United States imposes 50% tariffs on selected Canadian imports
The additional duties take effect August 19, 2026, on motor vehicles, alcoholic beverages, and dairy products.
President Trump on July 20, 2026, signed three proclamations imposing an additional 50% ad valorem tariff on certain imports from Canada to take effect on August 19, 2026, to offset allegedly discriminatory trade practices affecting U.S. commerce in the automotive, alcoholic beverages, and dairy sectors.
According to the White House release, the tariffs pursuant to Section 338 of the Tariff Act of 1930:
- Apply at 50% on a wide range of Canadian imports (set forth in Annexes to each of the three proclamations), covering products ranging from wine to hockey sticks to cement
- Apply to all covered goods regardless of whether a good originates under the U.S.-Mexico-Canada Agreement (USMCA)
- Will not apply to energy, potash, products subject to tariffs under Section 232, and certain other goods, such as fish or critical minerals
According to the proclamations, Canada has implemented trade barriers that disproportionately burden U.S. commerce relative to other trading partners in three key sectors:
- Motor vehicles: Canada maintained a 25% tariff rate on non-originating parts up to 85% of vehicle value, coupled with tariff-rate quotas (TRQs). Consequently, Canadian imports of U.S. motor vehicles fell by 22% ($5.6 billion) from April 2025 through March 2026.
- Alcoholic beverages: All Canadian provinces and territories except Alberta and Saskatchewan banned the purchase, distribution, or retailing of U.S. beer, wine, and spirits. As a result, Canadian imports of U.S. alcoholic beverages decreased by 81% ($582 million) from March 2025 through February 2026.
- Dairy: Canada's TRQ allocation measures for cheese under the United States-Mexico-Canada Agreement (USMCA) exclude retailers from eligibility, whereas retailers are granted access under the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA).
KPMG observation
Notably, Section 338 tariffs do not have a predetermined expiration date and will remain in effect unless reduced, modified, suspended, or terminated by a subsequent presidential action.
It is also worth noting that the 10% import duty imposed effective February 24, 2026, for 150 days, under Section 122 of the Trade Act of 1974, expires on July 24, 2026.