Section 338 Duties on Canadian Goods Take Effect (August 22, 2026) — What Sellers Shipping Into the U.S. Must Check Now
If you move product to U.S. customers through a Canadian warehouse, the Section 338 duties that took effect on August 22, 2026 need to be on your desk this week. On August 21, U.S. Customs and Border Protection issued guidance CSMS #69606660 confirming an additional 50 percent ad valorem duty on certain goods of Canada.
Two points drive everything else. USMCA origin does not exempt a covered good, and the covered list reaches well past alcohol, dairy and vehicles into cosmetics, chemicals and textiles.
1. The legal basis and how the measure came into force
Section 338 of the Tariff Act of 1930 (19 U.S.C. 1338) allows the President to impose additional duties of up to 50 percent on goods of a country found to be discriminating against U.S. commerce.
Three Presidential Proclamations were signed on July 20, 2026: No. 11046 covering alcoholic beverages (91 FR 46639), No. 11047 covering dairy (91 FR 46653), and No. 11048 covering motor vehicles (91 FR 46663).
The original effective date was August 19. Proclamation No. 11056, issued August 18, suspended the duties for three days, moving the effective moment to 12:01 a.m. eastern time on August 22, 2026. Negotiations did not conclude within that window, and the duties took effect as scheduled.
2. HTSUS 9903.03.12 through 9903.03.16 — the structure at a glance
Per CBP guidance, the Chapter 99 headings apply as follows.
9903.03.12: additional 50 percent ad valorem — goods described in U.S. Note 51(b)(1)
9903.03.13: additional 50 percent ad valorem — goods described in U.S. Note 51(b)(2)
9903.03.14: additional 50 percent ad valorem — goods described in U.S. Note 51(b)(3)
9903.03.15: additional 0 percent — steel, aluminum and copper articles and their derivatives, passenger vehicles and light trucks and parts, medium and heavy duty vehicles and parts, timber and lumber products, semiconductor articles and patented pharmaceuticals already covered by Section 232
9903.03.16: additional 0 percent — civil aircraft, engines, parts and components, and ground flight simulators
These duties do not replace existing ones. CBP states that covered goods are subject to the additional ad valorem rate in addition to all other applicable duties, taxes, fees, and any antidumping or countervailing duties.
3. A USMCA claim will not exempt your goods
The White House fact sheet is explicit: the Section 338 tariffs apply to all covered goods regardless of whether a good originates under the U.S.-Mexico-Canada Agreement. CBP's CSMS guidance contains no USMCA exemption either. Any brand that built its U.S. landed cost on duty-free USMCA treatment needs to rebuild the price model for covered items.
4. What is actually on the list — including some cosmetics
CBP attached a six-page annex, "Section 338-Canada HTS List," setting out the covered HTS numbers by heading. The confirmed scope looks like this.
9903.03.12: beer, wine and spirits (2203–2208), cork and wood articles (Chapter 44), paper (Chapter 48), sporting goods (9506)
9903.03.13: dairy including milk powder (0402), sugars and syrups (1702), gelatin (3501), food preparations (1901), certain beverages (2202.91)
9903.03.14: animal and vegetable materials (Chapters 5–6), seeds (1209), tobacco (Chapter 24), organic chemicals (Chapter 29), essential oils (3301) and mixtures of odoriferous substances (3302), selected cosmetics (3303.00.30, 3304.10.00, 3304.20.00, 3304.30.00, 3305.90.00), candles (3406), wood (4407, 4411), textiles and apparel, machinery
The variation inside the cosmetics category is worth pausing on. Lip and eye make-up preparations and manicure or pedicure preparations (3304.10, 3304.20, 3304.30) and other hair preparations (3305.90) appear on the list, while basic skincare (3304.99), shampoo (3305.10), oral hygiene (3306), shaving and deodorant products (3307) and soap (3401) were not found there. Classification must be verified at the 10-digit HTSUS level, not the 6-digit HS level.
5. The decisive question is whether the good is a product of Canada
CBP's language is "articles the product of Canada." The duty follows the country of origin determination, not the port or country of shipment. For Korean brands operating through a Canadian 3PL, that distinction decides the outcome.
