New 50% ad valorem Section 338 duties imposed on specified Canadian-origin goods via HTSUS Chapter 99 heading 9903.03.12 effective Aug 19, 2026.

REGULATORY BRIEFING – SECTION 338 ADDITIONAL DUTIES ON CANADIAN PRODUCTS (ALCOHOLIC BEVERAGES AND OTHER GOODS)

1. What changed

• The President, acting under Section 338 of the Tariff Act of 1930 and Section 604 of the Trade Act of 1974, has imposed additional ad valorem duties of 50% on certain products of Canada.
• The measure responds to Canadian provincial/territorial bans on U.S. alcoholic beverages and is implemented through new HTSUS Chapter 99 heading 9903.03.12 and related notes/headings 9903.03.15 and 9903.03.16.
• The HTSUS is modified (subchapter III of chapter 99) via Annex II to add U.S. Note 51 and new headings 9903.03.12, 9903.03.15, and 9903.03.16.

2. Affected products and HTS coverage

2.1 Products subject to the 50% additional duty (heading 9903.03.12)

Heading 9903.03.12 applies to articles that are products of Canada and classifiable in the following HTSUS provisions (per U.S. Note 51(b)(1) and Annex I):

Alcoholic beverages and related products:

• 2203.00.00 – Beer made from malt
• 2204.10.00 – Sparkling wine, made from grapes
• 2204.21.20 – Effervescent grape wine, in containers holding 2 liters or less
• 2204.21.30 – Tokay wine (not carbonated), not over 14% alcohol, in containers not over 2 liters
• 2204.21.50 – Wine other than Tokay (not carbonated), ≤14% alcohol, containers ≤2 liters
• 2204.21.60 – Marsala wine, >14% alcohol, containers ≤2 liters
• 2204.21.80 – Other grape wine, not sparkling/effervescent, >14% alcohol, containers ≤2 liters
• 2204.22.20 – Still grape wine, ≤14% alcohol, containers >2L but ≤4L
• 2204.22.40 – Still grape wine, >14% alcohol, containers >2L but ≤4L
• 2204.22.60 – Still grape wine, ≤14% alcohol, containers >4L but ≤10L
• 2204.22.80 – Still grape wine, >14% alcohol, containers >4L but ≤10L
• 2204.29.61 – Still grape wine, ≤14% alcohol, containers >10L
• 2204.29.81 – Still grape wine, >14% alcohol, containers >10L
• 2205.10.30 – Vermouth, containers ≤2L
• 2206.00.15 – Cider, fermented, still or sparkling
• 2206.00.30 – Prune wine
• 2206.00.45 – Rice wine or sake
• 2206.00.60 – Effervescent wine, nesoi
• 2206.00.90 – Other fermented beverages (other than grape wine, beer, cider, prune wine, sake, vermouth or other effervescent wines)
• 2207.10.30 – Undenatured ethyl alcohol, ≥80% vol, for beverage purposes
• 2208.20.10 – Pisco and singani
• 2208.20.20 – Grape brandy (excl. pisco/singani), containers ≤4L, ≤$2.38/L
• 2208.20.30 – Grape brandy (excl. pisco/singani), containers ≤4L, >$2.38–$3.43/L
• 2208.20.40 – Grape brandy (excl. pisco/singani), containers ≤4L, >$3.43/L
• 2208.20.50 – Grape brandy (excl. pisco/singani), containers >4L, ≤$2.38/L
• 2208.20.60 – Grape brandy (excl. pisco/singani), containers >4L, >$2.38/L
• 2208.30.30 – Irish and Scotch whiskies
• 2208.30.60 – Other whiskies
• 2208.40.20 – Rum and tafia, containers ≤4L, ≤$3/L
• 2208.40.40 – Rum and tafia, containers ≤4L, >$3/L
• 2208.40.60 – Rum and tafia, containers >4L, ≤$0.69/L
• 2208.40.80 – Rum and tafia, containers >4L, >$0.69/L
• 2208.50.00 – Gin and Geneva
• 2208.60.10 – Vodka, containers ≤4L, ≤$2.05/L
• 2208.60.20 – Vodka, containers ≤4L, >$2.05/L
• 2208.60.50 – Vodka, containers >4L
• 2208.70.00 – Liqueurs and cordials
• 2208.90.10 – Bitters, fit for use as beverages
• 2208.90.12 – Slivovitz brandy, containers ≤4L, ≤$3.43/L
• 2208.90.14 – Slivovitz brandy, containers >4L, ≤$3.43/L
• 2208.90.15 – Slivovitz brandy, >$3.43/L
• 2208.90.20 – Brandy (except slivovitz), containers ≤4L, ≤$2.38/L
• 2208.90.25 – Brandy (except grape brandy and slivovitz), containers ≤4L, >$2.38–$3.43/L
• 2208.90.30 – Brandy (except grape brandy and slivovitz), containers ≤4L, >$3.43/L
• 2208.90.35 – Brandy (except grape brandy and slivovitz), containers >4L, ≤$2.38/L
• 2208.90.40 – Brandy (except grape brandy and slivovitz), containers >4L, >$2.38/L
• 2208.90.50 – Tequila, containers ≤4L
• 2208.90.72 – Mescal, containers ≤4L
• 2208.90.75 – Spirits nesoi, fit for use as beverages or for beverage purposes

