UpTrajectory Review

CPA Practice Advisor's piece by Isaac O'Bannon addresses Section 338 tariffs on Canadian goods, a topic that has been generating confusion among importers and their advisors since the executive order was signed in late 2025. The available text is extremely brief, but the headline and the single excerpted sentence tell us something important: these tariffs apply broadly to Canadian products, including many that would otherwise qualify for duty-free treatment under the United States-Mexico-Canada Agreement. That is the critical fact small-business operators need to sit with, because it upends a baseline assumption many have held since USMCA took effect.

For a small-business operator who sources components, finished goods, or raw materials from Canada, the practical consequence is immediate and measurable. If you built your pricing, your margins, or your supplier contracts around the assumption that USMCA-compliant goods would cross the border without tariffs, that model may no longer hold. The piece appears aimed at helping owners understand the scope of Section 338 and what products fall within its reach. Given how thin the excerpt is, the full article likely walks through specific product categories, effective dates, and possibly guidance on how to determine whether a given import is affected.

What is genuinely notable here is the tension between a trade agreement designed to eliminate tariffs and a unilateral executive action that reimposes them on a key trading partner. USMCA was negotiated precisely to give North American supply chains predictability. Section 338 undercuts that predictability for Canadian goods specifically, which raises real questions about whether the tariffs are a negotiating tactic, a revenue measure, or something more durable. We are skeptical of any assumption that these levies are temporary. Businesses that delay adjusting their import strategy on the hope of a quick reversal risk absorbing costs they could have planned around.

The downstream effects ripple outward quickly. Canadian suppliers may see order volumes drop as US buyers reassess costs, which could strain relationships that took years to build. Domestic distributors who compete with Canadian imports may gain a short-term price advantage, but businesses that rely on Canadian inputs for manufacturing could see their cost of goods sold climb with no easy substitute. There is also a compliance burden: owners will need to verify tariff classifications, confirm whether their specific products are on the affected list, and potentially renegotiate terms with suppliers to share the added cost. None of that is free.

The most useful next step for any operator importing from Canada is to pull your most recent customs entries and identify which lines are currently claiming USMCA duty-free status. Cross-reference those against the Section 338 product list, which the full article presumably details. If your goods are affected, run the numbers on landed cost with the tariff applied and decide whether to absorb it, pass it to customers, renegotiate with your supplier, or explore alternative sourcing. Watch also for any legal challenges or legislative efforts to claw back the tariffs, but do not build your cash-flow projections on that outcome. The operators who move fastest on this will protect their margins better than those who wait for clarity that may never come.

“Section 338 tariffs apply to a variety of Canadian products, including many otherwise eligible for duty-free status under USMCA.” — CPA Practice Advisor

Takeaway: Audit your Canadian imports now to identify which USMCA duty-free lines are hit by Section 338 tariffs, then reprice or renegotiate before margins erode.