President Donald Trump signed three proclamations on July 20, 2026, imposing additional 50% duties on specified Canadian goods covering motor vehicles, alcoholic beverages and dairy products.
The tariffs mark the first-ever use of Section 338 of the Tariff Act of 1930, a powerful but previously dormant authority that had gone unused for more than 95 years.
The United States Trade Representative estimates the three product lists collectively cover nearly $20 billion worth of Canadian imports entering the United States each year.
Section 338 permits the president to impose duties of up to 50% ad valorem when a foreign country imposes unreasonable charges or discriminates against U.S. commerce relative to other countries.
Critically, the statute does not require the targeted imports to correspond to the specific U.S. exports affected by the foreign measure, giving the president broad latitude in selecting which Canadian goods face duties.
The motor-vehicle proclamation cites a 25% Canadian tariff on U.S. vehicles that do not qualify for USMCA treatment, with U.S. motor vehicle exports to Canada declining approximately 22%, from around $25.9 billion to $20.3 billion, between April 2025 and March 2026.
The alcoholic-beverage proclamation responds to provincial and territorial restrictions on U.S. alcohol sales, with U.S. exports to Canada falling approximately 81%, from around $718 million to $137 million, between March 2025 and February 2026.
The dairy proclamation concerns Canada’s administration of tariff-rate quotas for cheese, with the Administration concluding that differing eligibility criteria disadvantage U.S. cheese relative to materially similar European Union products.
Three new Chapter 99 headings — HTSUS 9903.03.12, 9903.03.13 and 9903.03.14 — will impose the additional 50% duty on top of ordinary customs rates when goods are entered for consumption from 12:01 a.m. Eastern time on August 19.
The proclamations provide no general in-transit exception, meaning goods already in transit or held in bonded warehouses may still face the tariff if entered or withdrawn on or after August 19.
USMCA qualification does not exempt goods from the Section 338 tariff, meaning a product entitled to a zero ordinary duty rate under the trade agreement may still incur the full 50% additional charge.
The scope of the motor-vehicle list extends well beyond cars, covering hundreds of classifications including smartphones, telecommunications equipment, toys, video game consoles, apparel, chemicals, cosmetics, furniture and artwork.
Businesses with no direct connection to the automotive, alcohol or dairy sectors may therefore face significant and unexpected tariff exposure under the new measures.
The aggregate duty burden could substantially exceed 50%, as Section 338 tariffs stack on top of ordinary customs duties, antidumping duties, countervailing duties, taxes and other applicable fees.
Because Section 338 has never previously been tested in courts, legal challenges are widely anticipated, and importers are advised to preserve refund rights in the event the tariffs do not withstand judicial scrutiny.