From Aug 22, 2026, many Canadian alcoholic, dairy, and other goods face new 50% additional duties via HTS 9903.03.12–9903.03.14, with defined exclusions.

This CSMS implements Section 338 additional duties on certain goods of Canada following Presidential Proclamations addressing Canadian discrimination against U.S. commerce in alcoholic beverages, dairy, and motor vehicles. It provides operational guidance for importers, brokers, and filers on how to apply new Chapter 99 provisions and how they interact with Chapter 1–97, Chapter 98, and other trade remedies.

Effective for goods that are products of Canada entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time on August 22, 2026, additional duties are imposed via HTSUS headings 9903.03.12 through 9903.03.14. These headings correspond to specific lists of Chapter 1–97 HTS codes provided in the attached “Section 338 Canada HTS LIST Final.pdf.”

• Heading 9903.03.12 applies to articles that are products of Canada as described in U.S. note 51(b)(1). The attached list shows these are primarily alcoholic beverages and related products (e.g., HTS 2203, 2204, 2205, 2206, 2207, 2208) plus certain related items. A 50% additional ad valorem rate of duty is imposed on these goods.

• Heading 9903.03.13 applies to Canadian products described in U.S. note 51(b)(2), largely dairy and related products (e.g., HTS 0402, 0404, certain sugar preparations, and dairy-based food preparations). These also incur a 50% additional ad valorem duty.

• Heading 9903.03.14 applies to Canadian products described in U.S. note 51(b)(3), covering a broad range of agricultural, wood, paper, textile, apparel, metal, machinery, electronics, furniture, toys, and art products listed in the PDF. These likewise incur a 50% additional ad valorem duty.

Headings 9903.03.15 and 9903.03.16 are also created but carry a 0% additional ad valorem rate. They function to define exclusions from the 50% duties:

• 9903.03.15 covers certain articles of aluminum, steel, or copper (or derivative aluminum or steel articles), passenger vehicles and light trucks, their parts, medium- and heavy-duty vehicles and parts, wood products, semiconductor articles, and patented pharmaceutical articles. It specifies that the additional duties under 9903.03.12–9903.03.14 do not apply to items already covered by other Chapter 99 headings such as 9903.82.02 and 9903.82.04–9903.82.26 (metal measures), 9903.94.xx (vehicles and parts), 9903.76.xx (wood products), 9903.74.xx (medium- and heavy-duty vehicles and parts), 9903.79.01 (semiconductors), and 9903.04.60–9903.04.66 (patented pharmaceuticals). It also references import adjustment offsets under Proclamations 10925 and 10984.

• 9903.03.16 excludes from the 50% duties certain civil aircraft and related products of Canada that meet General Note 6 criteria. It lists numerous HTS codes for aircraft parts, engines, components, simulators, and associated equipment. Even if these products are entered under provisions with a “Free (C)” special rate, they are explicitly carved out from the Section 338 additional duties when they qualify as civil aircraft products of Canada under GN 6.

The CSMS clarifies that products provided for in headings 9903.03.12–9903.03.16 remain subject to any applicable antidumping, countervailing, or other duties, taxes, fees, and exactions, in addition to the new Section 338 ad valorem duties where applicable.

Chapter 98 interaction is addressed. The additional duties imposed by headings 9903.04.12 to 9903.04.14 (related Section 338 provisions) do not apply to goods properly claimed under most Chapter 98 provisions, except for goods entered under subchapter XXIII of Chapter 98, and under subheadings 9802.00.40, 9802.00.50, 9802.00.60, and heading 9802.00.80. For 9802.00.40, 9802.00.50, and 9802.00.60, the additional duty applies only to the value of repairs, alterations, or processing performed abroad. For 9802.00.80, the additional duty applies to the value of the article assembled abroad, less the cost or value of U.S. components, as described in that heading. This is critical for brokers structuring partial duty exemptions under 9802 for Canadian-origin goods.

For Foreign Trade Zones, any product subject to these Section 338 duties that is admitted into a U.S. FTZ (and not eligible for domestic status) must be admitted in privileged foreign status. Upon entry for consumption from the FTZ, the merchandise will be subject to the applicable ad valorem rate of duty, including the Section 338 additional duties based on the HTS classification.

The CSMS also states that the additional duties imposed by headings 9903.04.12 to 9903.04.14 are eligible for drawback. Drawback claimants must therefore track these additional duties separately and ensure they are included in drawback calculations where appropriate.

CBP provides a specific HTSUS reporting sequence for entries involving Chapter 98 and 99:

1) Report any applicable Chapter 98 provision first.

2) Report Chapter 99 numbers for additional duties (this includes Section 338 headings such as 9903.03.12–9903.03.16 and 9903.04.12–9903.04.14).

3) For trade remedies, report Chapter 99 HTSUS in this order: Section 301, then Section 122, then Section 232, then Section 201 duties, then Section 201 quota.

4) Report Chapter 99 numbers for replacement duty or other uses (e.g., Miscellaneous Tariff Bill).

5) Report Chapter 99 numbers for other quotas not covered above.

6) Finally, report the Chapter 1–97 commodity HTS classification.

The entered value should be reported on the Chapter 1–97 HTS classification unless Chapter 98 rules require a different reporting method. This is important for ensuring the 50% additional duty is calculated on the correct value base.

Operationally, importers and brokers must:

• Identify Canadian-origin goods whose Chapter 1–97 HTS codes appear in the Section 338 HTS list and, for entries on or after August 22, 2026, apply the appropriate 9903.03.12, 9903.03.13, or 9903.03.14 code and assess an additional 50% ad valorem duty.
• Determine whether goods qualify for exclusion under 9903.03.15 or 9903.03.16, or are otherwise covered by other Chapter 99 measures that displace the Section 338 duties.
• Ensure correct use of Chapter 98 provisions, particularly 9802 and 9818, and apply Section 338 additional duties only to the specified value components where required.
• For FTZ operations, admit affected Canadian goods in privileged foreign status and plan for the additional duties at the time of entry for consumption.
• Update internal classification and duty-calculation tools to incorporate the new Chapter 99 headings, HTS lists, and the 50% additional duty rate.

Questions on Section 338 entry filing can be directed to the CBP Trade Remedy Branch at TradeRemedy@cbp.dhs.gov. Brokers should review the Federal Register notices (91 FR 46639, 46653, 46663) and the attached HTS list to ensure full coverage of affected products.