US Tariffs on Canada: Section 338
- Annkaren Wambui
- 15 hours ago
- 9 min read
Updated: 4 hours ago
🔓 The U.S. has imposed new 50% Section 338 tariffs on certain Canadian goods. Here is what importers need to know about affected products, USMCA treatment and CBP entry requirements.
Summary: The United States has introduced new Section 338 additional tariffs on certain goods from Canada, following three presidential proclamations issued in July 2026. The measures can impose an additional 50% duty on covered goods, although the tariffs do not apply to all Canadian products and certain categories are excluded or subject to different treatment. CBP's guidance sets out how the relevant HTSUS Chapter 99 provisions must be applied to qualifying entries on or after 22 August 2026. Importers should review whether their goods are covered, alongside the applicable Chapter 1–97 classification, Chapter 99 provision and any other relevant customs treatment. |
Why Has the United States Imposed New Tariffs on Canada?
The new Section 338 duties form part of a broader U.S. trade action against Canada.
On 20 July 2026, President Donald J. Trump signed three proclamations under Section 338 of the Tariff Act of 1930, imposing additional 50% tariffs on certain categories of Canadian imports.
According to the White House, the measures were introduced in response to what the U.S. administration describes as discriminatory treatment of American commerce by Canada, including concerns relating to motor vehicles, alcoholic beverages and dairy products.
The measures do not apply to every product imported from Canada. The White House states that certain goods are excluded, including energy, potash, products already subject to Section 232 tariffs and certain other specified products.
Importantly, the White House also states that the Section 338 tariffs apply to covered goods regardless of whether they qualify as originating goods under the USMCA.
For importers, this means that the key question is not simply whether goods are Canadian or whether they qualify for preferential treatment under the USMCA.
The first practical question is whether the specific product is covered by one of the new Section 338 measures.
What Has Changed for Imports from Canada?
The United States has introduced new Section 338 additional tariffs on certain goods imported from Canada.
The measures follow three presidential proclamations issued in July 2026 and can impose an additional 50% ad valorem duty on covered products. However, this is not a blanket 50% tariff on all goods from Canada.
Whether a product is affected depends on the scope of the relevant measure and its applicable tariff treatment. Importers must therefore determine whether their goods fall within the products covered by the relevant Section 338 provisions.
CBP has subsequently issued guidance explaining how the measures are to be implemented for goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time on 22 August 2026.
USMCA Qualification Does Not Automatically Remove the Duty
Importers should also avoid assuming that USMCA qualification automatically exempts a product from the new Section 338 tariffs.
For goods covered by the relevant Section 338 measures, preferential treatment under USMCA does not necessarily remove the applicable additional duty. Importers must therefore review the specific scope of the tariff measure and the applicable HTSUS provisions for their products.
This is particularly important for businesses that routinely rely on USMCA preferential treatment when importing goods from Canada.
Why Has the U.S. Imposed These Tariffs?
According to the White House, the Section 338 measures were introduced in response to what the U.S. administration describes as discriminatory treatment of U.S. commerce by Canada.
The measures address specific areas of trade and follow concerns raised by the administration regarding Canadian treatment of U.S. products and industries.
The three presidential proclamations form the basis for the new Section 338 tariff measures, with CBP's subsequent guidance setting out the customs treatment and reporting requirements for affected imports.
How Are the New Tariffs Applied?
CBP's implementation guidance identifies the relevant Chapter 99 provisions used to apply the new Section 338 measures to qualifying goods from Canada.
🔴 50% Additional Duty
The following headings impose a 50% additional ad valorem duty on specified products of Canada:
HTSUS 9903.03.12
HTSUS 9903.03.13
HTSUS 9903.03.14
Importers should review the relevant scope of each provision and the applicable underlying Chapter 1–97 classification to determine whether their goods are covered.
🔵 0% Additional Duty Under the Relevant Section 338 Provision
Two further Chapter 99 provisions identify specified categories of goods subject to a 0% additional duty under the relevant Section 338 provisions::
HTSUS 9903.03.15
HTSUS 9903.03.16
Heading 9903.03.15 covers specified products already associated with categories including aluminium, steel, copper and derivative articles, certain vehicles and vehicle parts, wood products, semiconductor articles and patented pharmaceutical articles.
