Section 338 tariffs are the least familiar trade remedy most US importers of Canadian goods now pay. Since 12:01 a.m. Eastern on August 22, 2026, three lists of Canadian products carry an additional 50% duty under 19 U.S.C. 1338, Section 338 of the Tariff Act of 1930. The lists were published in Proclamations 11046, 11047 and 11048, signed on July 20, 2026 and published on July 23 (91 FR 46639, 46653 and 46663), and CBP implemented them through CSMS #69606660.
Two later changes turned a single duty into a moving target. From September 15, 2026, Proclamations 11064 and 11065 added 122 HTS codes to the alcohol and motor vehicle lists, removed 10, and made those two lists apply on top of Section 232. From 12:01 a.m. ET on September 29, 2026, a short list of Canadian products is banned from importation. Those bans are narrower than much of the coverage suggests: they do not ban Canadian cars or all Canadian dairy. This guide sets out the legal basis, the three lists, the September 15 changes, the exact scope of the bans and how the duty stacks. For the full picture of duties on Canadian goods beyond Section 338, see our Canada tariff guide. Status as of September 23, 2026.
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The Legal Basis: 19 U.S.C. 1338 and the Three Proclamations
Section 338 is a US measure aimed at Canada. It is not a Canadian law, and it is not an extension of the IEEPA tariffs that the Supreme Court struck down in Learning Resources v. Trump on February 20, 2026. It rests on a separate statutory authority, which is one reason many trade teams did not have it in their tariff models.
The authority was exercised through three proclamations signed the same day. Proclamation 11046 covers an alcohol list, Proclamation 11047 a dairy list and Proclamation 11048 a list that the text calls a motor vehicle list. Each list maps to its own Chapter 99 heading, a fourth heading handles goods already subject to Section 232, and a fifth exempts Canadian civil aircraft. The rate on all three lists is 50% on top of the ordinary duty.
| Heading | Scope | Rate |
|---|---|---|
| 9903.03.12 | Alcohol list | 50% |
| 9903.03.13 | Dairy list | 50% |
| 9903.03.14 | Motor vehicle list, goods drawn from Chapters 4 to 97 | 50% |
| 9903.03.15 | Goods already under Section 232, dairy list only since September 15 | 0% |
| 9903.03.16 | Canadian civil aircraft, engines and parts (not unmanned aircraft) | 0% |
The Motor Vehicle List Is Mostly Not Vehicles
The name of heading 9903.03.14 causes more misclassification than any other part of the program. The motor vehicle list draws goods from Chapters 4 through 97 of the HTSUS. It covers Canadian furniture, cosmetics and apparel, among many other products. An importer of Canadian furniture or cosmetics who reads the heading title and moves on can underpay by 50 points.
The only reliable approach is a line-by-line screen of every Canadian-origin HTS number the company imports against all three lists. The screen has to be run on the eight-digit subheading, not a six-digit family, because the lists are drawn at the tariff line. Our HTS classification team runs these screens against the current list text rather than summaries.
What Changed on September 15: 122 Codes Added, 10 Removed, a Narrower Offset
Proclamations 11064 and 11065, signed on September 8 and effective September 15, 2026, added 122 HTS codes to the alcohol and motor vehicle lists, removed 10, and made those two lists apply on top of Section 232. CBP implemented the changes in CSMS #69851916. Any screen completed before that date is out of date, and entries filed after September 15 against an older screen can carry the wrong heading in either direction.
The more expensive change concerns the Section 232 offset. At launch, heading 9903.03.15 set the Section 338 duty at 0% for goods already under Section 232, across all three lists. Since September 15 that offset applies only to dairy-list goods. Alcohol-list and motor-vehicle-list goods that are also Section 232 articles now pay both duties. As an illustration, a vehicle-list good carrying a 25% Section 232 duty now adds 50% under Section 338 on the same entry, before the ordinary rate.
That change reaches well beyond alcohol. Any motor-vehicle-list product that is also subject to Section 232 tariffs now pays both duties. Importers who relied on the offset in August should recheck every entry filed since September 15 and confirm that both Chapter 99 headings are reported where they apply.
The September 29 Import Bans: Exactly Which Products
Proclamations 11061, 11062 and 11063, published in the Federal Register on September 14, 2026 (FR docs 2026-18835, 2026-18836 and 2026-18837), bar a short list of Canadian products imported on or after 12:01 a.m. ET on September 29, 2026. The list is specific, and precision matters because the bans are often described far more broadly than the text supports.
