Weekly Trade Policy Update
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The Bottom Line
Canada's 50% Section 338 duties are now in effect. The three-day suspension ended without a deal, so the duties on covered Canadian goods kicked in at 12:01 a.m. ET on August 22nd. CBP has since issued filing guidance, including the Chapter 99 headings to use and confirmation that the duties are eligible for drawback.
CBP is also getting stricter about importer-of-record information. Starting September 18, inaccurate information on a Form 5106 could result in an importer number being voided, which would prevent the importer from making entries.
Section 338
We covered the three-day suspension on Canada last week, but that pause is now over. The 50% Section 338 duties on covered Canadian goods took effect at 12:01 a.m. ET on August 22nd after the suspension expired without a final agreement. CBP has now issued filing guidance in CSMS 69606660.
Under the guidance, filers should use HTSUS headings 9903.03.12 through 9903.03.14 for covered goods, each carrying a 50% additional duty. Two other headings, 9903.03.15 and 9903.03.16, carry a 0% rate and cover the carve-outs, including steel, aluminum and copper articles, most vehicles and parts, wood products, semiconductors, patented pharmaceuticals, and qualifying civil aircraft.
The way the duty stacks with other tariffs, along with the fact that it can be recovered through drawback, is particularly important for importers already managing Canadian duty exposure. The 50% duty applies on top of regular tariffs and any applicable antidumping or countervailing duties. CBP also confirmed that the Section 338 duty is eligible for drawback, so importers may be able to recover the duty on qualifying re-exports.
USMCA qualification does not exempt these goods, and foreign trade zone treatment does not provide an exemption either. Covered goods admitted to an FTZ must enter under privileged foreign status, which locks in the duty rate at admission.
For importers of Canadian alcohol, dairy, motor vehicles, and other covered products, the exposure is already live. Since the list extends beyond those categories, importers should check Canadian-origin entries against the Chapter 99 headings rather than assume a product is exempt. It is also worth flagging entries where the 50% duty may be recoverable through drawback.
Sources: CBP bulletin, Federal Register
Importer of Record
From September 18, CBP can void an importer-of-record number outright when the information on its Form 5106 is inaccurate or incomplete. A voided number is invalid for every purpose, including making entry, so a wrong record can stop an importer from bringing goods in at all.
This is CBP's first step in carrying out Executive Order 14411 on customs enforcement. It targets the basics: the physical address, EIN, email, and phone number on file all have to belong to the importer and be current. A registered agent, a broker's address, a freight forwarder, or a P.O. box won't satisfy the physical-address requirement.
For brokers, the bar is explicit: a broker filing a Form 5106 for a client needs a power of attorney executed directly with that importer and can't submit information it knows or should know is unverified. CBP says it's reviewing the records already on file, so this is worth checking before the deadline rather than after a number gets pulled.
Source: Federal Register
USMCA auto content submissions. Commerce updated the process for importers of USMCA-qualifying automobiles to document their U.S. content and reduce the Section 232 auto tariff. The change brings the timeline in line with the rules for medium- and heavy-duty vehicles, and importers can use the revised process as of August 19. (Federal Register)
Silicon metal duties. On August 21, Commerce issued antidumping and countervailing duty orders covering silicon metal from Australia and Norway. Importers bringing in the covered material should check the applicable rates and deposit requirements before their next entry. (Federal Register: order 1, order 2)
What We're Watching
Canada's response. With the suspension expired and no deal signed, Canada has signaled it will answer with tariffs of its own. The specific measures and an effective date have been reported but not yet confirmed against a primary Canadian government notice, so treat the scope as unsettled. We'll cover it once the official measure publishes.
Screen Canadian-origin entries against the new headings
Pull your Canadian-origin entries and check them against headings 9903.03.12 through 9903.03.14. Make sure anything already covered by Section 232 is excluded, confirm the civil-aircraft carve-out where it applies, and update landed costs to reflect the additional 50% duty for entries on or after August 22. It's also worth flagging which of those duties may be eligible for drawback.
Check your Form 5106 before September 18
Make sure the physical address, EIN, email, and phone number on file for each importer are accurate and up to date. If a broker is filing on a client's behalf, confirm they have a direct power of attorney with the importer. An incorrect field could result in the IOR number being voided and prevent the importer from making entries.
Reach Out to Caspian to Understand Your Impact
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