Canada's 50% Problem: Section 338 and the Limits of USMCA

For three decades, goods made in Canada crossed into the US almost duty-free. Since August 2026, hundreds of them do not.

What Section 338 does

Section 338 of the Tariff Act of 1930 lets the President add duties on goods from a country found to discriminate against US commerce. It is rarely used. Since 22 August 2026 it adds 50% to the duty on 666 tariff lines from Canada, published on three lists.

The lists are named after their headline products, but each reaches much further:

The “alcoholic beverages” list also covers cheese, hides and leather, furskins, wooden tableware, paper, pleasure boats and ice-hockey sticks.
The “dairy” list also covers sugars, molasses, hop cones and non-alcoholic beer.
The “motor vehicles” list is the broad one: furniture, mattresses and lighting, wood products, cosmetics ingredients, apparel, bags, tools, smartphones and network gear, toys and sports goods.

It stacks, and USMCA does not exempt it

The 50% comes on top of everything else: the regular duty, the forced-labor tariff where it applies, and Section 232. Goods that qualify under USMCA are not exempt. Some examples:

Wooden furniture: 50% if it qualifies under USMCA, 60% if it does not.
Smartphones: 50% either way.
Structural steel, which already paid 50% under Section 232: 100%.

68 lines are banned

Since 29 September 2026, 68 of the listed lines cannot be imported from Canada at all. They include bottled wine and motorcycles over 800 cc, and beer is banned when packaged. A banned product has no duty rate. It is refused at the border.

What importers should do

Check every Canadian product at the 8- or 10-digit level. At the 6-digit level a heading can be only partly listed.
Stop treating a USMCA certificate as proof of duty-free entry for these lines.
Compare alternative origins with the full duty stack, not just the regular duty.
If you hold stock of banned goods in Canada, plan on it not entering the US.

The official lists are scanned annexes. Zentria Flow turned them into one searchable list with the banned lines marked: zentriaflow.com/section-338-tariff.