The Five Banned Categories
The following Canadian products imported on or after 12:01 a.m. ET on September 29, 2026 are excluded from importation:
- Packaged beer, wine, cider and spirits
- Whey classified under 0404.10
- Certain molasses
- Non-alcoholic beer under 2202.91.00
- Motorcycles with engines over 800 cc under 8711.50.00
What the Bans Do Not Cover
The bans do not cover Canadian passenger cars or trucks, and they do not cover all Canadian dairy. Dairy-list products other than whey remain enterable at the 50% duty. Bulk alcohol is not banned and continues to enter at 50%. Motorcycles at or below the 800 cc line are outside the ban. Goods that were imported before September 29 but not yet entered pay the 50% duty rather than being refused.
What Is Not Yet Confirmed
As of September 23, 2026, we had not located the CBP CSMS message that implements the September 29 bans in ACE. Until it is published, the operational details, such as how CBP will treat goods in transit, in a bonded warehouse or in a foreign-trade zone on that date, should be treated as unconfirmed. Importers with product on the water should plan entry timing now and confirm treatment as soon as CBP issues guidance. Our overview of restricted imports explains how refused and prohibited goods are handled at the border generally.
Why USMCA Origin Does Not Exempt Canadian Goods From Section 338
The most common assumption we hear from Canada-integrated manufacturers is that USMCA-qualifying goods are exempt. They are not. The Section 338 proclamations contain no USMCA exemption, and a valid preference claim does not remove the 50% duty. Compare the Section 232 treatment of certain aluminum and steel articles under Proclamation 11032, where USMCA-qualifying goods pay 25% only on non-U.S. content, with a 15% floor. Section 338 has no equivalent carve-out.
USMCA still matters for the ordinary duty. A qualifying good can still claim the preferential rate on the base tariff line, so the claim is worth keeping where it is supportable. The origin analysis itself follows USMCA rules of origin, and nothing in Section 338 changes it. What changes is the total: a USMCA-qualifying good on one of the three lists pays the 50% Section 338 duty on top of whatever preferential base rate applies.
Stacking, Entry Filing and Timing
A correct Section 338 entry reports the primary HTS number, the applicable 9903.03 heading and, for goods that are also Section 232 articles, the relevant Section 232 heading. Since September 15, dairy-list goods under Section 232 use 9903.03.15 at 0%; alcohol-list and motor-vehicle-list goods report both duties. The duty is assessed on the entered value, so valuation errors compound at a 50% rate.
Timing decisions have moved from logistics to compliance. For banned products, the date that matters is importation: goods imported on or after September 29 are refused, while goods imported before that date but not yet entered can still be entered at the 50% rate. For goods that remain enterable, the decision is whether to enter now, hold in a customs bonded warehouse or re-source. Our Tariff Response Unit models those options per product line.
Canada's Counter-Surtax and US Exporters
The measure runs in both directions. Canada has applied a counter-surtax of 15%, 25% or 50% on listed US goods since September 8, 2026, under CBSA Customs Notice 26-23. US exporters selling into Canada should confirm whether their products appear on the Canadian lists and whether their Canadian customers are absorbing the surtax or passing it back through price renegotiation. Where Canadian remission is available for a product, exporters should coordinate the request with their Canadian buyers early.
Frequently Asked Questions
What are Section 338 tariffs?
Section 338 tariffs are additional duties imposed under 19 U.S.C. 1338. On Canadian goods, Proclamations 11046, 11047 and 11048 set a 50% duty on an alcohol list, a dairy list and a so-called motor vehicle list, effective 12:01 a.m. Eastern on August 22, 2026.
Does USMCA qualification exempt Canadian goods from Section 338?
No. The proclamations contain no USMCA exemption. A qualifying good can still claim the preferential rate on the base tariff line, but it pays the 50% Section 338 duty on top.
Is Canada banned from exporting cars and dairy to the US from September 29?
No. The bans, which apply to goods imported on or after September 29, 2026, cover packaged beer, wine, cider and spirits, whey under 0404.10, certain molasses, non-alcoholic beer under 2202.91.00 and motorcycles over 800 cc under 8711.50.00. Canadian cars are not banned, and other dairy products remain enterable at the 50% duty.
What does the motor vehicle list cover?
Heading 9903.03.14 covers goods drawn from Chapters 4 through 97 of the HTSUS, including furniture, cosmetics and apparel. Screen each eight-digit HTS subheading against the list rather than relying on the heading title.
Do Section 338 duties stack with Section 232?
Since September 15, 2026, the Section 232 offset under 9903.03.15 applies only to dairy-list goods. Alcohol-list and motor-vehicle-list goods that are also Section 232 articles pay both duties.
What happens to banned goods that arrived before September 29 but were not entered?
Goods imported before September 29, 2026 but not yet entered pay the 50% duty instead of being refused. The CBP message implementing the bans had not been located as of September 23, 2026, so confirm handling of goods in transit, bonded warehouses and zones once CBP publishes guidance.