Heading 9903.03.16 covers specified Canadian civil aircraft and related engines, parts, components, subassemblies and ground flight simulators.
Again, classification matters.
The correct approach is to review the underlying Chapter 1–97 classification and the corresponding Chapter 99 treatment, rather than assuming that Canadian origin alone determines the applicable additional duty.
How Should Importers Determine the Correct Treatment?
This is where entry review becomes particularly important.
A product's customs treatment may involve:
The relevant Chapter 1–97 commodity classification;
The applicable Chapter 99 provision;
Any relevant Chapter 98 treatment;
Other applicable additional duties or trade measures.
In other words:
The key question is not simply whether goods are Canadian. Importers must determine whether their specific products are covered by the relevant Section 338 tariff provisions and how those provisions apply to the entry.
Trade compliance teams and customs brokers should ensure that product classifications and entry instructions are reviewed against CBP's published guidance.
HTSUS Reporting Sequence
Once the applicable Section 338 treatment has been determined, CBP's guidance also sets out the order in which relevant HTSUS provisions should be reported when Chapter 98 and/or Chapter 99 provisions are claimed on an entry summary.
The reporting sequence is:
1. Chapter 98
Where applicable.
2. Chapter 99 Numbers for Additional Duties
Where applicable.
3. Chapter 99 Numbers for Trade Remedies
CBP specifies the following order for relevant trade remedies:
Section 301;
Section 122;
Section 232;
Section 201 duties;
Section 201 quota, where applicable.
4. Chapter 99 Numbers for Replacement Duties or Other Use
For example, a Miscellaneous Tariff Bill or other relevant provision.
5. Chapter 99 Numbers for Other Quotas
Where applicable.
6. Chapter 1–97 Commodity Tariff
The entered value should generally be reported against the Chapter 1–97 HTSUS classification, unless the applicable Chapter 98 reporting rules require otherwise.
For businesses managing complex entries involving multiple tariff measures, getting the reporting sequence right is an important part of entry compliance.
What About Chapter 98?
CBP's guidance also addresses goods properly claimed under Chapter 98 provisions.
The Section 338 additional duty generally does not apply where entry is properly claimed under an applicable Chapter 98 provision and CBP agrees that the treatment is appropriate.
However, there are important exceptions, including:
Subchapter XXIII of Chapter 98;
HTSUS 9802.00.40;
HTSUS 9802.00.50;
HTSUS 9802.00.60;
HTSUS 9802.00.80.
For certain 9802 provisions, the additional duty may apply to the value of repairs, alterations, processing or assembly as specified in the relevant provision.
This means businesses using Chapter 98 programmes should not assume that the new measures can simply be disregarded.
Foreign Trade Zone Treatment
Businesses using U.S. Foreign Trade Zones (FTZs) should also review how the new Section 338 tariffs affect their operations.
According to CBP's guidance, products subject to the additional duties that are admitted into an FTZ generally must be admitted in privileged foreign status, unless they qualify for admission in domestic status.
The applicable duty treatment will then be relevant when the goods enter U.S. commerce.
For businesses using FTZs as part of their supply chain or duty-management strategy, this is an important operational consideration.
Can Importers Claim Drawback?
Yes.
CBP's guidance states that the relevant Section 338 additional duties are subject to drawback.
Businesses with established drawback programmes may therefore want to assess how these additional duties could affect their potential recovery opportunities.
Other Duties and Fees May Still Apply
The new Section 338 tariffs may form only one part of the total customs cost of an import.
The Section 338 provisions do not necessarily replace other applicable customs charges.
Products covered by headings 9903.03.12–9903.03.16 may continue to be subject to:
antidumping duties;
countervailing duties;
other applicable duties;
taxes;
fees;
exactions and charges.
The applicable Section 338 treatment should therefore be reviewed as part of the full customs duty and compliance picture..
