This article originally appeared on the Avalara blog.

Since his return to office, President Donald Trump has adopted various legal measures to implement new tariffs. Notably, on July 20, 2026, he enacted Section 338 of the Tariff Act of 1930, imposing a hefty 50% tariff on select Canadian imports, which commenced on August 19, 2026.

So, what exactly are Section 338 tariffs? Let’s break it down.

What You Need to Know

• Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338) empowers the president to impose duties of up to 50% indefinitely on countries that exhibit discriminatory practices against U.S. commerce.
• Trump's invocation of Section 338 specifically targets a range of Canadian goods, notably many alcohol and dairy items.
• This action circumvents the duty-free provisions of the United States-Mexico-Canada Agreement (USMCA), affecting products that would typically qualify for exemptions.

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Understanding Section 338

Section 338 addresses "discrimination by foreign countries" and provides the president with the authority to levy duties when he determinates that a nation either:

1. Imposes unreasonable charges or limitations unfairly imposed on U.S. goods, or
2. Discriminates against U.S. commerce, disadvantaging it relative to other countries’ commerce.

These tariffs can be as high as 50% and go into effect 30 days post-proclamation. The president can apply these tariffs to entire nations or specific sectors, and importantly, there's no fixed timeline for their expiration—the tariffs can remain permanent.

Products Affected by Section 338

Following three proclamations from the White House, additional duties were imposed to counteract Canadian discrimination against U.S. commerce for products including alcohol, dairy, and motor vehicles.

As of August 19, 2026, a wide array of products—alcoholic beverages, dairy commodities, among others—are subject to a 50% tariff. This is particularly significant because some of these goods would have been duty-free under the USMCA.

Exporters and importers must stay sharply aware of these new duties and their potential implications on pricing and supply chains, especially given the rapid implementation timeline and the ongoing adjustments in tariff regulations.

Conclusion

The Section 338 tariffs complicate an already intricate web of trade regulations and agreements. Stakeholders across industries need to closely monitor these developments to adapt their strategies accordingly, as compliance can be daunting with these rapid changes. For further details and product listings subject to these duties, refer to relevant publications like the White House Fact Sheet and additional annexes.