The United States announced on July 20 that it will impose an additional ad valorem duty of 50 percent on certain products imported from Canada, effective August 19, 2026. The measure is a response to what the administration describes as discriminatory and unreasonable tariffs imposed by Canada on U.S. motor vehicles.
According to the proclamation, Canada has maintained a tariff system since April 9, 2025, which applies a 25 percent tariff rate on imports of U.S. motor vehicles that do not qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA). For vehicles that do qualify for duty-free treatment under USMCA, Canada imposes a tariff based on the value of non-originating goods used in production and enforces a tariff-rate quota (TRQ) limiting duty-free access per automaker. The TRQs have reportedly been reduced for U.S. companies moving manufacturing operations from Canada back to the United States.
The proclamation states that following implementation of Canada’s tariff scheme, U.S. exports of motor vehicles to Canada decreased by approximately 22 percent over one year—from about $25.9 billion to $20.3 billion—while imports from other countries such as Mexico, Japan, Korea, and Germany increased significantly during the same period.
President Donald J. Trump said in the proclamation, “I find as a fact that Canada is discriminating against the commerce of the United States through Canada’s motor vehicle tariff scheme… I also find as a fact that this discrimination places the commerce of the United States at a disadvantage compared to the commerce of other countries.” He further stated, “Imposing additional duties on certain products of Canada will… expand opportunities for U.S. producers to compete within the U.S. market… and may spur Canada to remove the discrimination against U.S. motor vehicles.”
Under Section 338 of the Tariff Act of 1930 and Section 604 of the Trade Act of 1974, this action authorizes up to a fifty percent ad valorem duty when foreign countries are found to discriminate or impose unequal burdens upon American commerce.
The Commissioner of U.S. Customs and Border Protection is authorized by this proclamation—along with other relevant agencies—to implement necessary regulations and determine any further modifications required for effective enforcement.