On July 20, 2026, the President signed three proclamations under Section 338 of the Tariff Act of 1930, imposing an additional 50% ad valorem duty on specified Canadian products. The duties take effect at 12:01 a.m. Eastern Time on August 19, 2026. Companies across multiple sectors have less than 30 days to assess their exposure and take protective action.

Section 338 of the Tariff Act of 1930 authorizes the President to impose duties on goods from countries that discriminate against U.S. commerce. The three proclamations cite alleged discriminatory Canadian treatment of U.S. motor vehicles, alcoholic beverages, and dairy products as the triggering basis. However, the covered tariff lines extend well beyond those three sectors.

The covered tariff lines reportedly include a broad range of Canadian goods, among them:

• Wine and alcoholic beverages
• Dairy products
• Hockey equipment and sporting goods
• Cement and construction materials
• Automotive components and vehicles
• Various manufactured goods

Importers should not assume their products are excluded based solely on the stated triggering sectors. A line-by-line review against the proclamation annexes and applicable HTS classifications is essential.

This is the most important practical point for companies that have relied on USMCA preferential treatment. The additional 50% duty applies even where goods otherwise qualify as originating under the USMCA. Existing contracts that merely refer to "USMCA-originating goods" may not protect the parties from the additional duty burden.

The following categories are excluded from the additional 50% duty:

• Energy products
• Potash
• Goods already subject to specified Section 232 duties
• Certain fish, critical-mineral, and civil-aircraft products

Companies should verify whether their specific HTS classifications fall within these exclusions before assuming they are protected.

Covered merchandise admitted to a U.S. foreign-trade zone (FTZ) on or after the effective date generally must be entered in privileged foreign status, meaning the applicable tariff treatment is fixed at the time the goods enter the zone. Companies using FTZs for Canadian goods should review their admission procedures and timing strategies immediately.

The 50% additional duty is generally cumulative with other applicable customs duties, taxes, and fees. Companies must recalculate total landed costs accounting for all applicable duty layers, not just the new Section 338 rate.

U.S. importers, Canadian exporters, distributors, construction-material purchasers, automotive companies, food and beverage businesses, and customs brokers should immediately:

1. Product Classification Review Match affected products against the proclamation annexes and HTS classifications. Confirm whether specific tariff lines are covered, excluded, or subject to Section 232 or other existing duties.

2. Shipment and Inventory Assessment Review shipments expected to enter or leave bonded warehouses, FTZs, or in-transit on or after August 19. Goods already in transit before the effective date may be treated differently depending on entry timing.

3. Landed Cost Recalculation Recalculate landed costs and inventory valuations for all covered Canadian goods. Update financial models, pricing structures, and customer contracts accordingly.

4. Contract Review Review Incoterms, importer-of-record provisions, tariff-adjustment clauses, change-in-law rights, cancellation rights, and supplier indemnities in all relevant supply agreements. Contracts that reference USMCA origin as a duty-protection mechanism may need to be renegotiated.

5. FTZ Admission Status Confirm foreign-trade-zone admission status for Canadian goods and whether privileged foreign status elections are required or advantageous before August 19.

6. Section 232 and Exclusion Verification Confirm whether any Section 232 duties already apply to your products and whether the Section 338 exclusion for such goods covers your specific HTS lines.

Turkish companies that manufacture in Canada for the U.S. market, source Canadian inputs for U.S. operations, or have distribution arrangements involving Canadian goods should treat this as an urgent supply-chain and contract-compliance matter. USMCA origin certificates alone will not protect against the additional 50% duty on covered goods.

Turkish companies with U.S. subsidiaries acting as importers of record for Canadian goods face direct duty liability. Parent-company guarantees, intercompany pricing arrangements, and transfer pricing policies may all need to be reviewed in light of the new duty burden.

ULF New York is available to assist with HTS classification analysis, contract review for tariff-adjustment and change-in-law provisions, FTZ admission strategy, and customs compliance planning. Companies should not wait until August 18 to begin this review — the complexity of the proclamation annexes and the breadth of affected HTS lines make early action essential.

This alert is provided for informational purposes only and does not constitute legal advice. Companies should consult qualified legal counsel regarding their specific circumstances.