Other products:

• 3301.19.10 – Essential oils of grapefruit
• 4413.00.00 – Densified wood, in blocks, plates, strips or profile shapes
• 4419.90.91 – Wooden tableware and kitchenware (non-bamboo, non-tropical wood), other than forks and spoons
• 4420.90.80 – Wood marquetry and inlaid wood; other wooden articles of furniture, nesoi
• 4421.91.60 – Skewers, candy sticks, ice cream sticks, tongue depressors, drink mixers and similar wares, other than toothpicks, of bamboo
• 4421.91.70 – Pickets, palings, posts and rails of bamboo, sawn; assembled fence sections of bamboo
• 4602.19.80 – Basketwork and other articles, nesoi, of vegetable materials, nesoi
• 4804.11.00 – Uncoated, unbleached kraftliner, in rolls or sheets
• 4806.20.00 – Greaseproof papers, in rolls or sheets
• 4810.13.19 – Certain coated paper/paperboard for graphic use, ≤150 g/m², in rolls >15 cm wide
• 4811.59.60 – Certain plastic-coated paper/paperboard, <150 g/m², in rolls ≤15 cm wide or certain rectangular sheets
• 4811.90.80 – Paper, paperboard, cellulose wadding and webs of cellulose fibers, nesoi, >30 g/m², in certain size strips, rolls or sheets
• 4811.90.90 – Paper, paperboard, cellulose wadding and webs of cellulose fibers, nesoi, in rolls ≤15 cm wide or certain rectangular sheets
• 9506.99.25 – Ice-hockey and field-hockey articles and equipment (other than balls and skates), and parts and accessories thereof

2.2 Exclusions from the 50% duty (headings 9903.03.15 and 9903.03.16)

Per U.S. Note 51(c) and (d), the additional duties under 9903.03.12 do NOT apply to:

a) Articles covered by heading 9903.03.15 (various existing Chapter 99 measures):

