Trump Imposes 50% Tariffs on Selected Canadian Goods Using Rare Section 338

President Donald Trump on Monday signed three proclamations imposing additional 50% tariffs on selected Canadian goods under Section 338 of the Tariff Act of 1930, a rarely used law that allows retaliatory duties against countries deemed to disadvantage U.S. exports.

In a July 20 fact sheet, the White House said, “Today, President Donald J. Trump signed three Proclamations pursuant to Section 338 of the Tariff Act of 1930.” The new tariffs are set to take effect 30 days after signing, putting the effective date at about Aug. 19.

According to the White House summary, the proclamations impose an additional 50% ad valorem tariff on separate sets of Canadian imports, including motor vehicles, alcoholic beverages and dairy products. The administration also cited examples including wine, hockey sticks and cement. The White House said the new tariffs will apply even when goods qualify for duty-free treatment under the U.S.-Mexico-Canada Agreement, meaning USMCA-origin products are not exempt from the added surcharge.

The administration said the new duties will not apply to energy, potash, goods already subject to Section 232 tariffs, fish or critical minerals.

The White House framed the move as a response to what it called Canada’s “discriminatory treatment of American products.” In the fact sheet, the administration said Section 338 “empowers the President to impose tariffs when a country disadvantages U.S. exporters relative to the exports of another country to offset the disadvantage or burden on U.S. commerce.”

To justify the action, the White House cited declines in Canadian imports of certain U.S. products. It said Canadian imports of U.S. motor vehicles fell about 22%, or $5.6 billion, from April 2025 through March 2026 compared with the same period a year earlier. It also said Canadian imports of U.S. alcoholic beverages fell about 81%, or $582 million, from March 2025 through February 2026 compared with the same period a year earlier.

Section 338 is a provision of the Tariff Act of 1930, a broad U.S. trade law, that explicitly authorizes retaliatory tariffs when a foreign country disadvantages American commerce. The statute allows duties “not to exceed 50 per centum ad valorem” and requires a 30-day delay before they take effect. Its use is notable because the provision has been rarely invoked in modern trade policy.

The legal route also stands out because the Supreme Court earlier this year limited a different source of presidential trade authority. In its Feb. 20, 2026, syllabus in Learning Resources v. Trump, the court said: “Held: IEEPA does not authorize the President to impose tariffs.” IEEPA, the International Emergency Economic Powers Act, had been central to earlier fights over Trump tariff authority. The administration’s reliance on Section 338 instead points to a more specific, older statute that directly addresses retaliatory duties.

The move marks a major escalation in a trade dispute between the United States and Canada, two deeply integrated trading partners whose cross-border commerce is especially important in autos and other consumer goods. Canada had already imposed retaliatory measures during the broader tariff dispute in 2025, and Monday’s action adds another step in that cycle.

Canada did not immediately comment at the time of reporting.

By applying the new tariffs regardless of USMCA eligibility, the administration is taking an unusually aggressive step in a trade relationship normally governed by the North American pact. With autos, alcohol and dairy among the targeted sectors, the proclamations reach into some of the most visible categories in U.S.-Canada trade.