Canada's Section 338 Duties Give Way to Outright Import Bans on Sept. 29

President Trump signed five new proclamations on Sept. 8 that convert the existing 50% Section 338 duty on a slice of Canadian dairy, alcohol and motor vehicle products into an outright prohibition on entry, effective 12:01 a.m. Eastern on Sept. 29, according to the White House's own fact sheet on the action. A separate scope change takes effect Sept. 15, removing rock salt and cement from the covered list while adding all-terrain vehicles and additional dairy lines.

The administration also directed the U.S. Trade Representative and the General Services Administration to remove an estimated $50 billion in Canadian-origin products from GSA's Multiple Award Schedules — the catalog federal agencies buy from — cutting Canadian suppliers out of federal procurement rather than just taxing their goods at the border.

From duty to prohibition

The original Section 338 duty took effect Aug. 22 after a brief suspension, layering a 50% ad valorem rate on top of existing tariffs for Canadian dairy, alcoholic beverages and a narrow slice of motor vehicles (motorcycles and mopeds over 800cc). CBP guidance directs importers to file under new Chapter 99 headings — 9903.03.12 through 9903.03.14 carry the 50% duty, while 9903.03.15 and .16, at 0%, cover excluded categories such as steel, aluminum, copper articles, and civil aircraft parts, according to a trade-compliance summary published by customs broker GHY International. Full product scope sits in Annex I and Annex II of each proclamation rather than in general descriptions, which GHY's guidance flags as the most common point of misclassification.

A transition rule matters for anyone with goods already moving: merchandise imported but not yet entered for consumption, or not yet withdrawn from a bonded warehouse, before Sept. 29 stays subject to the 50% duty rather than the incoming ban — a window that closes the moment the ban takes effect, not when the goods left Canada.

This is Washington's answer to Canada's own retaliation. Ottawa's counter-tariffs, covering roughly $20 billion in U.S. goods (about 6% of 2025 U.S. exports to Canada), took effect at 12:01 a.m. Sept. 9 after the two governments' negotiations collapsed Aug. 21 — a package this publication covered as it landed (see "Canada's $27.6 Billion Counter-Tariffs Take Effect," filed Sept. 9). Washington's existing tariffs already cover $28 billion in Canadian imports; steel and aluminum duties stand at 50%. Prime Minister Mark Carney has said Canada will "do whatever it takes for as long as it takes."

What forwarders and brokers do differently

The compliance mechanics here outlast the political back-and-forth, and they fall squarely on the customs desk rather than the trade desk:

• USMCA offers no shelter. Covered goods remain subject to the Section 338 duty — and, after Sept. 29, the ban — even when they qualify for USMCA preferential treatment. Brokers relying on a USMCA certificate to route around this measure are wrong, per GHY's guidance, and importers should confirm classifications and country-of-origin files are current now rather than after an entry is rejected.
• Entry timing is the whole game for the next three weeks. Because the transition rule keys off entry for consumption or withdrawal from a bonded warehouse — not shipment or arrival date — any Canadian dairy, alcohol or covered-vehicle freight already in transit should be evaluated now for whether it can clear before the Sept. 29 cutover. After that date, a bonded warehouse or FTZ strategy no longer defers the problem; the goods simply cannot enter for consumption at all.
• The Sept. 15 scope change moves the target before the ban even lands. Rock salt and cement importers get relief two weeks before dairy and ATV importers pick up a new liability, so a bill of materials that was compliant on Sept. 10 may not be by month's end. This is a rolling target, not a one-time list.
• Federal-contract-adjacent shippers face a second exposure. The GSA schedule removal is separate from the Section 338 action and hits Canadian-origin goods regardless of tariff classification — a 3PL serving government-contract shippers should ask now whether any Canadian-origin product in that supply chain sits on a GSA schedule, since the $50 billion removal is a procurement rule, not a customs one, and won't show up in an HTS review.