Tariffs on Canadian Goods to the US in 2026: What Applies, and a Manufacturer's Options

A Canadian-made good entering the United States in October 2026 can carry up to three US measures. Section 338 adds 50 percent to listed products of Canada whatever their USMCA status. Section 232 charges by sector, 50 percent on steel, aluminum and most copper articles. Section 301 adds 10 percent to goods that do not enter duty-free under the USMCA. Which of them reaches your product depends on its tariff line, and the options run from paperwork you can fix this month to a plant in another country.

The stakes are national. Canadian manufacturers shipped C$324 billion of goods to the United States in 2024, and US demand accounted for 42.4 percent of manufacturing value added (Statistics Canada). Ottawa values the trade under Section 338 at C$27.6 billion (Canada Gazette, 23 September 2026).

What follows draws on the proclamations, USTR and CBP notices, CBP's tariff lists and rulings, the Canada Gazette and federal program pages, checked on 15 October 2026. Counts of tariff lines are ours, from CBP's files.

What applies at the border today

Measure	Rate	What it covers	What USMCA qualification does
Section 338	50%	Listed products of Canada on three lists: alcohol, dairy, motor vehicles	Nothing
Section 232	50% on full value for steel, aluminum and most copper articles; 25% for autos and medium and heavy trucks; 10% softwood lumber; 25% cabinets and upholstered wood	Goods in those sectors from any country	Reduces it only where the proclamation provides: vehicles after Commerce approval, Annex I-C derivatives, and qualifying auto parts, which pay none for now
Section 301	10%	Goods of Canada, except the Section 232 articles, patented pharmaceuticals and the exempt products the notice lists	Removes it, when the good is entered duty-free under the USMCA
Normal duty	By tariff line	Goods that do not qualify	Removes it

Sources: Proclamation 11048 and Proclamation 11065 for Section 338; Proclamation 11021, Proclamation 11032, Proclamation 10908 and Proclamation 11000 for Section 232; the USTR notice of 28 July 2026 for Section 301.

The White House states that the Section 338 tariffs "apply to all covered goods regardless of whether a good originates under the U.S.-Mexico-Canada Agreement (USMCA) and apply in addition to tariffs imposed under Section 232" (fact sheet, 8 September 2026). Since 15 September they stack on Section 232 for the alcohol and motor-vehicle lists; only goods on the dairy list keep the Section 232 carve-out (CBP CSMS #69851916). A listed good outside Section 232 that does not qualify under the USMCA pays the normal duty, plus 10 percent under Section 301, plus 50 percent under Section 338; a listed steel or aluminum article pays Section 232 and Section 338 instead of Section 301. Our Mexico or US decision page sets out every combination in one table.

What is on the Section 338 lists

By our count of CBP's list effective 15 September, 666 tariff classifications carry the 50 percent: 101 on the alcohol list, 52 on the dairy list and 513 on the motor-vehicle list (CBP list). That update added 122 lines and removed 10.

The motor-vehicle list reaches well beyond vehicles. It holds aluminum bars and profiles, steel structures, seats, furniture, mattresses and lamps. It has no auto-parts lines under heading 8708, and only two lines under heading 8703. An aluminum profile under heading 7604, for example, sits on the motor-vehicle list and is an aluminum article under Section 232, so since 15 September it carries both duties, one on top of the other.

Since 29 September, 68 of those classifications are barred from entry under Proclamations 11061 to 11063: 53 alcohol lines, 14 dairy-list lines including whey, molasses and non-alcoholic beer, and motorcycles over 800 cc (Proclamation 11063). Our note on Section 338 stacking and the bans covers that update in detail.

Section 338 caps the duty at 50 percent, so further escalation takes the form of more lines or more bans. Check your 10-digit code against CBP's current list each time a proclamation is published.

Your options, from fastest to largest

1. Confirm the classification and the origin of every line

List membership follows the 10-digit HTS code, and the duty follows origin. None of the Section 338 proclamations defines "product of Canada," and CBP's Section 338 messages say nothing on origin. For other additional duties, CBP rulings apply substantial transformation: "When determining the country of origin for purposes of applying current trade remedies under Section 301 and additional duties, the substantial transformation analysis is applicable" (ruling N357229). A binding ruling under 19 CFR Part 177 settles a code or an origin question for a specific product.

2. Qualify under the USMCA wherever the product can

Qualification removes the normal duty and the 10 percent Section 301 duty, which does not apply to goods "entered free of duty under the United States-Mexico-Canada Agreement." Qualifying auto parts still pay no Section 232 duty until Commerce publishes a process to tax their non-US content (Proclamation 10908). For steel and aluminum derivatives on Annex I-C, qualifying goods pay 25 percent on non-US content only, with a 15 percent floor, through 2027, and since 14 October steel melted and poured, and aluminum or copper smelted and cast, in the United States counts as US content (BIS notice). Qualification does nothing against Section 338 or the 50 percent on Annex I-A metals.

