U.S. Imposes 50% Tariffs On Canadian Products, Effective August 19, 2026

On July 20, 2026, United States President Donald Trump signed three Presidential Proclamations imposing additional 50% tariffs on a broad range of Canadian products, effective August 19, 2026:

• Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States With Respect to Motor Vehicles (Motor Vehicles Proclamation)
• Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States With Respect to Dairy (Dairy Proclamation)
• Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States With Respect to Alcoholic Beverages (Alcohol Proclamation)

While framed as a response to Canadian policies regarding dairy, automotive and alcoholic beverage sectors, the tariffs will apply to a broader range of products well beyond those sectors.

Significantly, unlike previous U.S. tariff measures, the new tariffs will also apply to goods that would otherwise qualify for preferential treatment under the Canada–United States–Mexico Agreement (CUSMA).

Certain goods are excluded from the new tariffs. These include energy, potash, fish, critical minerals and products already subject to Section 232 tariffs (vehicles and vehicle parts, steel & aluminum products, wood products and aerospace products).

According to the White House, these additional tariffs will be imposed under section 338 of the Tariff Act of 1930, which allows the President to impose tariffs when a foreign country is deemed to have discriminated against the commerce of the U.S.

The Motor Vehicles Proclamation

The Motor Vehicles Proclamation states that Canada’s 25% retaliatory surtax under the United States Surtax Order (Motor Vehicles 2025) (Motor Vehicles Surtax Order) is discriminatory.

The Motor Vehicles Surtax Order was announced on April 3, 2025, as a countermeasure against the imposition by the United States of similar 25% tariffs on non-CUSMA-certified car imports from Canada, and the non-U.S.-origin content of CUSMA-compliant vehicles.

Companies that maintain manufacturing and investments in Canada are also eligible for remission of duties imposed under the Motor Vehicles Surtax Order up to certain quotas. The Motor Vehicles Proclamation states that reducing quotas for companies which have moved manufacturing to the U.S. is discriminatory.

Products subject to tariffs under the Motor Vehicles Proclamation include:

• Electronics such as phones, cameras, monitors, circuit boards and GPS devices
• Machinery such as hydraulic turbines, refrigeration equipment and agricultural machinery
• Wood and paper products such as pulp, stationery, boxes, labels and envelopes
• Chemical goods such as fuel additives and industrial chemicals
• Textiles such as industrial textiles, silk, wool, cotton, ropes, carpets and ribbons
• Plastics and rubber articles such as plastic packaging, rubber seals and gaskets
• Furniture such as upholstered seating and wooden chairs and tables
• Leather luggage, handbags, belts and gloves

The Dairy Proclamation 

The Dairy Proclamation states that Canada’s tariff rate quota (TRQ) system for dairy imports is discriminatory.

Canada restricts imports of dairy goods using TRQs to protect the integrity of its supply management system. Under a TRQ, certain amounts (quotas) of cheese are allowed to be imported tariff-free. Imports over the quota are subject to significant tariffs. Different quota amounts and eligibility criteria are negotiated with different trade partners.

The U.S. TRQs negotiated under CUSMA include duty-free access for U.S. processors and distributors for up to 50,000 tonnes of fluid milk and 12,500 metric tonnes of cheese. The U.S. has never exported enough dairy products to exceed these quotas.

The Dairy Proclamation states that Canada has discriminated against the U.S. by restricting eligibility to “producers,” “processors” and “distributors,” but excluding “retailers.” Disputes about Canada’s dairy TRQ system are longstanding and have been adjudicated under the CUSMA dispute resolution mechanism. A binational panel found in favour of Canada in 2023.

Products subject to tariffs under the Dairy Proclamation include:

• Milk and cream powder, concentrated dairy products, casein and whey products
• Molasses, and syrups made from glucose, fructose or lactose
• Bakery mixes and doughs
• Non-alcoholic beer and hop cones used in brewing
• Peppermint essential oils

The Alcohol Proclamation

The Alcohol Proclamation states that decisions by provincial liquor boards to cease purchasing and selling U.S. alcohol is discriminatory. Provincial actions against U.S. alcohol began in February 2025 in response to the imposition of U.S. tariffs against Canada.

The Alcohol Proclamation notes that U.S. alcohol exports to Canada have plummeted and imports from other countries have risen, describing Canada’s measures as “unreasonable and unequal impositions and discriminations.”

Products affected by tariffs under the Alcohol Proclamation include:

• Beer, wine, spirits and other alcoholic beverages
• Hockey equipment, including sticks and pads for ice or field hockey
• Citrus essential oil
• Wooden cutting boards and other wooden kitchenware
• Paper for writing or printing, and laminated or greaseproof paper

Conclusion

Businesses engaged in cross-border trade should assess the potential impact on their supply chains, contractual arrangements and pricing strategies in advance of the measures taking effect.