Six weeks ago, the worst case for a Canadian import was a 50% duty. As of September 29, the worst case is that some items cannot be imported at all.
That is the short version of what happened after the Section 338 tariffs took effect on August 22. Canada answered with its own counter tariffs on September 8. Washington answered the answer the same day, with five new proclamations that widened the tariff list, stacked it on top of Section 232 for many goods, and, for a narrower set of dairy, alcohol, and motor vehicle products, replaced the tariff with an outright import ban. Section 338 has always allowed for that last step if the President finds the discrimination has continued. Until last month, no one had used it.
What changed in September
Canada matched, as promised. On September 8, Ottawa put counter tariffs of 15%, 25%, or 50% on roughly C$27.6 billion (about US$20 billion) of U.S. goods, around 700 tariff lines in all. The list reaches steel, aluminum, dairy, appliances, agricultural equipment, and fish, and raises rates on goods already caught in earlier rounds.
Washington widened the list on September 15. One of the five September 8 proclamations rewrote the scope of the original duties. CBP added 122 classifications and dropped about ten. Some of the items we flagged last month, including cement, rock salt, and fishing rods, are now off. Going on is a long list that most importers would not file under “dairy, alcohol, and autos”: cheeses, hides and furskins, motorboats, aluminum profiles, bars, rods, and tubes, iron and steel structural members, furniture and mattresses, lamps, golf carts, small passenger vehicles, ATVs, and printing paper.
Section 232 no longer protects you from Section 338, for most goods. The August version of these tariffs skipped anything already paying Section 232 duties. For goods entered on or after September 15, that carve-out survives only for products on the dairy list. Everything on the alcohol and general lists now pays both. For aluminum and steel products newly added to the list, Troutman Pepper Locke puts the combined additional duty at 75%, and the White House has said stacked rates can reach 100% on some items. That is before the normal duty rate.
And on September 29, some goods stopped being importable at all. Three proclamations (11061, 11062, and 11063) bar 68 tariff lines from entering the United States. That is 53 lines of packaged alcohol (beer, wine, spirits, cider), eight whey products, five molasses lines, nonalcoholic beer, and motorcycles over 800cc. Under CBP’s guidance (CSMS #70050970), these goods cannot be entered for consumption, admitted to a Foreign Trade Zone, placed in a bonded warehouse, or moved in bond. ACE now rejects them outright, and unreleased entries containing them are being cancelled. Goods that were already in a bonded warehouse or FTZ before 12:01 a.m. on September 29 can still be withdrawn, at the 50% rate. Bulk alcohol shipped for U.S. bottling sits outside the ban but still pays 50%.
In dollar terms, the ban is small, about $967 million of 2025 imports, 87% of it alcohol. As one former U.S. trade official told the AP, the 50% tariff was already making much of this trade uneconomical. The more important signal is that the statute’s final step is now in use, and nothing in it limits that step to these three product groups.
What’s next: three places this could move
At the table, slowly if at all. Formal talks have not resumed since Canada recalled its negotiators on August 21. At the G20 trade ministers’ meeting in Milwaukee last week, U.S. Trade Representative Jamieson Greer said technical conversations continue but called the open issues quite difficult to resolve, and said the administration is not inclined to go to zero tariffs. President Trump has predicted Canada will come back to the table. Ottawa’s stated plan points the other way: diversify, with a trade deal with India targeted for December and closer ties to the EU. Trade counsel quoted by the AP expect the standoff to run for months, not weeks. Our working assumption is that nothing in place today goes away before year-end.
In court, eventually. Section 338 had never been used before July, which means no court has ever interpreted it. The arguments against this use are already on paper. The International Trade Commission never investigated Canada before the President acted. The statute only authorizes duties that offset the harm from discrimination, and no one calculated that harm. And later trade laws arguably replaced it. The ITC has since asked for public comment on its Section 338 role, which reads as an agency trying to build a record after the fact. As of the most recent reporting we found, no challenge had been filed. Even if one succeeds, read the fine print: each ban proclamation says that if a court strikes the ban, the goods snap back to the 50% duty, not to duty-free.
Through USMCA, on a longer clock. Having declined to extend USMCA at the July 1 joint review, the U.S. now moves to annual reviews. The agreement runs to July 1, 2036 unless all three countries agree to extend it. USTR opened comments for the 2027 review on October 2 (docket USTR-2026-0595), due January 12, 2027. If USMCA has historically mattered to your costs, that docket is where importers get a formal say in what comes next.
Why this keeps landing in Wisconsin
The world’s trade ministers spent September 30 and October 1 at the Pfister in Milwaukee, and Canada’s trade minister used part of the trip to run a Wisconsin business program pitching cross-border trade and investment. The setting was apt. Canada bought $7.5 billion of Wisconsin goods in 2025, 28% of everything the state exported, more than any other market.
The exposure now runs both directions. On the export side, Canada’s September 8 list reaches appliances, agricultural equipment, steel, and dairy, all of which Wisconsin makes and ships north. On the import side, the September 15 additions pulled in aluminum shapes, structural steel, furniture, motorboats, and golf carts, the kind of inputs and finished goods Midwest manufacturers and distributors source from Canada because it is next door. A year ago, most of that crossed duty-free under USMCA. Today some of it pays 50%, some pays 75% or more, and a small slice cannot cross at all. For a state whose largest customer is on the other side of this fight, that is not a rounding error.
What to do now
- Rescreen every Canadian origin product against the September 15 list. Coverage moved in both directions. A product you cleared in August may be covered now, and a few that were covered are not. Check by HTS number against CBP’s current list, not by category name.
- Recalculate landed cost for anything that also pays Section 232. If you relied on the August rule that kept Section 232 goods out of Section 338, that rule now applies only to dairy list goods. Model the stacked rate before your next PO, not after the entry summary.
- Treat the ban list as a hard stop. If you have banned goods sitting in a bonded warehouse or FTZ from before September 29, they can still be withdrawn at 50%. Anything not yet in the country cannot be entered, and CBP will reject it at release.
- Keep your paperwork as if a refund is possible. CBP has confirmed drawback is available on the Section 338 duties, and if these tariffs are ever struck down, importers with clean entry records will be first in line. We learned that with IEEPA.
- If you export to Canada, check the other list too. Map your outbound products against Canada’s September 8 counter tariff list so your customers are not the first to tell you.
- Consider weighing in. USMCA review comments are due January 12, 2027. If preferential access to Canada matters to your business, this is the formal channel.
As always, bring any entry this touches to our team before it files rather than after. With rates now running from 50% to a full ban, the cost of a wrong guess has gone up.