Trump Imposes
50% Tariff on Canadian Alcohol-Related Imports under Section 338
·
President
Donald Trump
issued a proclamation under Section
338 of the Tariff Act of 1930 to impose an additional 50% ad valorem tariff
on certain Canadian products.
·
The action
is intended to offset Canada's
alleged discriminatory treatment of U.S. alcoholic beverages and
protect U.S. commerce.
·
The U.S.
alleges that Canada banned
or restricted the purchase, distribution, and retail sale of U.S. alcoholic beverages
while allowing imports from other countries.
·
According
to the proclamation, U.S. alcohol
exports to Canada fell by approximately 81% (from about US$718 million to US$137 million)
between March 2025–February
2026 compared with the previous year.
·
Imports
of alcoholic beverages from countries such as Chile, Japan, Argentina, Ireland, New Zealand, Australia, and
the EU increased during the same period, according to the U.S. administration.
·
The proclamation
states that the tariffs are intended to restore
fair competition, support U.S. manufacturers and farmers, and encourage
Canada to remove the alleged discriminatory measures.
·
The 50% tariff will take effect from 12:01 a.m.
(Eastern Time) on 19 August 2026.
·
The additional
duty will apply on top of existing
import duties, except for products already covered by Section 232 tariffs and certain
specified exemptions.
·
The proclamation
authorizes U.S. Customs and
Border Protection (CBP) to issue regulations and implement the new
tariff measures.
[ABS News Service/21.07.2026]
BY THE PRESIDENT
OF THE UNITED STATES OF AMERICA
A PROCLAMATION
1. Section 338 of
the Tariff Act of 1930 (19 U.S.C. 1338) (section 338) empowers the President to,
among other things, impose duties on imports of a foreign country to offset the
burden or disadvantage from a foreign country’s discrimination against or unequal
imposition on the commerce of the United States.
2. Canada, through
discrimination or an unreasonable and unequal imposition, burdens U.S. commerce
but not the commerce of other countries and disadvantages U.S. commerce compared
to the commerce of other countries. Specifically, Canada unreasonably burdens and
disadvantages U.S. alcoholic beverages but not alcoholic beverages of other countries.
3. The provinces
and territories of Canada generally regulate the distribution and sale of distilled
spirits, wine, beer, and other alcoholic beverages (collectively, alcoholic beverages)
in their respective jurisdictions. All provinces and territories control the wholesale
of alcoholic beverages, and most have a hybrid public/private system for the retail
of alcoholic beverages.
4. Beginning in March
2025, all Canadian provinces and territories halted the purchase, distribution,
or retailing of U.S. alcoholic beverages. For example, on March 4, 2025, the Liquor
Control Board of Ontario (LCBO) ceased purchasing all U.S. products and canceled
existing orders where contractually possible; removed all U.S. products from wholesale
product catalogues and retail eCommerce sites; and removed all U.S. products from
LCBO retail stores and outlets. Similarly, on March 4, 2025, the province of Quebec
asked the Société des Alcools du Québec to remove all U.S. products from its shelves
and to stop supplying U.S. alcoholic beverages to grocery stores, liquor stores,
bars, and restaurants. Only the provinces of Alberta and Saskatchewan subsequently
lifted their bans on the purchase, distribution, or retailing of U.S. alcoholic
beverages, in June 2025.
5. The United States,
U.S. businesses and workers, and U.S. commerce suffer from the Canadian provinces’
and territories’ unreasonable and unequal impositions and discriminations with respect
to U.S. alcoholic beverages. Following the implementation of the bans, U.S. exports
of alcoholic beverages to Canada fell precipitously. Comparing the period from March
2025 through February 2026 to the same period in 2024-2025, Canadian imports of
U.S. alcoholic beverages decreased by approximately 81 percent (from approximately
$718 million to approximately $137 million).