Finished goods manufactured in Korea, stored in a Canadian warehouse and shipped onward to the United States remain products of Korea and are outside the scope. Origin documentation and marking evidence must still be available for the entry.
Goods manufactured in Canada by an OEM or ODM, or substantially transformed there, are products of Canada and can attract the 50 percent duty.
Repackaging or relabelling alone does not normally change origin, but the outcome depends on the specific operations, so review these before shipping.
Three operational details that are easy to miss
Reporting order on the entry summary: Chapter 98, then Chapter 99 additional duties, then Section 301, Section 122, Section 232 and Section 201. The customs value is reported under the Chapter 1–97 classification.
Foreign trade zones: unless eligible for domestic status, covered goods may only be admitted under privileged foreign status, and the ad valorem duty applies when they are entered for consumption.
Chapter 98 and drawback: Chapter 98 goods are generally exempt, with the exception of 9802.00.40, 9802.00.50, 9802.00.60 and 9802.00.80, where the duty applies to the value of the repairs, alterations, processing or foreign assembly. Drawback is available for these additional duties.
6. Canada's counter-tariffs on September 8 raise import costs as well
Brands that do not sell into the United States are not insulated. On August 25, 2026, the Department of Finance Canada announced counter-tariffs on U.S.-origin products.
Effective: 12:01 a.m., September 8, 2026
Rates: 15, 25 and 50 percent, matching the U.S. measures on comparable goods
Scope: approximately CAD 27.6 billion of imports from the United States
Sectors: steel, dairy, appliances, agricultural equipment, pulp and paper, electronics and fish and seafood
If you source raw materials or packaging from U.S. suppliers, procurement costs can rise directly. Canada has confirmed that a remission process remains available for exceptional relief, with administrative detail to follow through the Canada Border Services Agency.
💡 Trufulfillment Insight
Responding to this measure is not optional; it is the basis of predictable customs clearance
A wrong scope call does not stay a tax problem. Under-declaring a 50 percent ad valorem duty leads to post-entry recovery and penalties, and the reverse case is just as costly:
Korean-origin goods paying duty they never owed because origin evidence was not ready at entry. Once 50 percent lands on a U.S. selling price, Amazon listing economics stop working, so shipments made on or after the effective date should be reviewed now.
Understood properly, the structure also creates room to move. Korean-made goods held in a Canadian 3PL and shipped to U.S. customers are not the direct target of this measure, and brands with disciplined origin management can hold supply steady while others pause.
Trufulfillment supports origin assessment, HTSUS classification review, and U.S.-bound shipping documentation as a single, integrated service from its base in Canada.
⭐Key Takeaways⭐
As of 12:01 a.m. on August 22, 2026, covered goods of Canada carry an additional 50 percent ad valorem duty.
A USMCA claim does not exempt them, and the duty stacks on existing duties, antidumping and countervailing duties.
What matters is country of origin, not country of shipment. Korean-origin goods transiting Canada are out of scope, but the evidence must be in place.
From September 8, 2026, Canada's counter-tariffs of 15, 25 and 50 percent on U.S. goods will affect import costs as well.
Trufulfillment is a Canada-based logistics and regulatory compliance partner. We support brands establishing a stable presence in the market, handling origin review through to customs documentation in both directions across the U.S. and Canadian borders, so that Korean sellers can manage their logistics and clearance risk with confidence.
👉 For safe, professional exporting to Canada, talk to Trufulfillment. (info@trufulfillment.ca)
📎 Sources (official government documents)
U.S. CBP, CSMS #69606660 — GUIDANCE: Section 338 Additional Duties on Certain Goods of Canada (August 21, 2026)
U.S. CBP, Section 338-Canada HTS List Final (attachment to CSMS #69606660, 6 pp.)
Presidential Proclamations 11046 / 11047 / 11048 (July 20, 2026) — 91 FR 46639 / 46653 / 46663
Presidential Proclamation 11056 (August 18, 2026) — Temporary Suspension, 91 FR (2026-17294)
The White House, Fact Sheet: President Donald J. Trump Imposes Additional Tariffs on Canada (July 2026)
Department of Finance Canada, Canada announces targeted countermeasures (August 25, 2026), and List of products from the United States subject to counter-tariffs effective September 8, 2026
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