- New US duties took effect 22 August: an additional 50 per cent on about US$20 billion of Canadian goods under Section 338.
- A valid CUSMA certificate does not exempt a covered product. HS code and annex listing now determine exposure.
- Rules of origin are unchanged, but CUSMA moves to annual review until 2036. Origin documentation should be current and complete.
Sequence of events
On 20 August, negotiators announced a draft agreement. Several outlets reported that it would reduce US sectoral tariffs on Canadian steel and aluminum from 50 per cent to 25 per cent. The reporting described the agreement as a draft, and the parties had until 12:01 a.m. Eastern on 22 August to convert it into legal text.
Talks collapsed late on 21 August, hours before that deadline. Prime Minister Mark Carney suspended negotiations and recalled the Canadian team, stating that the United States "asked too much and offered too little."
The duties took effect at 12:01 a.m. Eastern on 22 August: an additional 50 per cent on approximately US$20 billion of Canadian goods, or roughly 5 per cent of Canadian exports to the United States. This is the first use of Section 338 of the Tariff Act of 1930.
What the duties cover
Three regimes now apply concurrently, and each operates on a different basis. The table below summarises the treatment by category. It is a summary only; the annexes govern, and classification is by HS code.
| Category | Section 338 (+50%) | What applies |
|---|---|---|
| Dairy and caseins | Yes | Named annex; extends to sugar-containing and non-alcoholic beverages |
| Alcoholic beverages — beer, wine, spirits | Yes | Named annex |
| Machinery and manufacturing inputs | Yes | Listed in the "motor vehicles" annex despite its title |
| Circuit boards and electronics | Yes | Same annex |
| Textiles, leather, footwear | Yes | Same annex |
| Agricultural and food products | Yes | Same annex |
| Steel | No additional | Remains under Section 232 at existing rates |
| Aluminum | No additional | Remains under Section 232 at existing rates |
| Copper derivatives | No additional | Remains under Section 232 |
| Passenger and commercial vehicles and parts | No additional | Covered by Section 232; the exclusion is drafted as "certain" vehicles and parts, so confirm by HS code |
| Energy | Exempt | Excluded from the action |
| Potash | Exempt | Excluded from the action |
| Fish | Exempt | Excluded from the action |
| Critical minerals | Exempt | Excluded from the action |
| Civil aircraft under the WTO Agreement | Exempt | Unmanned aircraft are not covered by the exclusion |
A valid CUSMA certificate does not exempt a covered product. Origin status alone no longer determines exposure; a product's HS code, and whether that code appears in an annex, governs the outcome.
Three categories are described inconsistently across published advisories and should be confirmed by HS code rather than assumed: wood and paper products, which one advisory lists among the exclusions and another places within the alcoholic beverages annex; semiconductors; and patented pharmaceuticals.
Canadian counter-tariffs from 8 September
Canada has announced matching counter-tariffs effective 8 September, covering steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Details have not yet been released. Manufacturers importing US-origin inputs should anticipate exposure on that side as well.
Implications for origin documentation
Some clarification is warranted regarding CUSMA. On 1 July 2026, the United States declined to confirm renewal of the agreement at its first joint review. The agreement has not lapsed. It remains in force until at least 1 July 2036 and now proceeds to a joint review annually under Article 34.7.4. Rules of origin and certification requirements are unchanged.
What has changed is the review cadence and the level of uncertainty surrounding it. Combined with a duty regime that disregards origin for goods named in an annex, the operational requirement is consistent from either direction: origin documentation should be current, complete and available on request, and it should be accompanied by an HS-code assessment of the product book.
Much of that work is assembly rather than analysis. HS codes, bill-of-materials lines, supplier declarations and invoices need to be consolidated into a single file capable of withstanding review by CBSA or CBP. The underlying records generally exist already, distributed across an ERP system, a quality system, shared drives and email. A customs broker still makes the origin determination. What can be automated is the preparation that determination depends on.
The task suits workflow automation reasonably well. The inputs are structured, the source systems are known, and the output is the same file each year. Operations that have already mapped their product book to HS codes will find the incremental effort modest; those that have not may find that the sensible starting point. We are glad to talk through what it would involve in a specific operation.