If you ship products from Canada into the United States, there’s a new tariff you need on your radar. Starting at 12:01 a.m. ET on August 19, 2026, an additional 50% duty applies to a broad range of Canadian-origin goods entering the U.S.
This guide covers what the tariff is, which products are affected, why USMCA doesn’t protect you from it, and what you should do before it takes effect.
What is the Section 338 tariff on Canada?
The new US tariff was authorized under Section 338 of the Tariff Act of 1930, a decades-old trade law that lets the U.S. president impose duties of up to 50% on goods from a country found to discriminate against U.S. commerce. It was signed into three separate proclamations on July 20, 2026, and takes effect 30 days later, on August 19, 2026.
This isn’t a third-party summary. The White House published an official fact sheet confirming the action: “President Donald J. Trump signed three Proclamations pursuant to Section 338 of the Tariff Act of 1930 to impose additional 50% tariffs on certain goods of Canada in response to Canada’s discriminatory treatment of American products.” You can read the full fact sheet directly from the White House at whitehouse.gov/fact-sheets.
Unlike some other tariff programs, this one has no built-in expiration date. It stays in place until the U.S. administration changes or removes it.
How much is the new tariff, and what does it apply to?
The headline number is a 50% duty, added on top of whatever duties, taxes, and fees a product already owes. It’s not a replacement rate; it’s an addition.
Duty applies based on where a product was made, not where it ships from. That means goods manufactured in Canada are affected even if a US customs broker or fulfillment center is involved somewhere in the supply chain.
Which products are affected?
Media coverage has focused on three headline categories: dairy, motor vehicles, and alcoholic beverages. But the actual list of affected tariff lines is much longer. Hundreds of product categories are covered, including:
- Furniture
- Textiles and apparel
- Cosmetics
- Paper goods
- Sporting goods (including items like hockey equipment and fishing gear)
- Cement and building materials
- Seeds and wigs, among other niche categories
A small number of categories are excluded, including energy products, potash, and goods already subject to separate steel, aluminum, and auto tariffs.
Does this tariff apply if I’m a Canadian merchant selling non-Canadian goods?
Not necessarily, and this is good news for many sellers who may assume the worst. Since the tariff is based on country of origin, not country of shipment, a Canadian merchant selling goods manufactured outside Canada is not subject to this 50% duty, even though the shipment ships from a Canadian address.
Example: if you’re a Canadian retailer selling a product made in Vietnam, Mexico, or the U.S. itself, and you ship it from your Canadian warehouse/location to a U.S. customer, that shipment isn’t a Canadian-origin good under this tariff. The proclamations target goods that originate in Canada, based on where they were made or substantially transformed, not where your business is based or where the parcel is dropped off.
A few things worth keeping in mind:
- Accurate origin documentation matters. If you’re shipping non-Canadian goods from Canada, customs will want correct country-of-origin paperwork. Defaulting to “Canada” as the origin because that’s where you ship from can trigger the duty incorrectly or look like an attempt to evade it.
- Other duties can still apply. This tariff doesn’t replace other trade measures. A product’s actual country of origin can still carry its own separate tariffs; this Section 338 action just doesn’t add the extra 50% layer on top for non-Canadian goods.
- Mixed catalogues need SKU-level review. If you sell a mix of Canadian-made and non-Canadian-made products, you can’t treat your whole catalogue the same way. Each SKU’s actual origin determines whether it’s exposed.
Does USMCA protect my products from this tariff?
No. This detail catches a lot of Canadian sellers off guard. Products that qualify for preferential treatment under the USMCA are still subject to the additional 50% duty. None of the three proclamations behind this tariff includes a USMCA carve-out.
If you’ve been assuming USMCA-qualified goods are shielded from new trade actions, this tariff is the exception to plan around.
What will customers see at checkout?
For any order that is created on or after August 19, 2026, customers will see the additional duty reflected in their landed cost total at checkout, alongside product pricing and shipping. This happens automatically. Your landed cost estimates will update automatically to reflect the new duty rate, so there’s nothing you need to configure or turn on. Buyers get the same transparent, all-in pricing they’re used to, just with a higher total for affected products.
What if my order ships before August 19 but arrives after?
This is one of the most important details in the whole proclamation, and it catches a lot of people off guard. The tariff is triggered by the date a shipment is entered for consumption at U.S. customs, not the date it ships from Canada.
That means a shipment can leave your warehouse before the effective date and still get hit with the new duty if it clears customs on or after August 19.
Example: A customer in Ohio orders a $200 wooden furniture item from your Canadian shop on August 15. You ship it out on August 18, the day before the tariff takes effect. But because of normal transit and customs processing time, the shipment doesn’t clear U.S. customs until August 20, one day after the new duty kicks in.
Even though the order was placed and shipped before August 19, the shipment is charged the additional 50% duty because it was entered for consumption on August 20. The ship date doesn’t protect it. Only the customs entry date matters.
What this means for your customers: if there’s any chance an order could clear customs on or after August 19, they should expect the new duty to apply, even if it shipped before then.
What Canadian sellers should do before August 19?
- Review your product catalogue for Canadian-origin goods. Identify which SKUs are made in Canada and could fall into a newly covered tariff line, not just the headline categories of dairy, alcohol, and motor vehicles.
- Get ahead of it with your U.S. customers. If you sell products likely to be affected- apparel, furniture, cosmetics, sporting goods, and more- let your U.S. audience know that landed costs on these items are about to increase.
- Watch for further updates. Section 338 gives the administration room to expand, suspend, or modify these tariffs, so this list of affected products could change. Your landed cost estimates will continue to update automatically as those changes happen, so you won’t need to track rate changes manually.
Bottom line
This is a meaningful shift for Canadian sellers shipping to the U.S. It applies broadly; it isn’t limited to the headline categories, and USMCA doesn’t offer an exemption. The best move right now is to identify which products are affected and start communicating with your U.S. customers ahead of the August 19 effective date.
