Section 338: 50% Tariffs — Effective August 22, 2026
On July 20, 2026, the US President signed three proclamations imposing additional tariffs of 50% on selected Canadian products under Section 338 of the Tariff Act of 1930.
These tariffs took place at 12:01 a.m. Eastern Time on August 22, 2026.
The three proclamations were presented as responses to Canadian policies affecting US motor vehicles, alcoholic beverages and dairy products. However, the products selected for tariffs extend well beyond those three sectors. The covered lists include products ranging from wine and dairy products to hockey equipment, furniture, clothing and cement.
Unlike the temporary Section 122 tariff, the Section 338 tariffs will apply to listed products even where they qualify as originating goods under CUSMA.
The Section 338 tariffs will not apply to energy, potash, products already subject to Section 232 tariffs, fish, critical minerals and certain other excluded products.
Businesses should consult the full lists of included goods, and the related HS Codes, to confirm if their products are included:
US Broad-Based 10% Tariffs
U.S. tariffs imposed under Section 122 of the Trade Act of 1974 expired on July 24, 2026. Section 122 tariffs had replaced the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in response to alleged fentanyl and border concerns by the U.S., which were ruled invalid by the U.S. Supreme Court.
To replace Section 122 tariffs, on July 24, 2026, the U.S. imposed new tariffs of 10% on imports of most goods under Section 301 of the Trade Act of 1974, including on Canada, following investigations into alleged forced labour practices in 60 countries.
Goods that qualify for preferential duty-free treatment under the Canada-United States-Mexico Agreement (CUSMA) continue to be exempt.
Tariffs apply to physical goods crossing the border. Services such as consulting, software subscriptions, architecture, engineering and education are not subject to tariffs.
Businesses should not assume that a product is CUSMA-compliant merely because it is shipped from Canada. The product must satisfy the applicable CUSMA rule of origin and be supported by the required certification of origin.
US Steel, Aluminum and Copper Tariffs
The United States maintains Section 232 tariffs on steel, aluminum, copper and numerous derivative products imported from Canada. There is no general CUSMA exemption from these tariffs. These tariffs extend to a number of derivative products as well. Notably, the scope of products covered is substantially larger than the scope covered in the steel and aluminum tariffs from 2018.
Exports which were not impacted by U.S. tariffs in 2018 may now be impacted. Businesses which export should check the HS tariff codes of their products against those in the Federal Register notices linked above. Many downstream products likely will be impacted (e.g. auto parts, furniture, gym equipment, agricultural equipment, construction equipment, etc.). You can also use the Tariff Finder tool to search the HS tariff code for items exporting to the US.
The tariff structure was substantially revised in April and June 2026. Depending on the product and its US tariff classification, applicable rates currently range from 10% to 50%. Since April 2026, the applicable tariff is generally assessed on the full customs value of the product rather than only on the value of its steel, aluminum or copper content.
Under the current structure:
- Many primary steel, aluminum and copper products are subject to tariffs of 50%.
- Many derivative products predominantly composed of covered metals are subject to tariffs of 25%.
- Certain industrial machinery, power equipment and other designated derivative products are subject to different rates, generally between 15% and 25%.
- Products containing less than 15% covered steel, aluminum and copper by weight are generally exempt.
- Products composed of at least 85% US-origin steel, aluminum or copper may qualify for a reduced 10% rate.
Because the rules and product lists have changed several times, businesses should not rely on the original 2025 Federal Register lists alone. The current US Customs and Border Protection tariff schedule and implementation guidance should be checked for each product.
US Auto, Truck and Bus Tariffs
The United States maintains Section 232 tariffs of 25% on imported automobiles, light trucks, medium- and heavy-duty trucks and specified vehicle parts.
For CUSMA-compliant automobiles and trucks, the value of verified US content is excluded from the 25% tariff. Approval of the US-content calculation may be required on a model-by-model basis. The tariff is therefore assessed on the non-US content of a qualifying vehicle rather than automatically applying to its full value.
Non-CUSMA-compliant auto and truck parts are subject to the 25% tariff. CUSMA-compliant auto and truck parts are not currently subject to the tariff while the US Department of Commerce and US Customs and Border Protection develop a process for assessing tariffs on their non-US content.
The United States also imposes a 10% tariff on imported buses. There is no CUSMA or US-content exemption from the bus tariff.
Other US Sectoral Tariffs
Several additional Section 232 tariffs affect Canadian exports:
Softwood timber and lumber: A 10% Section 232 tariff applies to covered softwood timber and lumber products. There is no CUSMA exemption. This is separate from any applicable US anti-dumping or countervailing duties.
Furniture, cabinets and vanities: A 25% tariff applies to certain upholstered furniture, kitchen cabinets and bathroom vanities. There is no CUSMA exemption.
Semiconductors: A 25% tariff applies to a limited subset of semiconductor products and derivatives. Several exemptions exist for products used in US manufacturing, data centres, research and development and other specified domestic uses.
On July 9, 2026, the US President also directed officials to negotiate with trading partners over imports of commercial aircraft, jet engines and aircraft parts. The proclamation did not impose an immediate new aircraft tariff, although tariffs or other measures could be considered following the negotiations.
Removal of the De Minimis Tariff Exemption
On August 29, 2025, the United States suspended the duty-free de minimis exemption for commercial shipments valued at US$800 or less. The suspension applies globally, including to shipments from Canada and Mexico.
Low-value commercial shipments are no longer automatically exempt from US customs duties and tariffs. They must be properly declared and may be subject to:
- ordinary most-favoured-nation customs duties;
- applicable US tariffs;
- customs-processing or carrier charges; and
- additional documentation and clearance requirements.
With the de minimis exemption gone, every shipment from Canada into the United States is now treated like a regular import, no matter its value. Each parcel needs a full customs declaration and is assessed the applicable U.S. tariff or duty rate based on its product category. A Canadian product may still qualify for duty-free CUSMA treatment, but the result depends on the product’s origin, tariff classification, method of shipment and whether the necessary CUSMA documentation is provided, as opposed to a simple exemption based on its low-value. .