• Articles of aluminum, steel, copper or derivative aluminum/steel articles under:
• 9903.82.02 and 9903.82.04–9903.82.26
• Passenger vehicles and light trucks under:
• 9903.94.01, 9903.94.02 (as applied per subdivision 33(d)), 9903.94.03, 9903.94.31, 9903.94.40, 9903.94.41, 9903.94.50, 9903.94.51, 9903.94.60, 9903.94.61
• Parts of passenger vehicles and light trucks under:
• 9903.94.05, 9903.94.06, 9903.94.07, 9903.94.32, 9903.94.33, 9903.94.42, 9903.94.43, 9903.94.44, 9903.94.45, 9903.94.52, 9903.94.53, 9903.94.54, 9903.94.55, 9903.94.62–9903.94.69, and parts subject to import adjustment offsets under Proclamation 10925.
• Wood products under:
• 9903.76.01–9903.76.03, 9903.76.20–9903.76.24
• Medium- and heavy-duty vehicles, buses and other vehicles under:
• 9903.74.01–9903.74.03, 9903.74.06
• Medium- and heavy-duty vehicle parts under:
• 9903.74.08–9903.74.10, and parts subject to import adjustment offsets under Proclamation 10984.
• Semiconductor articles under:
• 9903.79.01
• Patented pharmaceutical articles under:
• 9903.04.60–9903.04.66

b) Civil aircraft and related items (heading 9903.03.16):

• Articles of civil aircraft (all non-military, non-unmanned aircraft), their engines, parts, components, subassemblies, and ground flight simulators and parts, that are products of Canada and meet General Note 6 criteria, classifiable in the extensive list of HTSUS provisions enumerated in U.S. Note 51(d) (including but not limited to 3917.21.00, 4009.12.00, 7304.31.30, 8411.11.40, 8471.60.10, 8517.62.00, 8802.11.01, 8807.10.00, 9030.10.00, 9405.11.40, 9802.00.40–9802.00.80, 9818.00.05, 9818.00.07, etc.).

3. Rate changes

• Additional duty: 50% ad valorem.
• Applied via heading 9903.03.12: “The duty provided in the applicable subheading + 50%” (for both Column 1 General and Special).
• This 50% is in addition to:
• The general MFN rate under the Chapter 1–97 subheading; and
• Any other applicable additional duties under Chapter 99 (e.g., Section 232, 201, 301, ADD/CVD), except where specifically excluded by U.S. Note 51(c)–(d) or where the proclamation states that Section 232 duties or civil aircraft duties are not to be combined.

4. Dates and applicability

• Proclamation date: July 20, 2026.
• Effective date/time: 12:01 a.m. Eastern Time on August 19, 2026.
• Scope of entries:
• Applies to goods entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date.
• Duration:
• Modifications continue in effect unless expressly reduced, modified, or terminated by subsequent action under Section 338.

5. Foreign Trade Zones (FTZ) treatment

• Any product subject to the duties imposed by this proclamation (and not eligible for “domestic status” under 19 CFR 146.43) that is admitted into a U.S. FTZ on or after August 19, 2026 must be admitted in “privileged foreign status” (19 CFR 146.41).
• Upon entry for consumption from the FTZ, such goods will be subject to the applicable ad valorem rate of duty, including the additional 50% under 9903.03.12 where applicable.

6. Interaction with other tariff provisions

• Section 232 and civil aircraft:
• The proclamation states that the new 50% duties do not apply to articles subject to Section 232 duties (19 U.S.C. 1862) or to articles (excluding unmanned aircraft) subject to the WTO Agreement on Trade in Civil Aircraft.
• Chapter 98 entries:
• Additional duties under 9903.03.12 do not apply to goods properly entered under Chapter 98 provisions, except:
• Subchapter XXIII of Chapter 98;
• 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80.
• For 9802.00.40, 9802.00.50, 9802.00.60: the 50% applies to the value of repairs/alterations/processing performed abroad.
• For 9802.00.80: the 50% applies to the value of the article assembled abroad, less the cost or value of U.S. components.
• Special tariff treatment and temporary duty reductions:
• Products eligible for special tariff treatment (e.g., under General Note 3(c)(i)) or temporary duty exemptions/reductions under Chapter 99 Subchapter II remain subject to the additional 50% unless otherwise specified.
• Trade remedies and other charges:
• Products under 9903.03.12–9903.03.16 remain subject to any applicable antidumping, countervailing, or other duties, taxes, fees, exactions, and charges.

