Section 338 Canada duties: 22 codes out, 100 in Oct 30

Effective 12:01 a.m. ET on October 30, 2026, 22 HTSUS classifications stopped being subject to the 50% Section 338 duty on Canadian goods under heading 9903.03.14, and 100 new classifications became subject to it. CBP published the filing guidance in CSMS #70314289, implementing the October 23 proclamation published at 91 FR 68861. The change applies to goods entered, or withdrawn from warehouse for consumption, on or after that moment, and continues unless it is suspended, revoked, amended or terminated.

Two things did not change. The classifications listed under headings 9903.03.12 and 9903.03.13 were untouched, and USMCA originating status still does not exempt a covered good. One more thing stayed true and is worth money: CBP confirms the additional duties under headings 9903.03.12 through 9903.03.14 are eligible for drawback, so a covered Canadian good that is later exported or destroyed can support a refund of 99% of the 50% duty under 19 U.S.C. 1313.

These are the codes CBP identifies as no longer subject to the additional duty under 9903.03.14 as of October 30. This is a go-forward change only — it does not create a refund on entries filed before the effective date.

The White House described the removals as covering plywood sheets, some paper products, certain machinery and refrigeration equipment, and certain packing crates and boxes, replaced with certain valves, carpets, waste products and others.

CBP did not publish the 100 added classifications in the body of the message. They appear only in the attached list, shown in bold, which is why the PDF — not a secondhand summary — is what your broker should be filing from. Category-level reporting points to additions such as certain cocoa powders, paints, soaps, carpets, air conditioners, chest-type freezers, power tools, valves and waste products.

A practical re-screen takes an afternoon. Pull every Canadian-origin line from your last 12 months of entry summaries and reduce it to a unique list of 8-digit HTS numbers with annual value by code. Match that list against CBP's October 25 attachment, flagging anything newly bold as a cost increase and anything on the removed list as a cost decrease.

Then close the loop operationally: tell your broker which codes now need the Chapter 99 line added or removed, update the duty assumptions in your landed cost model and your next PO pricing, and check any in-transit shipments that will enter after the effective date. Anything entered before 12:01 a.m. ET October 30 keeps the treatment that applied on its entry date.

There was a narrow period when goods covered by the Section 338 action could claim heading 9903.03.15, the 0% Section 232 offset. That ended on September 15, 2026. CBP's CSMS #69851916 states that as of that date only goods subject to heading 9903.03.13 are eligible to claim 9903.03.15.

For importers on the 9903.03.14 list, that means the 50% sits on top of any applicable Section 232 duty and the ordinary rate. If your landed cost model was built before mid-September, it is probably understating duty on these lines by a wide margin.

Section 338 comes from 19 U.S.C. 1338, which lets the President impose duties of up to 50 percent to offset a foreign country's unequal imposition on or discrimination against U.S. commerce. It is not a trade-preference program, and the action does not carve out originating goods.

The Congressional Research Service notes that the Section 338 Canada tariffs do not include an exemption for USMCA-compliant goods. A valid certification still reduces the ordinary rate of duty; it does nothing to the additional 50%.

CBP states plainly in CSMS #70314289 that the additional duties imposed under headings 9903.03.12 through 9903.03.14 are eligible for drawback. That matters because Section 232 duties are generally not recoverable — so two line items on the same entry can behave very differently.

Under 19 U.S.C. 1313, 99 percent of each eligible duty, tax or fee is refunded when the merchandise is exported or destroyed, and claims are filed under the procedures in 19 CFR Part 190 within five years of the date of importation. Unused merchandise drawback under 1313(j) covers goods exported in essentially the same condition; manufacturing drawback under 1313(a) and (b) covers goods used to produce an exported article. If you import Canadian-origin goods on the 338 list and export or destroy any portion of them, the 50% belongs in your drawback analysis.

One restriction bites specifically here. Substitution unused merchandise drawback is not available for exports to USMCA countries under 19 U.S.C. 1313(j)(4)(A)(i) and 19 CFR 182.42(c) — direct identification is the only route. If your Canadian imports go back to Canada or on to Mexico, read our note on the lesser of the two duties rule before you build the claim.

CSMS #70314289 keeps the familiar structure. The additional duty does not apply to goods under properly claimed Chapter 98 provisions, except for subchapter XXIII and subheadings 9802.00.40, 9802.00.50, 9802.00.60 and heading 9802.00.80 — where it applies to the value of the repairs, alterations or processing, or to the foreign-assembled value less the value of U.S. content.

For foreign trade zones, covered goods admitted on or after the effective date must be admitted in privileged foreign status under 19 CFR 146.41, unless they qualify for domestic status under 19 CFR 146.43. Separately, and not a duty question, three September 8 proclamations barred certain Canadian products from importation as of September 29, 2026 — keep those exclusions in a different column from tariff scope.

Start with exposure. Build the unique list of 8-digit Canadian-origin codes you actually imported in the last 12 months, match it against CBP's October 25 attachment, and quantify the annualized duty swing in both directions. That single table is what your CFO and your broker both need.

Then look at the other side of the ledger. Pull your export and destruction volumes for anything Canadian-origin on the 338 list — including returns, scrap and destroyed inventory — and test whether a 1313(j) or 1313(a)/(b) claim is worth filing, remembering the five-year window runs from the date of importation. Evana reviews that exposure and files the claims on a performance basis if you want a second set of eyes.

Finally, calendar the re-screen. Section 338 has no expiration date and its scope has already moved three times in ten weeks, so the right posture is a standing check every time CBP issues a new CSMS message on these headings.