At a glance
On July 20, the US announced two new rounds of US tariffs on Canadian goods. This article breaks down the 50% tariffs on autos, dairy, and alcohol taking effect August 19, and the 10% forced-labour tariff already in place since July 24. Discover which sectors are actually affected, what’s still unfolding with CUSMA, and how your business can respond while the situation develops.
Canadian businesses are facing a fast-moving and increasingly complex trade picture. In the span of five days in late July, two separate rounds of new US tariffs were announced, layered on top of an already-unresolved CUSMA renegotiation. Whatever sector you’re in, the question worth asking right now isn’t just whether your tariff codes are affected, it’s what you can do about it while the situation develops.
What changed on July 20 and July 24
On July 20, the US signed three presidential proclamations under Section 338 of the Tariff Act of 1930, each titled “Imposing Additional Duties to Offset Canadian Discrimination Against the Commerce of the United States,” covering motor vehicles, alcoholic beverages, and dairy. These impose an additional 50% tariff on the affected goods, effective August 19, 2026, with no exemption for CUSMA-compliant products. While auto, dairy, and alcohol are the named targets, the tariff codes affected are spread across extensive annexes and reach well beyond those three sectors into wood products, chemicals, minerals, textiles, and other manufactured goods.
Four days later, on July 24, the US Trade Representative finalized a separate set of tariffs under Section 301, related to forced labour practices, replacing the tariffs that had been in place under Section 122. Canada was placed in the 10% tariff category, alongside countries like Mexico, the UK, and the EU. Unlike the Section 338 tariffs, this one preserves the CUSMA exemption, meaning CUSMA-compliant goods are not subject to the additional 10%.
Both actions follow a bigger structural shift: on July 1, the US declined to extend CUSMA beyond its current 2036 expiry, triggering a fresh, open-ended round of renegotiation. The agreement remains in force while talks continue, but the predictability that CUSMA compliance used to offer businesses is, for the moment, less certain than it was a year ago.
Who this actually affects
The headlines focus on autos, dairy, and alcohol, but the actual scope of the affected tariff codes is significantly broader.
The three named sectors face the sharpest hit
Motor vehicles, dairy, and alcoholic beverages face a 50% tariff with no CUSMA exemption and no stated expiry, effective August 19, 2026.
The list reaches far beyond the headlines
Companies in wood products, chemicals, minerals, textiles, manufactured goods, and food products (including molasses, honey, and cereal and bakery preparations) should check the published tariff annexes for their own codes.
CUSMA is in renegotiation, not gone
The agreement stays in force while talks continue, but the US declining a clean extension adds a layer of uncertainty on top of the new tariffs themselves.
Where things stand right now
- August 19, 2026: 50% tariffs take effect on motor vehicles, dairy, and alcoholic beverages, no CUSMA exemption
- July 24, 2026: 10% Section 301 forced-labour tariff took effect on Canadian goods, CUSMA-compliant goods exempt
- Already in place: 25% tariff on steel and aluminum, 10% tariff on softwood lumber
- CUSMA: the US declined a clean extension on July 1; the deal remains in force to 2036 while renegotiation continues
- Retaliation: no formal Canadian countermeasures announced yet; the federal government has said trade talks with Washington are intensifying and that “everything is on the table” depending on the outcome
Given how quickly this has moved, this is a fast-changing situation, and further tariff actions or exemptions remain possible before and after the August 19 effective date.
How Ayming can help
Tariff uncertainty tends to push companies toward the same set of responses: qualifying a new supplier, adapting a product to avoid an affected tariff code, shifting production to reduce exposure, or accelerating automation to absorb rising costs without raising prices. Most companies treat this as a supply chain or operations problem. It’s also, often, an R&D problem, and one that can be partially funded.
Work done to requalify a formulation, redesign a process to use different inputs, or adapt a product for a new market to reduce tariff exposure can qualify for the Scientific Research and Experimental Development (SR&ED) tax credit, the same way any other systematic problem-solving does. In a period where cash flow and margin pressure are real concerns, a well-documented SR&ED claim is a source of non-dilutive funding that doesn’t depend on the outcome of trade negotiations.
SR&ED is also not the only lever available. Companies actively diversifying away from US-dependent markets may find support through government funding programs built for exactly this kind of transition, and provincial programs in several provinces have stood up contingency funds specifically to help businesses adapt to the current trade environment.
What to do now
- Confirm your exposure. Rather than relying on sector headlines, reach out to our Government Funding specialists to map your product lines against the affected lists and flag where you’re exposed.
- Document any pivot work now. If your team is reformulating, requalifying suppliers, or adapting processes in response to tariff exposure, start capturing that work as it happens. Ayming can help you set up the documentation practices to make sure that work is SR&ED-ready when it’s time to file.
- Talk to us before you assume nothing qualifies. The situation is still developing, but funding eligibility is generally based on the work itself, not on how the broader trade situation eventually resolves. A quick conversation with our team can tell you whether your current response to tariffs is already generating a claim.
Not sure how the new tariffs affect your business? Our specialists can help you assess the impact and the funding available to offset it.
Direct Government Funding
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