New 50% ad valorem Section 338 duties on specified Canadian dairy-related products via HTS 9903.03.13 effective Aug. 19, 2026.

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. These are implemented via a new Chapter 99 HTSUS heading 9903.03.13 and related modifications to U.S. note 51 to subchapter III of chapter 99.

The additional duties are Section 338 tariffs intended to offset Canadian discrimination against U.S. commerce in dairy products. They are in addition to all other applicable duties, taxes, and fees, except where specifically excluded (e.g., Section 232 measures, qualifying civil aircraft).

2. Affected products and HTS codes

The measure targets products of Canada classifiable in the following HTSUS provisions, as listed in Annex II / Annex I and referenced in U.S. note 51(b)(2) to subchapter III of chapter 99:

Dairy and dairy-derived products

• 0402.10.05 – Milk and cream, concentrated or sweetened, in powder, granules or other solid forms, fat ≤1.5%, subject to General Note 15
• 0402.10.10 – Milk and cream, in powder, granules or other solid forms, fat ≤1.5%, whether or not sweetened, described in additional U.S. note 7 to chapter 4
• 0402.10.50 – Milk and cream, in powder, granules or other solid forms, fat ≤1.5%, whether or not sweetened, nesoi
• 0402.21.02 – Milk and cream, concentrated, not sweetened, in powder, granules or other solid forms, fat >1.5% but ≤3%, subject to General Note 15
• 0402.21.05 – Same, subject to additional U.S. note 7 to chapter 4
• 0402.21.25 – Same, not subject to General Note 15 or additional U.S. note 7
• 0402.21.27 – Milk and cream, concentrated, not sweetened, in powder, granules or other solid forms, fat >3% but ≤35%, subject to General Note 15
• 0402.21.30 – Same, subject to additional U.S. note 7 to chapter 4
• 0402.21.50 – Same, not subject to General Note 15 or additional U.S. note 7
• 0402.21.73 – Milk and cream, concentrated, not sweetened, in powder, granules or other solid forms, fat >35%, subject to General Note 15
• 0402.21.75 – Same, subject to additional U.S. note 9 to chapter 4
• 0402.21.90 – Same, not subject to General Note 15 or U.S. note 9 to chapter 4
• 0402.91.03 – Milk and cream, concentrated, in non-solid forms, not sweetened, in airtight containers, subject to General Note 15
• 0402.91.06 – Milk and cream, concentrated, in non-solid forms, not sweetened, not in airtight containers, subject to General Note 15
• 0402.99.68 – Milk and cream (except condensed milk), concentrated in non-solid forms, sweetened, subject to General Note 15

Whey and milk protein products

• 0404.10.05 – Whey protein concentrates
• 0404.10.08 – Modified whey (except protein concentrates), subject to General Note 15
• 0404.10.11 – Modified whey (except protein concentrates), whether or not concentrated or sweetened, subject to additional U.S. note 10 to chapter 4
• 0404.10.15 – Modified whey (except protein concentrates), whether or not concentrated or sweetened, not subject to General Note 15
• 0404.10.20 – Fluid whey, whether or not concentrated or containing added sweeteners
• 0404.10.48 – Whey (except modified whey), dried, whether or not concentrated or sweetened, subject to General Note 15
• 0404.10.50 – Whey (except modified whey), dried, whether or not concentrated or sweetened, subject to additional U.S. note 12 to chapter 4
• 0404.10.90 – Whey (except modified whey), dried, whether or not concentrated or sweetened, not subject to General Note 15 or additional U.S. note 12 to chapter 4
• 0404.90.10 – Milk protein concentrates
• 0404.90.28 – Dairy products of natural milk constituents (except protein concentrates), described in additional U.S. note 1 to chapter 4 and subject to General Note 15
• 0404.90.30 – Same, subject to additional U.S. note 10 of chapter 4
• 0404.90.50 – Same, not subject to General Note 15 or additional U.S. note 10
• 0404.90.70 – Products consisting of natural milk constituents (except protein concentrates), whether or not sweetened, not described in additional U.S. note 1 to chapter 4

