its use against Canada represents an unusual application of the statute.
The 50% Tariffs Cover Far More Than Alcohol, Dairy, and Cars
The July 20 proclamations invoked Section 338 in response to three categories of alleged Canadian discrimination: alcoholic beverages, dairy, and