7. Required actions for importers, brokers, and compliance teams

7.1 Classification and origin review

• Confirm Canadian origin:
• The 50% duty applies only to products that are “products of Canada.” Review origin determinations, including substantial transformation and USMCA rules of origin where relevant.
• Verify HTS classification:
• For all Canadian-origin imports in the listed HTS codes (especially 2203–2208 and the listed wood/paper/hockey goods), confirm correct 10-digit classification.
• Where classification is uncertain, seek binding rulings or guidance from CBP.

7.2 Entry filing and Chapter 99 reporting

• For covered Canadian-origin goods entered on/after August 19, 2026:
• Report the appropriate Chapter 1–97 HTSUS subheading; and
• Add Chapter 99 heading 9903.03.12 on the same line to trigger the additional 50% duty.
• For goods qualifying for exclusions under 9903.03.15 or 9903.03.16:
• Ensure the product is properly entered under the relevant exclusion heading and meets all conditions (e.g., civil aircraft criteria under General Note 6, or coverage under the specified 9903 headings).

7.3 FTZ and supply chain planning

• FTZ operators:
• From August 19, 2026, admit covered Canadian-origin goods as privileged foreign status if they are subject to the new duties.
• Update FTZ procedures and inventory systems to track affected HTS codes and ensure correct status designation.
• Sourcing and pricing:
• Evaluate the cost impact of an additional 50% duty on Canadian alcoholic beverages and listed wood/paper/hockey products.
• Consider alternative sourcing (non-Canadian origin) or product substitutions where feasible.
• Renegotiate contracts and pricing with Canadian suppliers and U.S. customers to reflect increased landed costs.

7.4 Compliance controls and documentation

• Update internal tariff databases and broker instructions to:
• Flag all affected HTS codes when origin = Canada.
• Automatically prompt addition of 9903.03.12 where applicable.
• Train staff and brokers on:
• New Section 338 measures, effective date, and scope.
• Interaction with Chapter 98, FTZ, and other Chapter 99 provisions.
• Monitor Federal Register and CBP guidance:
• CBP is authorized to issue rules, regulations, guidance, and technical corrections to the annexes. Compliance teams should monitor for:
• Any changes to the list of HTS codes;
• Clarifications on scope, valuation, and exclusions;
• Any suspension, reduction, or termination of the 50% duties.

8. Key references

• Proclamation: “Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States with Respect to Alcoholic Beverages,” July 20, 2026 (White House).
• Annex I – Product list and descriptions (Canadian-origin goods subject to 50% duty):
• https://www.whitehouse.gov/wp-content/uploads/2026/07/ANNEX-I-2.pdf
• Annex II – HTSUS modifications (U.S. Note 51, headings 9903.03.12, 9903.03.15, 9903.03.16, and detailed HTS lists for civil aircraft exclusions):
• https://www.whitehouse.gov/wp-content/uploads/2026/07/Annex-II-1.pdf

9. Practical next steps checklist

• Immediately:
• Map all current and planned Canadian-origin imports against the HTS codes listed in Annex I and U.S. Note 51(b)(1).
• Identify SKUs impacted by the 50% duty and estimate financial exposure for entries on/after August 19, 2026.
• Before August 19, 2026:
• Adjust purchase orders and shipment timing where possible to enter goods before the effective date.
• Update ERP and broker instructions to require 9903.03.12 for qualifying Canadian-origin entries.
• Review FTZ admissions procedures and status designations for affected goods.
• Ongoing:
• Monitor for any Canadian policy changes that might lead to modification or revocation of these Section 338 duties.
• Track CBP rulings and Federal Register notices for technical corrections or scope clarifications.
• Periodically audit entries involving the listed HTS codes and Canadian origin to ensure correct application or non-application of 9903.03.12, 9903.03.15, and 9903.03.16.