Section 338 Goes From Duties to Import Bans: Canadian Alcohol, Whey and Big Motorcycles Barred September 29, the 50% List Rewritten September 15 — and the Bonded-Warehouse Window in Between

Section 338 Goes From Duties to Import Bans: Canadian Alcohol, Whey and Big Motorcycles Barred September 29, the 50% List Rewritten September 15 — and the Bonded-Warehouse Window in Between

Section 338 of the Tariff Act of 1930 has two halves. Subsection (a) lets the President add up to 50% duty on goods from a country found to discriminate against U.S. commerce; that is the tool used on Canadian dairy, alcohol and motor vehicles since August 22. Subsection (b) lets him exclude the goods from importation entirely if the country "maintains or increases" the discrimination after the first proclamation. Until this week, no President had reached for (b) in the statute's 96-year history.

On September 8, 2026 — the same day Canada's counter-tariffs took effect — the White House signed five proclamations. Three invoke 338(b) and bar specified Canadian goods from entry starting September 29. Two rewrite the product annexes for the existing 50% duty, effective September 15, and reverse the rule that kept Section 338 from stacking on Section 232. The White House fact sheet frames all five as a response to Canada's retaliation and to Saskatchewan's August 27 announcement of an additional 50% provincial levy on U.S. alcohol.

For importers of Canadian goods, there are now three lists and two dates, and the right move depends on which list a SKU is on and where the goods physically are today. This guide sorts it out.

The three lists

List 1 — banned from importation on September 29 (338(b)). Three proclamations, each with an HTS annex:

- *Alcoholic beverages.* Beer of 2203.00.00; sparkling and still wine and vermouth across the 2204–2205 subheadings; cider, sake and other fermented beverages of 2206; undenatured beverage ethyl alcohol; and spirits of 2208 — whiskey, bourbon, rye, brandy, rum, gin, vodka, tequila, mezcal, liqueurs, cordials and bitters. Where the annex line is marked "Packaged," the ban reaches only product in bottles, cans, boxes, kegs or similar direct-to-consumer containers. Bulk Canadian alcohol — tanker or tote loads for U.S. bottling or blending — is not banned; it stays under the 50% duty. - *Dairy proclamation.* Whey protein concentrates, modified whey, fluid whey and dried whey; invert, cane and other molasses; and, oddly, non-alcoholic beer of 2202.91.00. The stated trigger is Canada's continued tariff-rate-quota allocation on U.S. cheese. - *Motor vehicles proclamation.* One line: motorcycles and mopeds with reciprocating piston engines over 800 cc, HTSUS 8711.50.00. Nothing else in the vehicle chapter is banned.

List 2 — added to the 50% duty on September 15. The two scope-modification proclamations reach well past the alcohol and vehicle headings their titles suggest:

- Cheese: cheddar, Swiss, Emmentaler, Gruyère, Romano, Reggiano, Parmesan, provolone, blue-veined, Roquefort, Edam, Gouda, sheep's-milk cheese, cheese substitutes, and cheese not made from cow's milk. - Oxidized and dehydrated fats and oils; raw bovine and equine hides and leather goods; raw and tanned furskins. - Iron and steel structures, columns and beams; aluminum profiles, bars, rods, tubes and pipes; flexible tubing; hooks, rivets, buckles, clasps, crown corks; sign plates; welding electrodes, wire and rods. - Furniture: convertible seats, bamboo/rattan/wood/plastic seating, seat parts, office and kitchen furniture, mattresses and mattress supports. - Electric lamps — table, desk, bedside and floor-standing, LED and non-LED. - Golf carts; passenger vehicles with spark-ignition engines of 1,000 cc or less; motorboats and outboard motorboats of 7.5 m or more. - Paper and paperboard for writing and printing; fishing rod parts.

List 3 — removed from the 50% duty on September 15. Canadian whiskies in containers over four liters (2208.30.6085) and liqueurs and cordials over four liters (2208.70.0060); salt and pure sodium chloride; Portland cement; certain chemically pure sugars; toilet and facial tissue stock; bed sheets and similar paper-pulp articles; refined lead; switchgear assemblies and switchboards; and certain fishing rod parts.

A separate proclamation modifying the dairy 50% list is referenced in the dairy ban but had not been published as of September 10. If you import Canadian dairy that is not whey or molasses, watch for it.