Other animal and agricultural products

• 0506.90.00 – Bones and horn-cores, unworked, defatted, simply prepared (but not cut to shape) or degelatinized; powder and waste of these products
• 1210.20.00 – Hop cones, fresh or dried, ground, powdered or in the form of pellets; lupulin
• 1301.90.91 – Lactose, natural gums, resins, gum-resins and oleoresins (e.g., balsams), nesoi

Sugars, syrups, and molasses

• 1702.11.00 – Lactose and lactose syrup, containing by weight 99% or more lactose, on dry matter
• 1702.19.00 – Lactose and lactose syrup, containing by weight less than 99% lactose, on dry matter
• 1702.30.28 – Glucose and glucose syrup, not containing or containing in dry state less than 20% fructose; blended syrups described in additional note 4 to chapter 17, nesoi
• 1702.40.28 – Blended syrups described in additional U.S. note 4 to chapter 17, containing in dry state 20% to 50% by weight fructose, nesoi
• 1702.60.28 – Other fructose and fructose syrups, containing in dry state more than 50% by weight fructose; blended syrups (see additional U.S. note 4 to chapter 17), nesoi
• 1702.90.35 – Invert molasses
• 1702.90.58 – Blended syrups described in additional U.S. note 4 to chapter 17, nesoi, not subject to additional U.S. note 9 to that chapter
• 1702.90.68 – Sugars nesoi containing over 65% by dry weight sugar, described in additional U.S. note 2 to chapter 17, not subject to additional U.S. note 7 to that chapter
• 1703.10.30 – Cane molasses imported for the commercial extraction of sugar or human consumption
• 1703.10.50 – Cane molasses, nesoi
• 1703.90.30 – Molasses, other than cane, imported for the commercial extraction of sugar or human consumption
• 1703.90.50 – Molasses, nesoi

Food preparations and beverages

• 1901.20.35 – Mixes for bakers’ wares, containing over 25% by weight butterfat, not retail, described in additional U.S. note 1 to chapter 19, not subject to additional U.S. note 3 to chapter 19 nor to General Note 15
• 2202.91.00 – Nonalcoholic beer

Other chemicals and proteins

• 3301.24.00 – Essential oils of peppermint (Mentha piperita)
• 3501.10.10 – Casein, milk protein concentrate
• 3501.10.50 – Casein, other than milk protein concentrate
• 3501.90.20 – Casein glues
• 3501.90.60 – Caseinates and other casein derivatives, nesoi
• 3502.20.00 – Milk albumin, including concentrates of two or more whey proteins
• 3504.00.50 – Peptones and their derivatives; protein substances and their derivatives, nesoi; hide powder

Chapter 99 / Section 338 implementation headings

• 9903.03.12 – (pre-existing Section 338 heading referenced and conformed in U.S. note 51)
• 9903.03.13 – New Section 338 heading for Canadian products listed above

3. Rate changes

Additional duty rate:

• For all covered products of Canada listed above, when entered under new HTSUS heading 9903.03.13, the applicable duty becomes:
• “The duty provided in the applicable subheading + 50%” (ad valorem).

This is a 50 percentage point ad valorem duty applied on top of the normal column 1 general (or special) rate for the underlying HTS line. The measure does not alter the base HTS duty rates; it adds a separate Chapter 99 duty requirement for qualifying Canadian-origin goods.

Exclusions from this additional duty:

• Articles subject to duties pursuant to Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862) are excluded from the Section 338 duty.
• Articles (excluding unmanned aircraft) subject to the WTO Agreement on Trade in Civil Aircraft that meet the criteria of General Note 6 to the HTSUS are excluded.

4. Dates

• Proclamation date: July 20, 2026.
• Effective date/time: 12:01 a.m. Eastern Time on August 19, 2026.
• Applicability: Goods entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date/time.
• Duration: The modifications “shall continue in effect, unless this action is expressly reduced, modified, or terminated” by subsequent action under Section 338.

5. Foreign Trade Zone (FTZ) treatment

• Any product subject to the duties imposed by this proclamation that is admitted into a U.S. foreign trade zone (FTZ) on or after August 19, 2026 must be admitted in “privileged foreign status” (19 CFR 146.41), unless eligible for admission under “domestic status” (19 CFR 146.43).
• 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 heading 9903.03.13, based on the classification under the applicable HTSUS subheading.

