What Happened?

Some of the Canadian products you buy are about to get more expensive. A new round of U.S. tariffs on Canadian goods, including alcoholic beverages, dairy products, and motor vehicles, took effect after negotiations between the two countries broke down. President Trump invoked Section 338 of the Tariff Act of 1930, a nearly century-old trade law that a Congressional Research Service (CRS) report, published Sept. 14, identifies as never before having been expressly cited by a president to impose tariffs.

The tariffs were announced July 20 at 50 percent on certain Canadian goods, with a suspension running through Aug. 22 before taking effect. Canada responded with tariffs on C$27.6 billion worth of U.S. goods, equivalent to roughly US$20 billion, according to the CRS report.

Why Does it Matter to Me?

The tariffs target goods including alcoholic beverages, dairy products, and motor vehicles, and the covered categories also include paper and wood products, household and beauty products, bags, and dog leashes, with a September 8 update adding certain dairy and wood products, furniture, and motorboats.

In 2025, the U.S. imported approximately $967 million worth of products on the import-exclusion lists from Canada. The Section 338 tariffs do not exempt goods that meet the rules of the United States-Mexico-Canada Agreement (USMCA), the trade deal that normally allows most Canadian goods to enter the U.S. duty-free. Businesses that structured their supply chains around USMCA protections are not shielded from these new costs.

Both Sides, Now

Section 338 directs the president to impose tariffs on goods from foreign countries that discriminate against U.S. commerce in specified ways, permits additional duties of up to 50 percent, and authorizes the president to exclude a country's products from U.S. imports if the discrimination continues or increases after tariffs are imposed. The U.S. International Trade Commission is assigned under Section 338 to ascertain discrimination, notify the president and provide recommendations, and it requested public comments Sept. 4 on carrying out those responsibilities.

Congress has constitutional authority over foreign commerce and tariffs, and proposals before it range from investigating Canadian trade practices to repealing tariff authorities and requiring congressional approval of tariffs involving U.S. allies.

What Happens Next?

The Trump administration announced Sept. 8 that some product lists would be updated Sept. 15, and import bans on certain Canadian goods were set to take effect Sept. 29. Canadian sectors including steel, aluminum, automobiles, and lumber remain subject to separate Section 232 tariffs as well. Congress could also act to limit or require approval of future tariffs, though no vote on any such measure is currently scheduled.

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