The four rule changes that matter more than the lists

1. Section 338 now stacks on Section 232. The July 20 proclamations said Section 338 duties "shall not apply to articles subject to duties pursuant to section 232." The September 8 modifications say the opposite: Section 338 applies "in addition to" Section 232. From September 15, a Canadian aluminum extrusion or steel beam carries 25% (Section 232) + 50% (Section 338) = 75% additional duty on top of the general rate. This is the single largest landed-cost change in the package, and it hits products — structural steel, aluminum profiles — that were never part of the dairy-alcohol-vehicles dispute. Rebuild the stack in the tariff stacking calculator before quoting a single Q4 job on Canadian metal.

2. USMCA provides no relief. None of the five proclamations carves out USMCA-originating goods. Section 338 predates the agreement by nine decades, and the USMCA implementing act (19 U.S.C. 4512(a)(1)) says no provision of the agreement inconsistent with U.S. law has effect. A USMCA certificate of origin does nothing against a 338 duty or a 338 ban.

3. The transitional rule for banned goods. Each ban proclamation says goods that have been imported before September 29 but not yet entered for consumption or withdrawn from warehouse for consumption remain subject to the 50% duty rather than the ban. Read that carefully: the operative fact is when the goods were *imported* — arrived in the United States — not when they were entered. Canadian beer that crossed at Detroit on September 20 and is sitting in a bonded warehouse on September 29 can still be withdrawn afterward at the 50% rate. Canadian beer that crosses on September 29 cannot enter at all.

4. Severability snaps back to 50%. If a court strikes down any ban as to any import, that import reverts to the 50% duty under the underlying July proclamation. A successful legal challenge does not produce duty-free entry. Do not build a Q4 plan on the bans being enjoined.

The proclamations also require Section 338 goods admitted to a foreign-trade zone to take privileged foreign status — the same rule we covered in the FTZ deadline piece — so a zone cannot be used to freeze a pre-338 rate. A Class 3 bonded warehouse is a different animal, and that difference is the whole playbook below.

The bonded-warehouse angle: the rate is set on withdrawal day

Duty on goods withdrawn from a bonded warehouse for consumption is assessed at the rate in effect on the withdrawal date (19 U.S.C. 1557(a)), not the date of importation. We walked through the mechanics in Bonded Warehouse Withdrawals Explained yesterday; the September 8 package is a live example of why the rule cuts both ways, and it produces three distinct moves depending on the list.

List 3 (removed September 15): hold in bond, withdraw on or after the 15th. Canadian bulk whisky, Portland cement, refined lead, salt, switchgear that arrived under the 50% duty since August 22 and is still in a bonded warehouse today should not be withdrawn this week. A withdrawal on September 14 pays 50%; the same withdrawal on September 15 pays zero Section 338. If your broker is running weekly withdrawals against orders, skip the week and consolidate. Goods already entered for consumption at 50% are not refundable by this route — the only recovery there is drawback on re-export, and note that the September 8 proclamations are silent on drawback, so keep the documentation and expect CBP guidance.

List 2 (added September 15): enter or withdraw before the 15th, or bond and decide later. Canadian aluminum profiles, steel structures, furniture, lamps, cheese, golf carts sitting in bond today face 50% — and for metals, 75% with 232 stacking — from Monday the 15th. Anything you will sell in the U.S. anyway should be withdrawn for consumption by Sunday, September 14 at the current rate. Anything you are not sure you can sell at the new landed cost should stay in bond: a T&E withdrawal on Form 7512 exports it later with no U.S. duty, and the rate-on-withdrawal rule means you have lost nothing by waiting. Goods still north of the border and on List 2 should cross and enter before the 15th if they are coming at all; after that date, bonding them on arrival preserves the export option without committing to 75%.

List 1 (banned September 29): get the goods across the border by the 28th, and bond what you cannot sell immediately. The transitional rule is the important one. Packaged Canadian alcohol, whey products, molasses and 800-cc-plus motorcycles that are *in the United States* before 12:01 a.m. ET on September 29 stay under the 50% duty indefinitely; they can be withdrawn from bond in October, November or next year at 50%, or exported by T&E at zero. Product that arrives on or after the 29th is refused. So the play for a U.S. distributor with a Canadian brand is to move a season's worth of inventory across the border in the next seventeen days, put it in a bonded warehouse, and withdraw against orders — paying the 50% only on what sells, when it sells, and exporting the balance if the brand's U.S. business ends up not surviving the duty. The ban converts a bonded warehouse from a cash-flow tool into the only lawful supply of the product.

