Section 338: Presidential Tariffs and Import Bans

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In 2026, tariffs of 50 percent took effect August 22 on a range of Canadian goods, and three September 8 proclamations excluded certain Canadian products in disputes over alcoholic beverages, dairy and motor vehicles, with the import bans taking effect September 29. A banned shipment cannot be brought in by paying more.

In its March 19, 2026 overview, the Congressional Research Service reported that the United States had never imposed tariffs under Section 338. The Canada measures show how Section 338 can move from higher import charges to exclusion.

The finding that opens the door to duties

Section 338 of the Tariff Act of 1930 gives the president two ways to answer a country found to discriminate against American commerce. The first is added duties of up to 50 percent of a product’s value. The second, which requires a finding that the discrimination continued after the duties were proclaimed, is to exclude that country’s products from importation.

The provision is codified at 19 U.S.C. 1338. It directs the president to declare new or additional duties by proclamation when the president makes the required factual finding and determines that the public interest will be served. A proclamation is the formal presidential action that puts the specified measure into effect.

One trigger is an unreasonable foreign charge, regulation or limitation on American products that is not equally enforced on similar products from every foreign country. That provision reaches the handling of American products within the foreign country, their transit through it, and their reexport from it. The comparison with other countries is part of the rule: a burden on American trade alone does not describe the full statutory test.

The other trigger is discrimination through a foreign law, administrative regulation or practice that places U.S. commerce at a disadvantage compared with another country’s commerce. The listed forms include customs and port charges, product classifications, restrictions and prohibitions. That is why Section 338 is broader than a complaint about another country’s tariff rate.

The statute also assigns a role to the U.S. International Trade Commission, which must stay informed about the specified discrimination and provide information and recommendations to the president.

In a notice published September 9, 2026, the commission sought public comments on how to carry out that reporting duty, with a November 9, 2026 deadline.

A ceiling on duties is not a price for admission

The president must choose new or additional duty rates intended to offset the burden or disadvantage, with a ceiling of 50 percent ad valorem, meaning 50 percent of the goods’ value, or its equivalent. The statute provides for collection of those duties 30 days after the proclamation.

A proclamation may extend to the whole foreign country or be confined to specified subdivisions of it. The statute also reaches affected products imported indirectly as well as directly. Sending a product through another country therefore does not, by itself, answer whether the measure applies.

In the measures against Canada, covered products remain subject to applicable antidumping, countervailing and other duties, taxes and fees in addition to the Section 338 duty. Antidumping duties address foreign goods sold in the United States at less than fair value, subject to the required findings about harm to U.S. industry. Countervailing duties address government subsidies for manufacturing, producing or exporting goods. The Section 338 ceiling therefore does not cap a product’s entire import tax bill.

Exclusion requires a further finding

The second step authorizes exclusion, a ban on importing the products, when the president finds that the foreign country maintained or increased the discrimination after the earlier duty proclamation was issued. The president must also consider the action consistent with U.S. interests and select the excluded products in keeping with the public interests.

That is narrower than a power to ban imports whenever another country has a policy the president dislikes. It requires the specified discrimination, an earlier proclamation, and a further finding that the discrimination was maintained or increased. The trigger is issuance of the earlier proclamation; the statute does not expressly require that the new duties be collected first.

Articles imported contrary to Section 338 are subject to forfeiture to the United States and may be seized under the governing revenue-law procedures. Forfeiture means the goods can be taken by the government; exclusion is not an invitation to pay a penalty and proceed with the same import.

Canada shows the sequence in practice

On July 20, 2026, the United States issued three proclamations to impose 50 percent tariffs under Section 338 on a range of Canadian products, citing alleged discrimination against U.S. autos, alcoholic beverages and dairy, according to Canada’s official trade FAQ. The duties took effect on August 22, 2026, the FAQ reports, on goods including plastics, furniture, electronics, paper, industrial machinery, wood, textiles, apparel and sports equipment.

The initial start date was August 19, 2026, thirty days after the July 20 proclamations; an August 18 proclamation postponed it by three days to August 22, 2026.

On August 25, 2026, Canada’s Department of Finance said Canada had negotiated in good faith and had suspended talks rather than accept terms it considered harmful to Canadian workers, businesses and sovereignty. It described its response to U.S. tariffs effective August 22 as matching them dollar-for-dollar and rate-for-rate. In that account, countermeasures defend Canadian producers’ ability to compete rather than initiate the conflict.

On September 8, 2026, President Donald Trump issued three proclamations excluding certain Canadian products, each citing continued discrimination in one area: alcoholic beverages, dairy or motor vehicles. Each proclamation lists excluded products in its annex and separately leaves other products subject to additional duties. The White House says the president also removed products such as rock salt and cement from the duty lists and added others, ranging from all-terrain vehicles to additional dairy products.

In the September 8, 2026 alcohol proclamation, the president described an earlier finding that Canada had banned the purchase, distribution or retailing of U.S. alcoholic beverages without similarly restricting products from other countries. The proclamation said that, according to senior executive branch officials, Canadian authorities maintained the discrimination and announced additional retaliation involving American alcohol.