6. The Canadian provinces
and territories have not instituted or maintained similar bans or restrictions on
any other country since March 2025, thereby benefitting other countries at the expense
of the United States. Indeed, exports of alcoholic beverages from other countries
to Canada have increased to meet the demand previously filled by U.S. exports. For
example, comparing March 2025 through February 2026 to the same period in 2024-2025,
Canadian imports of alcoholic beverages from Chile, Japan, Argentina, Ireland, New
Zealand, and Australia significantly increased, with increases ranging from approximately
13 percent to approximately 26 percent. Despite a nearly 12 percent decline in total
imports of alcoholic beverages into Canada, imports into Canada from countries other
than the United States increased by over $170 million from March 2025 through February
2026 compared to the same period in 2024-2025, with imports into Canada from the
European Union accounting for over $100 million of this increase.
7. Accordingly, pursuant
to section 338, I find as a fact that through the regulation, restriction, or prohibition
of U.S. alcoholic beverages, Canada has imposed an unreasonable regulation or limitation
on articles wholly or in part the growth or products of the United States and is
discriminating in fact against the commerce of the United States in such manner
as to place it at a disadvantage compared to the commerce of other countries, by
banning the purchase, distribution, or retailing of U.S. alcoholic beverages while
not banning or similarly restricting such products from other countries. I also
find as a fact that this unequal and unreasonable imposition or discrimination places
a burden on the commerce of the United States and places a disadvantage on the commerce
of the United States.
8. Further, I find
that imposing additional ad valorem duties on certain products of Canada
to address the burden or disadvantage from this discrimination or unequal and unreasonable
imposition is in the public interest, will serve the public interest, and is consistent
with the interests of the United States. When U.S. producers are unfairly denied
export opportunities, as they are in Canada due to Canadian provinces’ and territories’
bans on the purchase, distribution, or retailing of U.S. alcoholic beverages, they
lose sales that support production in the United States, among other harms to the
U.S. alcoholic beverage industry. The unreasonable, unequal, and discriminatory
actions by Canada suppress U.S. manufacturing and agricultural output, as well as
investment, undermining employment and economic vitality in American communities.
Imposing additional duties on certain products of Canada will, among other things,
expand opportunities for U.S. producers to compete within the U.S. market, revitalizing
U.S. production and bringing attendant economic and societal benefits, and may spur
Canada to remove the unreasonable and unequal imposition on and discrimination against
commerce in U.S. alcoholic beverages.
9. Accordingly, I
find that it is necessary and appropriate and in the public interest to impose an
additional ad valorem duty of 50 percent on certain products of Canada, as
identified in Annex II to this proclamation, effective as of 12:01 a.m. eastern
time on August 19, 2026. I determine that the additional ad valorem duties
imposed in this proclamation, as described below, will offset the burden or disadvantage
on U.S. commerce from Canada’s discrimination or unequal and unreasonable imposition.
In my judgment, the action in this proclamation is consistent with the public interest,
will serve the public interest, and is consistent with the interests of the United
States.
10. Section 338 authorizes
the President, if he determines it will serve the public interest, to offset any
burden or disadvantage placed on the commerce of the United States by an unequal
imposition or discrimination by a foreign country by specifying and declaring additional
duties not to exceed 50 percent ad valorem (or its equivalent) and not to
take effect earlier than 30 days after the President’s proclamation finding that
a foreign country imposes an unreasonable charge, exaction, regulation, or limitation
that is not equally enforced on the like articles of every foreign country, or discriminates
in fact against U.S. commerce in a way that places the commerce of the United States
at a disadvantage compared to the commerce of any foreign country. Section 338 also
authorizes the President to suspend, revoke, supplement, or amend any proclamation
under section 338 whenever the President deems that the public interests require
such action. Further, section 338 authorizes the President to exclude articles of
the foreign country if the foreign country maintains or increases the discrimination
against the commerce of the United States and the President deems the exclusion
to be consistent with the public interests and the interests of the United States.
