CBP Issues Guidance on Section 338 Duties on Canadian Imports

U.S. Customs and Border Protection has issued CSMS #69606660, providing entry-filing instructions for the additional duties imposed on certain Canadian-origin goods under Section 338 of the Tariff Act of 1930.

Following a three-day suspension, the measures took effect at 12:01 a.m. Eastern time on August 22, 2026. Covered merchandise entered for consumption—or withdrawn from warehouse for consumption—must be reported under HTSUS headings 9903.03.12 through 9903.03.16.

As of August 24, neither the White House nor USTR had announced formally any further suspension or modification, though Monday morning the President did post : "On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%,"   

Canadian Prime Minister Mark Carney on Monday said Canada has been "pragmatic, patient and persevering" in an effort to reach an agreement with the US, but his priority was to get the best deal for his country, not a deal "at any price or any time frame".

“They asked too much and offered too little,” Carney said.

Key points for importers

• HTSUS 9903.03.12, 9903.03.13 and 9903.03.14 impose an additional 50% ad valorem duty on the Canadian products identified in the relevant annexes.

• HTSUS 9903.03.15 and 9903.03.16 carry a 0% additional rate. These provisions cover specified steel, aluminum and copper articles; vehicles and parts; wood products; semiconductors; patented pharmaceuticals; and civil aircraft and related components.

• The Section 338 duty applies in addition to ordinary customs duties and any applicable antidumping, countervailing or other duties, taxes, fees and charges.

• Chapter 98 treatment may provide relief in qualifying circumstances, subject to stated exceptions and special valuation rules.

• The additional duties are eligible for drawback.

• Covered merchandise admitted to a U.S. foreign-trade zone generally must be admitted in privileged foreign status unless it qualifies for domestic status.

Products extend well beyond the disputed sectors

Although the proclamations address alleged Canadian discrimination involving alcoholic beverages, dairy products and motor vehicles, the annexes reach a much broader range of merchandise.

Jennifer “Jen” Diaz, president of Diaz Trade Law, highlighted this disconnect: “Section 338 of the Tariff Act of 1930 does not require any connection between the product hit with duties and the discrimination being offset.”

Diaz noted that the motor-vehicle proclamation’s annex includes products such as natural honey, flower bulbs, orchids, essential oils, cosmetics, candles, plywood, envelopes, smartphones, video-game consoles, fishing rods and antiques—but no automotive tariff lines.

Her practical warning to importers is straightforward: review classifications against each proclamation’s annex rather than assuming that only dairy, alcohol or automotive products are affected.

The unprecedented character of the measure also creates uncertainty. Ryan Majerus, a former U.S. trade official and partner at King & Spalding, described the use of Section 338 as “completely untested,” according to the Associated Press.

Apparent cross-reference error

The CBP message appears to contain a drafting error. Its Chapter 98 and drawback sections refer to headings 9903.04.12 through 9903.04.14, although the operative Section 338 provisions identified elsewhere in the guidance are 9903.03.12 through 9903.03.16.

Importers and brokers should not independently correct CBP’s published instructions when filing. They should confirm the proper treatment with CBP, their customs broker or trade counsel and watch for a corrected CSMS message.

Recommended compliance steps

Importers should promptly:

1. Screen Canadian-origin merchandise against the complete HTS lists attached to the proclamations and CBP guidance.

2. Confirm origin and classification rather than relying solely on product descriptions.

3. Identify entries potentially eligible for Chapter 98 treatment or drawback.

4. Review foreign-trade-zone admission procedures.

5. Update landed-cost calculations and contractual tariff provisions.

6. Monitor CBP communications for correction of the apparent Chapter 99 cross-reference error.

Questions concerning Section 338 entry filing may be directed to CBP’s Trade Remedy Branch at TradeRemedy@cbp.dhs.gov.