3. Settle who pays

US duties are paid by the importer of record. Whether that is your company, under delivered-duty-paid terms, or your customer is a commercial term you can renegotiate line by line, and it decides who claims any refund or drawback.

4. Recover what can be recovered

CBP states that the Section 338 duties "are eligible for drawback," so duty paid on goods later exported or destroyed under the drawback rules can come back (CSMS #69851916). Section 232 auto duties carry no drawback, and Section 232 metals only a narrow manufacturing drawback. A foreign-trade zone does not lower these duties, because the goods must be admitted in privileged foreign status.

Older duties may be owed back too. The Supreme Court held on 20 February 2026 that IEEPA "does not authorize the President to impose tariffs" (Learning Resources v. Trump). CBP refunds those duties with interest through its CAPE tool; phase 1 covers unliquidated entries and entries within the 90-day voluntary reliquidation period (CBP).

5. Use what Ottawa offers

• Regional Tariff Response Initiative: C$3.45 billion through the regional development agencies, accepting applications (PacifiCan).
• BDC Pivot to Grow: loans of C$250,000 to C$5 million, 0 percent interest for the first 12 months, minimum revenue C$1 million (BDC).
• EDC Trade Impact Program: a C$700 million direct-financing envelope, with program changes effective 1 September 2026 (EDC).
• Large Enterprise Tariff Loan: C$10 billion for large companies, now covering 36 months of liquidity needs with terms up to 15 years (CEEFC).
• Work-Sharing: the tariff special measures run to 31 March 2028 (ESDC).
• Remission of Canada's counter-surtaxes on US goods used in manufacturing, covering the 2025 and 2026 surtax orders (the 2026 order, in force since 8 September, runs at 15, 25 or 50 percent) and the steel and aluminum order; the motor-vehicle surtax is not listed (SOR/2026-186).

6. Sell more outside the United States

Exports to countries other than the US were 30.2 percent of the total in August 2026 (Statistics Canada). Mexico is one of the closer markets: its 2026 tariff increase on 1,463 lines applies to countries without a trade agreement with Mexico, so it does not reach Canadian goods that qualify for T-MEC preference (Secretaría de Economía). Our guide to finding a distributor in Mexico covers the route to market without a plant.

7. Move the transforming step to the United States

Goods made in a US plant sit outside Section 338. Listed Canadian inputs shipped into that plant still pay it, and imported steel and aluminum still pay Section 232 from any source. The production portion of a new US plant you own and use, with construction starting after 19 January 2025 and before 2029, can be expensed in its first year under section 168(n), which our Mexico vs US cost comparison covers with the labor, power and rent figures.

8. Move it to Mexico

No Section 338 action names Mexico. A good that becomes a product of Mexico through substantial transformation leaves the duty behind, and if it qualifies under the USMCA it enters the US with no normal duty and no Section 301 duty. Section 232 applies to Mexico on the same terms as Canada. Light assembly of Canadian-made core parts can leave the good Canadian, so a binding ruling per part number comes before the capital moves. The Mexico or US decision page works through when each wins, and moving manufacturing to Mexico covers the sequence.

9. Split the catalogue

Most catalogues hold lines in each position: some on a Section 338 list, some under Section 232, some qualifying and on neither. The plan that holds up usually keeps the third group in Canada and moves only the lines where a duty decides the margin.

What could change next

• More Section 338 lines or bans. As of 15 October, nothing has been added since the proclamations of 8 September (published 14 September). The US International Trade Commission is taking comments on its Section 338 monitoring until 9 November 2026 (Federal Register).
• 1 January 2027. The Section 232 rate on upholstered wooden products rises to 30 percent and on kitchen cabinets and vanities to 50 percent. A 24 August statement reported by CBS said tariffs on Canadian cars, trucks, parts and steel would rise to 50 percent that day; no proclamation implementing it had been published by 15 October.
• Talks. Canada suspended negotiations in August, and the US proclamation of 8 September describes the same break from its side. The USMCA remains in force under annual joint reviews and expires on 1 July 2036 unless all three countries extend it, and USTR is taking comments for the 2027 review until 12 January 2027 (Federal Register, 5 October 2026); our note on the July outcome explains the mechanics.
• Federal procurement. A presidential memorandum of 16 September directs agencies to identify Canadian-origin items in civil procurement that can be "removed or made non-available for purchase" (Federal Register).

The bottom line

Tariffs on Canadian goods to the US are now set line by line, and three questions find each line's bill: is it on a Section 338 list, is it under Section 232, and does it qualify under the USMCA. The fast options are classification, origin, who pays, refunds and Ottawa's programs, and most companies have some of them available this quarter. The structural options, a US plant or a Mexican one, pay off on the lines where Section 338 or Section 232 decides the margin, and both start with a binding ruling on what the plant would actually make.