11. Section 604 of
the Trade Act of 1974, as amended (19 U.S.C. 2483) (section 604), authorizes the
President to embody in the Harmonized Tariff Schedule of the United States (HTSUS)
the substance of statutes affecting import treatment, and actions thereunder, including
the removal, modification, continuance, or imposition of any rate of duty or other
import restriction.
NOW, THEREFORE, I,
DONALD J. TRUMP, President of the United States of America, by the authority vested
in me by the Constitution and the laws of the United States, including section 338;
section 301 of title 3, United States Code; and section 604, do hereby proclaim
as follows:
(1) Except as otherwise
provided in this proclamation, certain products of Canada, as set forth in Annex
II to this proclamation, imported into the United States shall be subject to an
additional ad valorem duty of 50 percent, effective for goods entered for
consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m.
eastern time on August 19, 2026.
(2) Except as otherwise
provided in this proclamation and in Annex I to this proclamation, the duties imposed
in this proclamation are in addition to any other duties, taxes, fees, exactions,
and charges applicable to such products. The duties imposed in this proclamation
shall not apply to articles subject to duties pursuant to section 232 of the Trade
Expansion Act of 1962, as amended (19 U.S.C. 1862), or articles, excluding unmanned
aircraft, subject to the World Trade Organization Agreement on Trade in Civil Aircraft.
(3) The HTSUS is
modified as provided in Annex II to this proclamation, effective with respect to
goods entered for consumption, or withdrawn from warehouse for consumption, on or
after 12:01 a.m. eastern time on August 19, 2026, and the modifications shall continue
in effect, unless this action is expressly reduced, modified, or terminated.
(4) Any product subject
to the duties imposed in this proclamation, except those eligible for admission
under “domestic status” as described in 19 CFR 146.43, that is subject to the duties
imposed in this proclamation and that is admitted into a United States foreign trade
zone on or after the effective date of this proclamation must be admitted as “privileged
foreign status” as described in 19 CFR 146.41, and will be subject upon entry for
consumption to any ad valorem rate of duty related to the classification
under the applicable HTSUS subheading.
(5) The head of each
executive department and agency (agency) is authorized to and shall take all appropriate
measures within the agency’s authority to implement this proclamation. The head
of each agency may, consistent with applicable law, including section 301 of title
3, United States Code, redelegate the authority to take such appropriate measures
within the agency.
(6) The Commissioner
of U.S. Customs and Border Protection (CBP), in consultation with the Secretary
of the Treasury, the Secretary of Commerce, and the United States Trade Representative,
is authorized to issue such rules, regulations, guidance, instructions, or determinations
as may be necessary to implement this proclamation and is authorized to take any
necessary measures to administer the duties imposed in this proclamation.
(7) The Commissioner
of CBP, in consultation with the Secretary of the Treasury, the Secretary of Commerce,
the United States Trade Representative, the Chairman of the United States International
Trade Commission, and any other senior official he deems appropriate, shall determine
whether any additional modifications to the HTSUS are necessary to effectuate this
proclamation and shall make such modifications to the HTSUS through notice in the
Federal Register, including any technical correction to the annexes to this
proclamation.
(8) For any rule
or regulation the Commissioner of CBP makes to implement this proclamation, the
Commissioner of CBP shall, to the extent required by law, obtain the approval of
the President or the United States Trade Representative. The United States Trade
Representative is delegated the President’s approval authority in 19 U.S.C. 1338(h).
(9) Any provision
of previous proclamations and Executive Orders that is inconsistent with this proclamation
is superseded to the extent of such inconsistency. If any provision of this proclamation
or the application of any provision to any individual or circumstance is held to
be invalid, the remainder of this proclamation and the application of its provisions
to any other individuals or circumstances shall not be affected.
IN WITNESS WHEREOF,
I have hereunto set my hand this twentieth day of July, in the year of our Lord
two thousand twenty-six, and of the Independence of the United States of America
the two hundred and fifty-first.
DONALD J. TRUMP