At a glance
- The U.S. has issued three Presidential Proclamations imposing an additional 50% tariff on specified Canadian products, including goods under the Canada-United States-Mexico Agreement (CUSMA).
- The tariffs apply to covered goods entered for consumption, or withdrawn from warehouse for consumption, beginning Aug. 19, 2026.
- Businesses should assess their product-level exposure, quantify the potential cost, and review contracts and upcoming shipments before the measures take effect.
On July 20, 2026, the U.S. President issued three Presidential Proclamations under Section 338 of the Tariff Act of 1930, imposing an additional 50% ad valorem tariff on specified products of Canada.
The additional tariffs apply to goods entered for consumption, or withdrawn from warehouse for consumption, at or after 12:01 a.m. EDT on Aug. 19, 2026.
The proclamations do not establish an expiry date, and the measures will remain in effect unless expressly reduced, modified or, terminated. The proclamations cite Canadian measures affecting U.S. alcoholic beverages, dairy products and, motor vehicles as the basis for the action. However, the products subject to the new tariffs are not limited to those sectors.
Collectively, the covered tariff lines include selected alcoholic beverages and dairy ingredients, agricultural and food products, chemicals, plastics and packaging materials, wood and paper products, textiles and apparel, furniture, machinery and industrial equipment, telecommunications and electronic equipment, toys, sporting goods, and other consumer products.
How is tariff exposure determined?
Businesses should not rely on the title of a proclamation or a high-level product description to determine whether they are affected.
Coverage is determined by the applicable tariff classification in the Harmonized Tariff Schedule of the United States (HTSUS). The annexes expressly state that their product descriptions are provided for informational purposes and do not define or limit the scope of the measures.
Canadian exporters should therefore confirm the U.S. tariff classification used when their goods are imported rather than relying solely on the product description or classification used for Canadian export reporting.
Does CUSMA provide an exemption to the additional 50% tariff?
A covered product of Canada remains subject to the additional 50% tariff even if it qualifies as originating under CUSMA/USMCA.
CUSMA eligibility and whether an article is a product of Canada for U.S. customs purposes are related but distinct considerations. Businesses should review both rather than assuming that a CUSMA certification removes the new tariff exposure.
For covered products, the additional 50% tariff generally applies in addition to ordinary customs duties, anti-dumping and countervailing duties, and other applicable taxes, fees and charges, unless a specific exclusion or special treatment applies.
What goods are excluded in the new U.S. tariffs on Canada?
The Section 338 tariffs do not apply to specified articles that are already subject to certain U.S. Section 232 measures. These include:
- Steel, aluminum, and copper articles and derivatives
- Passenger vehicles, light trucks, and certain automotive parts
- Medium and heavy-duty vehicles and parts
- Wood products
- Semiconductor articles
- Patented pharmaceutical articles
Qualifying civil aircraft, engines, parts and components are also excluded. However, the civil aircraft exclusion does not extend to unmanned aircraft.
Certain goods properly entered under Chapter 98 of the HTSUS may also receive full or partial relief. Special rules apply to goods returned following repairs, alterations or processing and to certain goods assembled abroad using U.S. components.
Because these exclusions depend on the precise tariff classification, Chapter 99 treatment, and circumstances of entry, businesses should validate any claimed exclusion at the product and transaction level.
How can Canadian businesses prepare for the new 50% U.S. tariffs?
The effective date is based on when goods are entered for consumption or withdrawn from warehouse, not when they are ordered, invoiced, or shipped. Businesses should therefore review upcoming shipments, including goods already in transit and inventory held in U.S. bonded facilities.
Canadian exporters and U.S. importers should:
- Determine product-level exposure: Confirm the U.S. HTSUS classification and country of origin of each product and compare it against the tariff lines in all three proclamations.
- Coordinate with the U.S. importer and customs broker: Confirm the applicable Chapter 99 reporting, available exclusions, documentation requirements and treatment of upcoming entries.
- Quantify the financial impact: Model the additional 50% tariff together with ordinary duties, anti-dumping and countervailing duties, customs fees and related cash-flow requirements.
- Review entry timing: Identify shipments expected to enter the U.S., or be withdrawn from warehouse, on or after Aug. 19, 2026.
- Review commercial arrangements: Confirm the importer of record, applicable Incoterms, responsibility for duties, pricing-adjustment provisions and the ability to pass increased costs to customers.
- Evaluate customs and supply-chain planning opportunities: Consider tariff classification, customs valuation, origin, Chapter 98 treatment, sourcing, manufacturing and supply-chain alternatives.
- Monitor implementation developments: U.S. Customs and Border Protection (CBP) is authorized to issue implementing rules, guidance and instructions, and technical corrections may be published in the Federal Register.
- Businesses relying on a tariff exclusion or mitigation strategy should ensure that the position is properly documented and can be supported if reviewed by CBP.
How BDO can help
Canadian exporters should not assume that CUSMA qualification or the title of a proclamation places their goods outside the new measures. The immediate priority is to identify covered products, determine who will bear the additional cost and take appropriate action before Aug. 19, 2026.
BDO’s Customs and International Trade Services team can help businesses conduct a practical, product-by-product assessment of their exposure to the new Section 338 tariffs.
Our team can assist with:
- Reviewing U.S. tariff classifications and country-of-origin determinations
- Identifying applicable exclusions and special tariff treatment
- Quantifying duty and cash-flow exposure
- Reviewing importer-of-record and customs broker arrangements
- Assessing customs valuation, Chapter 98 and other planning opportunities
- Evaluating pricing, contractual and supply-chain responses
Please reach out to your BDO contact if you need assistance or contact:
The information in this publication is current as of July 20, 2026
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.