6. HTSUS structural changes

Annex II modifies subchapter III of chapter 99 as follows:

• U.S. note 51(a):
• Text updated so that “heading 9903.03.12 imposes” becomes “headings 9903.03.12–9903.03.13 impose”.
• References to “imposed by this heading” changed to “imposed by these headings”.
• U.S. note 51(b):
• “in the heading” changed to “in these headings”.
• New subdivision (b)(2) added, specifying that heading 9903.03.13 applies to articles classifiable in the listed HTS provisions (0402, 0404, 0506, 1210, 1301, 1702, 1703, 1901, 2202, 3301, 3501, 3502, 3504 lines enumerated above).
• U.S. note 51(c) and (d):
• References to “heading 9903.03.12 shall” changed to “headings 9903.03.12–9903.03.13 shall”, aligning procedural rules across both Section 338 headings.
• New heading 9903.03.13 inserted:
• Article description: “Articles the product of Canada as provided in subdivision (b)(2) of U.S. note 51 to this subchapter”.
• Rate of duty 1 – General: “The duty provided in the applicable subheading + 50%”.
• Rate of duty 1 – Special: “The duty provided in the applicable subheading + 50%”.
• Rate of duty 2: “No change”.

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

Classification and entry

• Identify all imports of Canadian-origin goods that fall under the listed HTS codes (0402, 0404, 0506, 1210, 1301, 1702, 1703, 1901.20.35, 2202.91.00, 3301.24.00, 3501, 3502.20.00, 3504.00.50).
• Ensure correct HTS classification at the 10-digit level to determine whether the product is within the scope of U.S. note 51(b)(2).
• For covered Canadian-origin products entered on or after August 19, 2026, declare the appropriate Chapter 99 number 9903.03.13 in addition to the underlying HTS classification on CBP entry documents.

Costing and contracts

• Update landed cost models to incorporate an additional 50% ad valorem duty on affected Canadian products.
• Review and, where possible, renegotiate supply contracts, pricing, and Incoterms with Canadian suppliers to address the increased duty burden.
• Consider alternative sourcing from non-Canadian suppliers for affected HTS lines to avoid the Section 338 duty, where commercially feasible.

Systems and controls

• Update internal tariff databases, broker instructions, and automated classification tools to flag Canadian-origin entries under the specified HTS codes as subject to 9903.03.13.
• Implement origin controls to distinguish Canadian-origin goods from identical or similar products sourced from other countries under the same HTS codes.
• Train customs, logistics, and procurement teams on the new Section 338 measure, effective date, and Chapter 99 declaration requirements.

FTZ and bonded operations

• For FTZ operators, ensure that any covered Canadian-origin products admitted on or after August 19, 2026 are admitted in privileged foreign status unless they qualify for domestic status.
• For goods already in FTZs or bonded warehouses prior to the effective date, evaluate the timing of withdrawal for consumption and potential exposure to the new duty.

Exclusions and overlaps

• Confirm whether any of your affected products are also subject to Section 232 measures or qualify as civil aircraft/aircraft parts under General Note 6; such products are excluded from the Section 338 duty.
• Monitor for any subsequent CBP guidance, Federal Register notices, or USTR announcements that may:
• Clarify scope or classification issues;
• Provide technical corrections to Annex I/II;
• Modify, suspend, or terminate the Section 338 duties.

8. References

• Proclamation: “Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States with Respect to Dairy” (July 20, 2026), White House Presidential Actions.
• Annex II (HTSUS modifications and new heading 9903.03.13):
• https://www.whitehouse.gov/wp-content/uploads/2026/07/Annex-II.pdf
• Annex I (detailed product descriptions and HTS list for Section 338 tariff):
• https://www.whitehouse.gov/wp-content/uploads/2026/07/ANNEX-I-1.pdf

9. Key takeaways

• A new 50% ad valorem Section 338 duty now applies to a broad set of Canadian dairy, dairy-derived, and related products via HTS 9903.03.13.
• The duty is in addition to existing MFN or preferential rates and applies to entries and warehouse withdrawals for consumption on or after August 19, 2026.
• Immediate compliance steps include updating classifications, adding the Chapter 99 code, revising cost and sourcing strategies, and ensuring FTZ and origin controls are aligned with the new requirements.