US-Canada Tariffs 2026: 50% Section 338 Duty on ~$20B of Canadian Goods
What happened
On July 20, 2026, President Trump signed three proclamations (11046, 11047, 11048) under Section 338 of the Tariff Act of 1930 (19 U.S.C. 1338) — the first-ever use of that authority — imposing an additional 50% ad valorem duty on Canadian motor vehicles, alcoholic beverages, and dairy. The original August 19 effective date was suspended for three days on August 18 to allow talks; the Aug 19–21 negotiations collapsed, and the duty took effect at the rescheduled time.
USTR Jamieson Greer said minutes before the deadline: "Tonight, Canada declined to finalize the trade deal under the terms agreed earlier this week." Prime Minister Mark Carney responded that Canada "will match those tariffs dollar for dollar," with retaliatory duties on U.S. steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics starting September 8, 2026.
Affected categories and rates
Coverage spans roughly $20 billion of Canadian exports (~5% of Canada's annual exports to the U.S.) — products described in coverage as ranging "from hockey sticks to tongue depressors." The full line-level HTS list lives in the three proclamations; the categories below are the verified scope.
| Category | Rate | Effective | Legal basis |
|---|---|---|---|
| Motor vehicles & auto parts (plus Annex II goods: furniture, sporting goods, hockey equipment, jewelry, etc.) | 50% additional ad valorem | Aug 22, 2026, 12:01 a.m. ET | Proclamation 11048 |
| Alcoholic beverages (beer, wine, liquor, cider, other fermented beverages) | 50% additional ad valorem | Aug 22, 2026, 12:01 a.m. ET | Proclamation 11046 |
| Dairy (cheeses of all types; milk, cream, whey, lactose, sugars, non-alcoholic beer) | 50% additional ad valorem | Aug 22, 2026, 12:01 a.m. ET | Proclamation 11047 |
| Other Annex II goods — cement, honey, plywood/wood products, plastics, paper, candles, apparel, wigs, chandeliers, pools, fishing rods, ice skates, etc. | 50% additional ad valorem | Aug 22, 2026, 12:01 a.m. ET | Annex II of Proclamations 11046/47/48 |
| Steel & aluminum (pre-existing, NOT part of this action) | Pre-existing Section 232 duties | Pre-existing | Section 232 regime |
| Lumber (pre-existing levy) | 10% (pre-existing) | Pre-existing | Section 232 |
The 50% duty stacks on top of regular MFN/CUSMA rates and other applicable duties. Pre-existing steel, lumber, and auto tariffs remain in force. Excluded from the new duty: energy products, potash, fish, critical minerals, and goods already under Section 232. USMCA/CUSMA origin does not shield covered goods.
What the rejected deal would have meant — NOT enacted
The deal Canada declined on Aug 21, 2026 would have reduced U.S. tariffs — it is not in force and never took effect:
- Steel & aluminum: would have been cut to 25% (rejected)
- Automotive duties: would have been lowered to 15% (rejected)
- Lumber 10% levy: would have been eliminated (rejected)
Instead, the 50% Section 338 duty took effect Aug 22, 2026. You can model the rejected offer as a what-if scenario in the Tariff Calculator 2026 ("Rejected US–Canada deal offer — what-if, NOT enacted"), but the live estimate uses the enacted 50% rate.
Why the talks failed
Three days of talks in Washington (Aug 19–21) followed the August 18 three-day suspension, which was premised on a preliminary deal "subject to finalization of documents." That finalization never happened. Greer blamed "new demands and walk-backs of other commitments by Canada"; Carney said "last-minute changes in the U.S. proposed terms were unfair, uneconomic," adding "They asked too much and they offered too little." Negotiations are suspended and no new talks are scheduled.
Calculate your duty
The updated Tariff Calculator 2026 includes the 50% duty in your estimate when you select Canada and a covered product category (Automotive, Food & Beverages, or Canada Section 338 Covered Goods) with an import date on or after August 22, 2026. The calculator shows the effective date, the statutory basis, and sources with every estimate — and flags the rejected-deal what-if preset separately so it is never confused with the live rate.
FAQ
Q: Are the US-Canada 2026 tariffs in effect right now?
A: Yes — the 50% additional duty on roughly $20B of Canadian goods took effect Saturday, August 22, 2026 at 12:01 a.m. EDT (04:01 GMT) under Section 338 of the Tariff Act of 1930, after talks failed. The original Aug 19 date was pushed by the Aug 18 three-day suspension.
Q: Which products are covered?
A: Motor vehicles and auto parts, alcoholic beverages (beer, wine, liquor, cider), dairy including cheeses of all types, and Annex II goods — from hockey equipment and furniture to cement, honey, plywood, plastics, paper, candles, apparel, wigs, chandeliers, pools, and fishing rods.
Q: What about the 25% steel, 15% autos, and 10% lumber rates?
A: Those were the rejected deal offer — steel/aluminum would have been cut to 25%, autos to 15%, and the lumber levy eliminated. They were never enacted. The 50% Section 338 duty is what applies to covered goods.
Q: Does USMCA/CUSMA protect my goods?
A: No. The Section 338 duties apply to all covered goods regardless of whether they originate under USMCA/CUSMA.
Q: What is excluded?
A: Energy products, potash, fish, critical minerals, and goods already subject to Section 232 tariffs (steel, aluminum, copper, autos, lumber). Pre-existing steel/lumber/auto duties remain and stack where applicable.
Q: What is Canada's retaliation?
A: A dollar-for-dollar response beginning September 8, 2026 on U.S. steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Talks are suspended; negotiators were recalled to Ottawa.
Related guides: Canada 50% Section 338 tariff explainer · 2026 tariff exemption list · US tariff rates by country · Tariff news & advisories
Sources (verified Aug 22, 2026 against the parent datapack t_89767bbd — 12 sources, 6 official instruments): USTR — Greer statement (Jul 20, 2026) · White House Fact Sheet (Jul 20, 2026) · Proclamation 11048 (motor vehicles) · Proclamation 11046 (alcohol) · Proclamation 11047 (dairy) · Aug 18 suspension proclamation · Al Jazeera · Jerusalem Post / Reuters · ZeroHedge (rejected-offer rates) · NPR · CBC · The Guardian. This page is an advisory summary, not legal or customs advice — consult a licensed customs broker or trade counsel for your specific entries.