At 12:01 a.m. Eastern on September 29, 2026, the United States stopped admitting 68 tariff lines of Canadian goods under Section 338 of the Tariff Act of 1930. The lines include whey, molasses and non-alcoholic beer, plus alcohol and motorcycles above 800 cc. Goods imported before the cutoff stay dutiable at 50 percent. Goods imported after it cannot enter at any rate, and USMCA qualification gives no relief. If you buy Canadian whey protein concentrate, your decision is closed by rule, and the operating move is a qualified second origin, not a duty budget.
Key takeaways
- Proclamations 11061, 11062 and 11063 bar entry of 68 Canadian tariff lines from 12:01 a.m. ET on September 29, 2026: 53 alcohol, 8 whey, 5 molasses, 1 non-alcoholic beer and 1 motorcycle line (HTS 8711.50.00).
- Importation date decides treatment. Goods imported before the cutoff remain eligible for entry at the 50 percent duty, including withdrawals from bonded warehouses and foreign trade zones. Later imports meet ACE system rejects.
- The ban carries a severability clause. If a court voids a ban on a given product, the 50 percent duty applies to it in place of the ban.
- Whey was tight before the ban. WPC 34 percent rose from under $1 per pound in August 2024 to nearly $2 in July 2026, and USDA reports extremely tight WPC 34 percent inventories.
- On October 6, CBP opens CAPE Phase 3 for IEEPA refunds on finally liquidated entries. Only plaintiffs with a Court of International Trade reliquidation order and an importer of record number filed by July 30 qualify.
- On September 30, the Court of International Trade heard argument on Section 301 forced-labor duties of 10 to 12.5 percent. No ruling date exists, and plaintiffs ask for relief limited to the countries they import from.
- Input prices diverge. The ISM Prices index rose to 77.9 in September from 71.1 in August, while December corn settled at $5.0075 on September 30 after September 1 stocks of 2.10 billion bushels, up 35 percent.
- Diesel averaged $6.382 per gallon in the week ending September 28, up 14 percent from $5.599 on August 31. Brent closed near $102.25 on October 2, up 7.05 percent over one month.
What defined the week
The defining development is a change in kind, not in rate. Since August 22, 2026, goods covered by Proclamations 11046, 11047 and 11048 have paid an additional 50 percent ad valorem duty under Section 338. On September 29, the administration converted 68 of those tariff lines into prohibitions. A duty is a cost. You model it, pass it through, and where a court rules against it, you claim a refund. A prohibition has no rate to pay. CBP guidance bars entry for consumption, foreign trade zone admission, bonded warehouse storage and in-bond movement of the listed goods.
The authorities and dates are specific. The White House announced five proclamations on September 8. The Federal Register published the ban proclamations on September 14 (documents 2026-18835 and 2026-18836). The scope changes to the 50 percent duty lists took effect September 15. The bans took effect September 29. The White House fact sheet states the Section 338 duties apply in addition to Section 232 duties, and apply whether or not a good qualifies under USMCA. Twenty-one days separated announcement from cutoff.
The scale is narrow. The bans cover about $967 million of annual Canadian imports, roughly 90 percent of it alcohol, and about 0.2 percent of total US imports from Canada (ABC News, September 29). The exposure is concentrated in dairy ingredients. Canada shipped about 43 million pounds of whey protein concentrate, 21.2 million liters of fluid whey and 3.5 million pounds of dried whey to the US in 2025 (Cheese Reporter, September 11). Vesper estimates Canada supplied 29 percent of US imports of dry whey, WPC and milk protein concentrate, equal to about 6 percent of US production of those products (August 28).
The second set of rules governs courts and refunds, and you must not conflate it with the first. On September 30, a three-judge Court of International Trade panel heard challenges to Section 301 forced-labor duties of 10 to 12.5 percent, in force since July 24, 2026. The judges asked whether USTR followed the statutory process and whether plaintiffs have standing across economies from which they do not import. The government asked for remand without vacatur. The plaintiffs asked for remand with vacatur. On October 6, CBP opens CAPE Phase 3 for IEEPA refunds, limited to plaintiffs holding court reliquidation orders. Duties are priced and, for those who sue, refundable. A ban is neither.