Quick Reference: Section 338 Canada Entries
🔴 Covered Goods Subject to a 50% Additional Duty
Relevant HTSUS provisions:
9903.03.12
9903.03.13
9903.03.14
🔵 Specified Goods Subject to 0% Additional Duty Under the Relevant Provision
Relevant HTSUS provisions:
9903.03.15
9903.03.16
📅 Current Effective Date
For qualifying goods entered for consumption, or withdrawn from warehouse for consumption: From 12:01 a.m. Eastern Time on 22 August 2026.
📋 Before Filing an Entry, Check:
✅ Whether your product is covered by the relevant Section 338 measure
✅ The Chapter 1–97 commodity classification
✅ The applicable Chapter 99 provision
✅ Whether any Chapter 98 treatment applies
✅ Other applicable duties, trade measures and fees
✅ The required HTSUS reporting sequence
⭐ Important
Canadian origin alone does not determine whether the 50% Section 338 duty applies. USMCA qualification should also not be assumed to automatically remove the duty from a covered product.
What Should Trade Compliance Teams Do Now?
Businesses importing goods from Canada should consider:
Identifying Potentially Covered Products
Review your product portfolio to determine whether any imported goods fall within the scope of the new Section 338 measures.
Reviewing Product Classifications
Confirm the relevant Chapter 1–97 HTSUS classification and review the corresponding Section 338 and Chapter 99 provisions.
Reviewing USMCA Treatment
Do not assume that USMCA qualification automatically removes the Section 338 additional duty. Review whether the specific product is covered by the relevant measure.
Reviewing Entry Instructions
Ensure customs brokers and internal entry teams have the correct Chapter 99 reporting instructions.
Checking Chapter 98 Claims
Identify whether any imports rely on Chapter 98 provisions and whether an exception applies.
Reviewing FTZ Operations
Assess whether affected products entering an FTZ require privileged foreign status.
Considering Drawback Opportunities
Review whether eligible additional duties could potentially be recovered through an applicable drawback programme.
Looking at the Full Duty Picture
Remember that Section 338 additional duties may apply alongside other applicable duties, taxes and fees.
The Bottom Line
The United States has introduced new Section 338 tariffs on certain goods imported from Canada, with covered products potentially subject to an additional 50% duty.
However, this is not a blanket 50% tariff on everything imported from Canada. The correct treatment depends on whether a specific product falls within the scope of the relevant Section 338 measure and how the applicable HTSUS provisions apply to the entry.
For businesses importing goods from Canada, the immediate priority is to identify potentially affected products, review the relevant tariff classifications and ensure that customs brokers and internal trade compliance teams have the correct entry instructions.
Canadian origin alone does not answer the question. The key issue is whether the product is covered by the relevant Section 338 measure and how that measure applies to the specific import.
Sources
For the latest official information, importers and trade compliance professionals should consult the relevant U.S. government sources:
🇺🇸 The White House
The White House Fact Sheet explains the broader Section 338 trade action and the reasons given by the U.S. administration for imposing additional tariffs on certain goods from Canada.
🛃 U.S. Customs and Border Protection (CBP)
Importers should consult the applicable CBP guidance and operational instructions for the relevant HTSUS Chapter 99 provisions, entry requirements and reporting procedures.
📚 Official U.S. Harmonized Tariff Schedule
The current HTSUS and applicable Chapter 99 provisions should be checked directly against the official U.S. tariff schedule.
🎥 US Section 338 Canada Tariffs: 5 Checks for Importers
New U.S. Section 338 tariffs on certain goods from Canada are now in force. In this video, Customs Manager outlines five practical checks for importers, including product coverage, HTSUS classification, USMCA treatment, entry dates, Chapter 99 reporting and applicable exclusions or additional duties.
The video provides a practical companion to this article for businesses reviewing whether their Canadian imports are affected by the new measures and what their trade compliance teams should check before filing entries.
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#CBP #Section338 #USCustoms #Canada #Tariffs #HTSUS #ImportCompliance #TradeCompliance #CustomsBroker #Chapter99 #CustomsManager #TradeIntelligence
Author
Ann Karen | Head of Growth
Updated: August 2026
Disclaimer
This article is provided for general informational purposes only and does not constitute legal, customs or tax advice. Businesses should seek professional advice based on their individual trading arrangements and compliance obligations.
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