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On July 20, 2026, President Trump signed a Presidential Proclamation imposing 50% tariffs on certain Canadian products, including goods that qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA), effective 12:01 a.m. Eastern Time on August 19, 2026. 

The latest action targets what the administration has identified as discriminatory trade practices by Canada against U.S. alcoholic beverages. In particular, the measure issued pursuant to Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338) responds to provincial and territorial restrictions on the purchase, distribution, and retail sale of U.S. alcoholic beverages that the President has determined are unreasonable and discriminatory to U.S. commerce.

The Proclamation relies primarily on Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338). This provision empowers the President to impose additional duties (not exceeding 50%) on imports from a foreign country to offset the burden or disadvantage caused by that country’s unequal imposition on or discrimination against U.S. commerce.

The action also invokes Section 604 of the Trade Act of 1974 (19 U.S.C. § 2483), which authorizes the President to implement these changes in the Harmonized Tariff Schedule (HTS).

Factual Background:

Beginning in March 2025, all Canadian provinces and territories abruptly halted the purchase, distribution, and retail sale of U.S. alcoholic beverages. On March 4, 2025, Ontario’s Liquor Control Board canceled existing U.S. orders and removed U.S. products from its wholesale catalogs, e-commerce platform, and retail stores, while Quebec directed its state alcohol distributor to remove U.S. products from shelves and cease supplying them to grocery stores, bars, and restaurants. Although Alberta and Saskatchewan lifted their restrictions in June 2025, similar measures remained in effect elsewhere in Canada.

The Proclamation notes that U.S. alcohol exports to Canada decreased by 81 percent (from approximately $718 million to approximately $137 million) between March 2025 and February 2026. Concurrently, Canada did not impose similar restrictions on other countries.

Key Details of the New Tariffs

Finding that Canada’s actions represent an unreasonable and discriminatory burden on U.S. commerce, President Trump has authorized the following:

  • New Tariff Rate: An additional 50% on certain Canadian products identified under Annex I. These duties are in addition to any other applicable duties, taxes, fees and exactions.
  • Effective Date: Duties apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time on August 19, 2026.
  • Products Covered: The 50% tariff applies to the categories of products of Canada as set out in Annex I. Additionally, according to the White House Fact Sheet, the Section 338 tariffs apply to all covered goods regardless of whether they qualify as originating under the USMCA.
  • Exemptions: The proclamation excludes several categories of Canadian products from the additional 50% tariff, including aluminum, steel, and copper products including derivative aluminum or derivative steel articles; passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans and cargo vans) and light trucks; parts of passenger vehicles and parts of light trucks; medium and heavy-duty vehicles (including parts), buses and other vehicles; wood products; semiconductors, patented pharmaceuticals, and qualifying civil aircraft and aircraft parts. These products remain subject to any other applicable duties or trade remedies. For a complete list of excluded products and applicable tariff provisions, please review Annex II of the proclamation.
  • Foreign Trade Zones (FTZ): Any targeted products admitted into a U.S. FTZ (except for those eligible under “domestic status”) on or after the effective date must be admitted under “privileged foreign status” per 19 C.F.R. § 146.41. Merchandise admitted in privileged foreign status retains that status even if subsequently manufactured or otherwise processed in the FTZ, limiting an importer’s ability to avoid the additional 50% tariffs through FTZ operations.

The proclamation imposes significant new tariffs on certain Canadian products. Consequently, importers should review both annexes, evaluate potential duty exposure, and assess any necessary compliance or supply chain adjustments before the August 19, 2026 effective date.

The Husch Blackwell International Trade and Supply Chain team will continue to monitor developments and provide updates as they become available. If you have any questions about this, please contact your Husch Blackwell attorney.