Key developments
1. Which Canadian goods are barred from import, and which still pay 50 percent?
What happened. Proclamations 11061 (alcoholic beverages), 11062 (dairy-related products) and 11063 (motor vehicle-related products) exclude listed products of Canada from importation from 12:01 a.m. ET on September 29, 2026. CBP guidance (CSMS 70050970) names HTS headings 0404, 1702, 1703, 2202 through 2208 and 8711. The lines break down as 53 alcohol, 8 whey, 5 molasses, 1 non-alcoholic beer and 1 motorcycle line over 800 cc (HTS 8711.50.00), per two customs advisories. Several alcohol lines carry a packaged-goods scope limitation, so read the annex line, not the product name.
The operative test has three parts. The product must be a product of Canada. It must match an annex line and any scope limitation on the line. It must be imported at or after 12:01 a.m. ET on September 29. USMCA qualification does not change the result. Goods imported before the cutoff remain eligible for entry and, if sitting in a bonded warehouse or foreign trade zone, for withdrawal at the 50 percent duty under Proclamations 11046, 11047 and 11048. CBP will reject non-compliant filings in ACE with error codes 239, 335 and 886.
Worked example. A Canadian-origin dairy product still under the duty, entered at a customs value of $100,000, adds $50,000 of Section 338 duty on top of any ordinary duty. A Canadian whey lot imported after the cutoff generates no duty bill because the entry is refused.
Why this matters. Whey was tight before the ban. WPC 34 percent rose from under $1 per pound in August 2024 to nearly $2 in July 2026 (Food Processing). USDA Dairy Market News, retrieved October 3, describes WPC 34 percent inventories as extremely tight and dry whey as firm. Canada is a small share of US supply, but a buyer with a Canadian qualified source loses it with no price at which it returns.
Executive implications.
- Trade compliance, within five business days: match every open purchase order and every unit of bonded or foreign trade zone inventory to the annex lines at 8-digit HTS level, and record the importation date for each.
- Dairy ingredients category lead, within ten business days: start qualification of a second whey origin. Vesper identifies New Zealand as the largest alternative supplier to the US. Ask for pricing indexed to a published USDA WPC 34 percent series.
- Finance, within ten business days: reserve cash for 50 percent duty on goods withdrawn from bond. The proclamations are silent on drawback, so do not book a recovery.
2. Does a court ruling reach your imports?
What happened. On September 30, the Court of International Trade heard argument in a representative case on the Section 301 forced-labor duties. Learning Resources and Burlap and Barrel lead the challenges filed in July (Trade Law Daily, October 1). Plaintiffs prefer relief limited to the 8 to 12 countries from which they import. A broader remedy covering about 24 countries was discussed. No ruling date was set. Separately, CBP launches CAPE Phase 3 on October 6 for finally liquidated IEEPA entries. Judge Eaton's July 17 order covers only companies who filed IEEPA refund cases at the court. The broader orders sit on appeal at the Federal Circuit in V.O.S. Selections, Inc. v. Trump (National Law Review, September 18).
Why this matters. Relief tracks the plaintiff list. Phase 3 requires a court reliquidation order, a valid CAPE declaration and an importer of record number filed with CBP by July 30, 2026. CBP reports 286,000 declarations submitted, about $134.7 billion in accepted refunds and $1.3 billion on hold for missing bank details (C.H. Robinson, September 17). If you are not a plaintiff, you do not qualify for Phase 3 on October 6. Section 301 duties are not IEEPA duties, and CAPE removes IEEPA duties only.
Executive implications.
- General counsel and customs counsel, within five business days: confirm whether the company is a plaintiff, holds a reliquidation order and filed the importer of record number by July 30. Decide with counsel whether to file at the Court of International Trade, since residual deadlines begin to approach in February 2027.
- Treasury, within ten business days: confirm CBP holds your ACH refund details. Missing bank data holds refunds today.
- Trade compliance, within ten business days: build an entry-level ledger of Section 301 duties paid since July 24 by origin, rate and supplier, so a refund claim is possible if a court acts.
