Trump Invokes Section 338 To Impose Additional Duties On Canadian Imports

On July 20, 2026, the Trump Administration published a fact sheet announcing new 50% tariffs on a broad range of Canadian imports. Simultaneously, the Administration issued three separate presidential proclamations targeting Canada’s treatment of U.S. dairy products, alcoholic beverages, and motor vehicles. According to the White House, these actions are intended to respond to what the Administration describes as Canada’s long-standing discrimination against U.S. commerce. 

The New Tariffs 

The White House announced that the United States will impose an additional 50% tariff on many Canadian-origin products beginning 30 days after the order’s issuance. According to the Administration, the new duties are intended to offset Canada’s alleged discriminatory treatment of American products and businesses. 

Products eligible for USMCA treatment are not exempt from the new tariffs. Several categories of goods are excluded from the new tariffs, including: 

• Energy products 
• Critical minerals 
• Potash 
• Fish 
• Products already subject to separate Section 232 tariffs, such as steel, aluminum, and certain automobiles 

The White House has indicated that additional guidance will be published before implementation. 

Dairy, Alcoholic Beverages, and Motor Vehicle Proclamations  

In addition to the broader tariff announcement, the Administration issued three presidential proclamations explaining the specific Canadian practices it believes discriminate against U.S. commerce. 

Dairy 

The Administration argues that Canada’s supply management system continues to restrict meaningful access for U.S. dairy producers despite commitments made under USMCA. The proclamation points to tariff-rate quotas, import restrictions, and administrative practices that the White House contends unfairly limit American dairy exports while protecting Canada’s domestic industry. View the annex of impacted HTS codes here. 

Alcoholic Beverages 

The proclamation concerning alcoholic beverages focuses largely on actions taken by several Canadian provinces that removed or restricted the sale of U.S. alcohol products following earlier rounds of U.S.-Canada trade disputes. The Administration characterizes these provincial actions as discriminatory measures directed specifically at American products. View the annex of impacted HTS codes here. 

Motor Vehicles 

The motor vehicle proclamation challenges Canadian policies that the Administration believes favor domestic production and investment while disadvantaging American automobile manufacturers. The White House argues these measures distort competition within the North American automotive market and warrant a trade response. View the annex of impacted HTS codes here. 

The Legal Authority: Section 338 of the Tariff Act of 1930 

Perhaps the most significant aspect of these actions is not the tariff rate itself, but the statute used to impose it. 

Section 338 of the Tariff Act of 1930 was enacted as part of the broader Smoot-Hawley Tariff Act during a period when Congress sought to provide the President with tools to respond to discriminatory foreign trade practices. The provision authorizes the President to impose additional duties when a foreign country discriminates against the commerce of the United States. 

Specifically, Section 338 allows the President to increase duties on imports from countries that impose unreasonable or discriminatory restrictions affecting American goods or commerce. The statute was designed to give the Executive Branch leverage during trade disputes by authorizing retaliatory tariff measures without requiring new legislation from Congress. 

Despite existing for nearly 100 years, Section 338 has remained largely dormant until now. 

What Importers Should Be Watching 

Although the proclamations focus on dairy, alcohol, and motor vehicles, the practical implications extend well beyond those industries. 

Businesses importing Canadian-origin products should closely monitor implementation guidance from U.S. Customs and Border Protection (CBP) and whether Canada announces retaliatory trade measures. 

Companies should also review existing contracts, sourcing strategies, pricing models, and customs compliance procedures to understand the potential financial impact if these duties take effect as announced. 

As tariff authorities continue to evolve and new tariffs reshape international supply chains, importers face increasing compliance obligations and financial exposure. Diaz Trade Law regularly advises businesses on tariff mitigation strategies, customs compliance, country of origin issues, valuation, classification, USMCA eligibility, exclusions, protests, and litigation involving U.S. trade actions. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.