New 50% U.S. Tariffs on Canada — and They Override CUSMA

Information provided for general guidance only; not customs or legal advice.

⚠️ URGENT — ACTION REQUIRED FOR CANADA → U.S. EXPORTERS

• New 50% U.S. tariffs on certain Canadian goods take effect August 19, 2026 — giving businesses a 30-day window to prepare.
• Signed July 20 under Section 338 of the Tariff Act of 1930 — a different legal authority than previous tariff actions.
• CUSMA/USMCA origin will NOT exempt covered products from these new duties.
• This is the first major U.S. tariff action that applies to covered goods even when they qualify under CUSMA.
• Covered products include alcohol, dairy, and hundreds of other goods—including cement, furniture, apparel, jewellery, toys, sporting goods and more. Coverage is determined by HTS classification.
• If your product's HTS code appears in one of the Annex II lists, the additional 50% duty applies.
• Act now: (1) Match your HTS codes to the Annex II lists, (2) Confirm CUSMA certificates for products not covered, (3) Review whether your U.S. customs bond is sufficient, and (4) Speak with your customs broker before August 19.
• costly delays and unexpected duty exposure.Don't wait until the effective date—incorrect classifications and insufficient customs bonds can lead to 

At a Glance: What Changed?‍

The new Section 338 tariffs take effect August 19, 2026. Whether they apply depends entirely on your product's HTS classification.

50% Tariff. No CUSMA Exemption. What Changed?

On July 20, 2026, the United States issued three Presidential Proclamations under Section 338 of the Tariff Act of 1930. Together, they impose a new 50% duty on specified Canadian products effective August 19, 2026. Unlike previous U.S. tariff actions, qualifying CUSMA origin does not exempt covered goods.

Each proclamation includes an Annex II listing the affected HTS classifications. If your product's HTS code appears in one of those Annex II lists, the additional 50% duty applies.

1. General Manufacturing & Consumer Products

Despite its official title, this proclamation is not limited to automobiles. Motor vehicles already subject to Section 232 measures are excluded. Instead, Annex II contains a broad list of consumer and industrial products across much of the U.S. tariff schedule.

Trade impact: This is by far the largest of the three proclamations. It captures products drawn from sectors that collectively represent hundreds of billions of dollars in annual Canada-U.S. trade., including consumer goods, industrial machinery, electronics, building materials and manufactured products. 

2. Alcoholic Beverages

This proclamation covers most alcoholic beverages classified under HTS Chapter 22. The U.S. cites provincial restrictions on the sale of American alcohol as the basis for the action.

Trade impact: Canada exports approximately C$1.4 billion in alcoholic beverages to the United States each year, making this one of Canada's largest export markets for wine, spirits, beer and other alcoholic beverages.

3. Dairy Products

This proclamation targets a range of dairy ingredients and processed dairy products, citing Canada's dairy tariff-rate quota system. The covered products are identified in Annex II and span several HTS headings, including products classified in Chapters 4, 17, 22 and 35. 

Trade impact: While much smaller than the broader manufacturing proclamation, the dairy measures affect a strategically important sector, including milk powders, whey, milk proteins and other high-value dairy ingredients exported to the U.S. under CUSMA and other market access arrangements. Canada exports approximately C$300–400 million annually in dairy products and ingredients to the United States.

Urgent Actions for Canadian Exporters

1. Check the list. Identify whether any of your products fall under the three Section 338 proclamations — and watch for the Federal Register publication for the exact HTS codes.

2. Don't drop CUSMA certification. It still delivers 0% duty for the large universe of goods not on the Section 338 list, versus the Section 122 surcharge on non-qualifying goods.

3. Get the right HS codes. Your tariff treatment turns entirely on classification. Confirm your codes against the Annex II lists.

4. Make sure your U.S. entry bond is sufficient. A 50% duty increase can quickly push you past your continuous bond limit, triggering CBP insufficiency notices and shipment delays. Review your bond now — we can help with that. 

5. Plan for ~August 19. The 30-day window is the time to review sourcing, pricing, contracts and any first-sale or tariff-engineering options for covered goods.

6. Watch for retaliation and legal challenge. Section 338 is a rarely used authority; expect a Canadian response and possible litigation.

7. Talk to your Customs Broker, or call us. Tariff changes like this are exactly when expert guidance pays off. Reach out — we're happy to help you work through your exposure.

Not sure which fits? Reach out to either team, and they'll point you to the right place.

References

1. The White House, Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada, July 20, 2026. whitehouse.gov
2. The White House, Proclamation, Imposing Additional Duties… with Respect to Motor Vehicles, July 20, 2026. whitehouse.gov
3. The White House, Proclamation, Imposing Additional Duties… with Respect to Alcoholic Beverages, July 20, 2026. whitehouse.gov
4. The White House, Proclamation, Imposing Additional Duties… with Respect to Dairy, July 20, 2026. whitehouse.gov
5. CBC News, Trump's new 50% tariff to hit even CUSMA-compliant goods, July 20, 2026. cbc.ca
6. CNBC, Trump slaps 50% tariffs on Canada goods on trade discrimination claims, July 20, 2026. cnbc.com
7. CBC News, CUSMA-compliant goods exempt from Trump's tariff threat (background on the CUSMA exemption). cbc.ca
8. White & Case LLP, Trump Administration Imposes 10% Section 122 Tariff in Plan to Replace IEEPA Tariffs. whitecase.com
9. FreightFigures, USMCA Exemption From Section 122 Tariff Extended Indefinitely. freightfigures.com

Rates and coverage change frequently, and the Section 338 HTS annexes were not yet published in the Federal Register at the time of writing. Confirm current figures and product coverage before relying on them.