The July 20 dairy proclamation said Canada let retailers access cheese quotas under its European Union agreement but denied them access under the U.S.-Mexico-Canada Agreement, disadvantaging U.S. cheese exports. The motor-vehicles proclamation alleged that Canada’s tariff system singled out U.S.-origin vehicles while leaving vehicles from other countries outside that system.

As an example of further retaliation, the September alcohol proclamation cited Saskatchewan’s announced additional 50 percent levy on U.S. alcoholic beverages, effective September 8, 2026.

The dairy proclamation said Canada maintained the specified discrimination after the earlier proclamation and after its additional duties took effect. It then declared exclusion of the designated Canadian products consistent with the public interests and the interests of the United States. The White House described the measures as protecting American farmers, manufacturers and workers.

The motor-vehicles proclamation excludes the Canadian products listed in its annex when imported on or after September 29, 2026. The three annexes should be checked separately: the area named in a proclamation is the subject of its discrimination finding, not a ban on every product of that kind.

The earlier U.S. actions included February 2025 duties on Canadian goods under the International Emergency Economic Powers Act, followed by automobile and auto-parts tariffs announced in March 2025 under Section 232.

Canada’s official trade FAQ says its counter-tariffs on U.S. light vehicles and the provincial and territorial restrictions on U.S. alcoholic beverages were responses to U.S. tariffs implemented in 2025. It says Canada’s administration of its dairy import quotas complies with the Canada-United States-Mexico Agreement (CUSMA), the trade pact known in the United States as the U.S.-Mexico-Canada Agreement (USMCA). Import quotas limit the quantity that can enter on particular terms; the dispute here concerns how Canada administers those terms.

The import date changes the outcome

Under the customs definition, the import date is when goods arriving other than by vessel reach U.S. customs territory; for goods arriving by vessel, it is when the vessel reaches a U.S. port with the intent to unload those goods there.

The alcohol exclusion took effect for the annex-listed Canadian alcoholic beverages imported on or after 12:01 a.m. eastern time on September 29, 2026. Under that proclamation, covered products imported before September 29, 2026 remain subject to the earlier 50 percent duty if they had not yet been entered for consumption or withdrawn from a warehouse for consumption. Entry for consumption is the customs step for admitting goods into U.S. commerce; the proclamation distinguishes that step from importation. A listed beverage imported before the cutoff can therefore still be entered by paying the duty, while the same product imported on or after it is excluded.

The dairy proclamation also keeps its earlier 50 percent duty for covered products imported before September 29, 2026 but not yet entered for consumption or withdrawn from a warehouse for consumption. The motor-vehicles proclamation contains the same pre-cutoff treatment for products covered by its import ban.

Separately, a U.S. Customs and Border Protection (CBP) notice gives September 15, 2026 as the effective date for the changes to the duty lists, which apply to goods entered for consumption or withdrawn from warehouse for consumption on or after that date. That date governs the duty lists; the September 29 import date governs the exclusions.

Canada’s official FAQ reports that qualifying for CUSMA’s preferential duty-free treatment does not exempt goods from the U.S. Section 338 tariffs on Canada.

CBP says the importer of record remains responsible for correct entry documentation and all applicable duties, taxes and fees, even when using a customs broker. A customs broker handles the entry work, while the importer of record is the party responsible for that entry. Check the proclamation’s annex and the applicable CBP instructions before treating a product as covered, exempt or prohibited.

Other tariff laws and paths to ending an action

Section 338 is one of several tariff powers, and each has its own legal test. Section 232 of the Trade Expansion Act of 1962 addresses imports that the commerce secretary finds threaten to impair national security. The White House says the Section 338 tariffs on Canada apply in addition to tariffs imposed under Section 232. Section 301 of the Trade Act of 1974 allows discretionary action when the U.S. trade representative determines that an unreasonable or discriminatory foreign practice burdens or restricts U.S. commerce and that U.S. action is appropriate.

Under Section 338, the president shall suspend, revoke, supplement or amend a proclamation whenever the president deems the public interests require it. Section 338 gives the president discretion to change or end a proclamation; it sets no fixed expiration date.

Congress holds the constitutional tariff power and determines which authorities it delegates and which limits apply to presidential discretion. The Banning Antiquated Duties and Delivering Equitable American Levies Act, S. 5397, introduced on September 15, 2026 and referred to the Senate Finance Committee, would repeal Section 338 and nullify presidential proclamations issued under it. The bill is a proposal, not an enacted repeal; it does not itself end the authority or erase a proclamation.

The official bill-status record lists its September 15, 2026 referral to the Senate Finance Committee as the latest action.

Under 28 U.S.C. 1581(i), the Court of International Trade has exclusive jurisdiction over civil actions against the United States, its agencies or officers that arise from tariff laws and from import restrictions imposed for reasons other than public health or safety, including their enforcement. The court’s statutory powers include appropriate relief such as injunctions, court orders that can stop enforcement, subject to specified exceptions. A challenge to an exclusion could ask whether the statutory conditions for excluding the products were met.

In an October 6, 2026 update, the Liberty Justice Center said it had identified clients and planned to challenge the Canadian Section 338 measures later that month.