Two cautions. "Imported" is not defined in the proclamations, and CBP has not yet issued CSMS guidance; treat arrival at the U.S. port of entry with a filed manifest as the safe reading, not a truck that has left the Canadian shipper's dock. And warehouse entries take a custodial bond and a broker filing; a bonded operator that is already handling your entries can turn this around in days, but a first-time bonded program set up in the last week of September is a risk. Size the bond now in the customs bond calculator if the value moving is large.

Landed-cost worked example: a Canadian aluminum extrusion line

Take $200,000 of Canadian aluminum profiles (7604), general rate 1.5%, landing at a Southeast customer's plant in October.

- *Entered for consumption September 12:* general 1.5% ($3,000) + Section 232 aluminum 25% ($50,000) + Section 338 0% (non-stacking rule still in force) = $53,000 in duty. - *Entered for consumption September 16:* general 1.5% ($3,000) + Section 232 25% ($50,000) + Section 338 50% ($100,000) = $153,000. - *Bonded September 12, withdrawn October 20:* rate on withdrawal day governs — $153,000, plus storage. Bonding does not save this lot; it only preserves the option to T&E it to a Mexican or overseas customer at zero if the U.S. sale collapses at the new price.

Same value in Canadian bulk whisky (List 3): *entered September 12* pays 50% Section 338 ($100,000) plus general; *bonded September 12 and withdrawn September 15* pays general only. The direction of the calendar decides everything, which is why the lists above are worth an hour with your broker today rather than next week. Importers rebuilding line-level landed-cost models against a list this long often run classification and duty math per SKU through software such as Zonos before deciding which lines get entered, bonded, or re-routed. (Disclosure: this is an affiliate link — FreightFigures may earn a commission if you sign up, at no additional cost to you. See our full affiliate disclosure.)

This week's checklist

1. Screen every Canadian-origin SKU against all three annexes by 10-digit HTS, not by product name. "Motor vehicles" now includes desk lamps; "alcoholic beverages" now includes Gouda. The scope proclamations' annexes are the only authority. 2. List 3 goods in bond: freeze withdrawals until September 15. 3. List 2 goods in bond or in transit: withdraw or enter by September 14 if they are for U.S. sale; leave in bond otherwise. 4. List 1 goods: get them into the United States by September 28. Manifest and arrival documentation is your proof under the transitional rule. Bond what will not sell in the next few weeks. 5. Reprice Canadian aluminum and steel — 75% additional duty is the number from Monday. 6. Do not rely on USMCA claims for any 338 line, and do not count on the bans being enjoined. 7. Confirm your IOR record is clean. CBP begins voiding importer numbers with bad Form 5106 data on September 18, which lands squarely between the two Section 338 dates. A voided IOR cannot file the entry or the withdrawal.

Where the bonded capacity is

Most Canadian goods enter by truck or rail across the northern border, but a large share is bound for Southeast customers — Canadian structural steel and aluminum for Carolinas and Georgia construction and manufacturing, Canadian furniture for the retail distribution centers along I-85 and I-26, Canadian spirits for the Southeast's control-state and distributor networks. Those goods can move in-bond by IT from the border crossing to a bonded warehouse near the customer, and the withdrawal cadence described above then runs from a facility a short truck ride from the point of sale. For the Charleston market, C&C Warehouse operates a CBP-bonded and General Order facility minutes from the port and the interstate, with container devanning and cross-dock for goods arriving by ocean and in-bond receipt for goods arriving by rail or truck. If you are trying to position Canadian inventory ahead of September 15 or September 29 and need a bonded home for it in the Southeast, ask below.

The Bottom Line

Section 338 has moved from a duty to a wall. Three lists, two dates: the 50% list is rewritten September 15 and now stacks on Section 232 (75% on Canadian aluminum and steel), and packaged Canadian alcohol, whey, molasses, non-alcoholic beer and big motorcycles are prohibited from September 29. USMCA does not help. Goods removed from the list should wait in bond until the 15th; goods added should clear by the 14th or wait in bond for the export option; goods facing the ban must be inside the United States by the 28th, where a bonded warehouse keeps them lawfully withdrawable at 50% for as long as the ban lasts.

Related Tools

Related Articles