In the latest development in United States-Canada trade relations, 50% additional duties, announced in three separate proclamations issued on July 20, 2026, took effect as of 12:01 a.m. eastern time on August 22, 2026. President Donald Trump imposed the additional duties pursuant to Section 338 of the Tariff Act of 1930, which empowers the President to impose additional duties (not exceeding 50%) on imports from a foreign country to offset the burden or disadvantage caused by that country’s unequal imposition on or discrimination against U.S. commerce.
As previously reported, the President had temporarily delayed imposition of the Section 338 additional duties by three days, to 12:01 a.m. Eastern on August 22, 2026, as negotiators from both countries worked to secure a deal. However, late Friday night, August 21, 2026, Canadian Prime Minister Mark Carney instructed Canadian negotiators to suspend trade negotiations. The following day, Prime Minister Carney announced that Canada will impose dollar-for-dollar retaliatory tariffs, scheduled to go into effect on September 8, 2026. While the exact details of the retaliatory tariffs have not been released, Prime Minister Carney stated that the tariffs would target steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics products. Because the three-day suspension was expressly tied to the finalization of a deal between the U.S. and Canada, following the suspension of negotiations, the Section 338 additional duties went into effect at 12:01 eastern time on August 22, 2026.
U.S. Customs and Border Protection (CBP) has issued CSMS #69606660, providing guidance on the implementation of the Section 338 additional duties, a finalized list of all Canadian products subject to the Section 338 additional duties, and the respective Harmonized Tariff Schedule of the United States (HTSUS) headings.
The modified HTSUS headings implementing the Section 338 proclamations cover a significant number of Canadian products and contain exclusions. Consequently, importers should review the finalized list and appropriate HTSUS headings, evaluate potential duty exposure, and assess any necessary compliance or supply chain adjustments. We encourage you to consult your Husch Blackwell attorney if you have any questions.
Key Takeaways
- United States-Mexico-Canada Agreement (USMCA) Originating Products: The Section 338 additional duties apply to all covered goods regardless of whether they qualify as originated under the USMCA
- Exemptions: Several categories of Canadian products are excluded from Section 338 additional duties including aluminum, steel, and copper products including derivative aluminum or derivative steel articles; passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans and cargo vans) and light trucks; parts of passenger vehicles and parts of light trucks; medium and heavy-duty vehicles (including parts), buses and other vehicles; wood products; semiconductors, patented pharmaceuticals, and qualifying civil aircraft and aircraft parts. These products remain subject to any other applicable duties or trade remedies.
- Foreign Trade Zones (FTZ): Any targeted products admitted into a U.S. FTZ (except for those eligible under “domestic status”) on or after the effective date must be admitted under “privileged foreign status” per 19 C.F.R. § 146.41. Merchandise admitted in privileged foreign status retains that status even if subsequently manufactured or otherwise processed in the FTZ, limiting an importer’s ability to avoid the Section 338 additional duties through FTZ operations
- Drawback: Section 338 additional duties are eligible for drawback.
The relevant tariff provisions are the following:
HTSUS 9903.03.12
Canadian products identified in Proclamation 11046 are classifiable under HTSUS subheading 9903.03.12 and are subject to 50% additional duties.
HTSUS 9903.03.13
Canadian products identified in Proclamation 11047 are classifiable under HTSUS subheading 9903.03.13 and are subject to 50% additional duties.
HTSUS 9903.03.14
Canadian products identified in Proclamation 11048 are classifiable under HTSUS subheading 9903.03.14 and are subject to 50% additional duties,
HTSUS 9903.03.15
Certain categories of Canadian products identified in Proclamation 11046 as excluded from additional duties are classified under HTSUS subheading 9903.03.15.
The categories are aluminum, steel, and copper products, and derivative aluminum and derivative steel articles; passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans and cargo vans) and light trucks; parts of passenger vehicles and parts of light trucks; medium and heavy-duty vehicles (including parts), buses and other vehicles; wood products; semiconductors, patented pharmaceuticals.
HTSUS 9903.03.16
Qualifying civil aircraft and aircraft parts identified in Proclamation 11046 as excluded from additional duties are classifiable under HTSUS subheading 9903.03.16.
The Husch Blackwell International Trade and Supply Chain team continues to monitor developments related to U.S.-Canada trade relations and will provide updates as they become available. If you have questions about coverage, timing, or supply chain impacts, please contact your Husch Blackwell attorney.