3. Where do input prices diverge, and where do you hold leverage?
What happened. The ISM Manufacturing PMI for September, released October 1, read 54.5 percent against 54.6 percent in August, a flat headline. The Prices index rose 6.8 points to 77.9, the highest since May. Supplier Deliveries read 59.0 against 59.3, still slowing for the tenth month. Inventories fell to 48.6 from 50.6, the first contraction since May. New Orders read 55.3 and Backlog 56.4. ISM respondents list resins, steel, aluminum, copper, freight and fuel among items up in price. The report gives no resin price level.
Grain moved the other way. USDA reported September 1 corn stocks of 2.10 billion bushels, up 35 percent from a year earlier and above the 1.918 billion bushel trade estimate, a seven-year high. December corn fell 21.25 cents to settle at $5.0075 on September 30, the lowest settlement since August 19. Wheat stocks fell 14 percent to 1.85 billion bushels. Soybean stocks fell 3 percent.
Energy remains elevated. EIA reports on-highway diesel at $6.382 per gallon for the week ending September 28, down from $6.529 the prior week and up from $5.599 on August 31. Trading Economics shows Brent at $102.25 on October 2, up 7.05 percent over one month and 58.45 percent over one year. Sources disagree on Hormuz traffic. Maritime Executive reports 17 transits on September 29 with Gulf crude flows of at least 16.5 million barrels per day in September, while a tracking site reports one transit on September 27. Container rates are falling. Drewry shows the World Container Index at $4,434 per 40-foot container on October 1, down 1 percent in the week and lower for 12 consecutive weeks.
Why this matters. Your input basket splits into three groups. Whey is scarce and now restricted. Corn is in surplus and cheaper. Energy and trucking costs are high while ocean container rates fall. A single weighted price assumption across your basket is wrong in both directions.
Executive implications.
- Category leads for corn-linked ingredients, within ten business days: review contracts priced off a fixed forward or a prior-month index and request repricing against the September 30 settlement.
- Logistics and finance, within ten business days: test fuel surcharge clauses against the $6.382 diesel level and the 14 percent rise since August 31.
- Packaging category leads, within five business days: collect origin data on corrugated die-cut boxes from China, Malaysia and Turkey. Commerce extended its adequacy deadline on the September 9 antidumping and countervailing petition to October 19 (Federal Register, October 2).
What this means for category strategy
Rank actions by financial consequence. First, dairy ingredients. Take a hypothetical plant buying 500,000 pounds of WPC 34 percent per year. WPC 34 percent moved about $1 per pound between August 2024 and July 2026. On this volume, the move is $500,000 per year. Every $0.10 per pound is $50,000. A forced move from a Canadian source to New Zealand or a domestic source adds freight, qualification time and a price premium to this base. Model the second source now, at today's spot, not after your Canadian stock is gone.
Second, goods still under the 50 percent duty. A $100,000 customs value adds $50,000 of duty, on top of ordinary duty and any Section 232 duty. Treat a duty line as a cost with an end date you do not control, and treat a banned line as a source you must replace. Do not carry banned lines in a landed cost model.
Third, Section 301 forced-labor exposure. Sources describe a 10 percent rate for 17 countries including the United Kingdom, India and Mexico, and 12.5 percent for about 38 countries including China, Vietnam and Thailand. On a $100,000 customs value, 12.5 percent is $12,500. Confirm the Chapter 99 treatment for your lines before you model, since USMCA goods, Section 232 products and 471 HTS subheadings are described as excluded.
Fourth, index-linked categories. Reprice corn-linked ingredients while the September 30 settlement is fresh. Fifth, freight. Pair falling container spot rates with rising diesel surcharges and renegotiate the surcharge schedule, not the base rate alone.
How leading organizations compress decision velocity
This week's trigger is a hard cutoff at 12:01 a.m. ET on September 29, announced 21 days earlier. A legacy operating model reads a trade counsel memo, forwards it to category managers, and reviews open orders by supplier country after the date passes. Purchase orders carry a supplier name and a price. Nobody knows which orders were imported before the cutoff until customs entries post.
A continuous intelligence model ingests the proclamation on the day it publishes, maps its annex lines to open purchase orders and inventory, and flags each order by expected importation date against the cutoff. The data attribute separating the two is an 8-digit HTS code and an expected importation date on every open purchase order line. Without both, you cannot tell a 50 percent duty from a prohibition until the shipment arrives.
The Kodiact perspective
Procurement is an engine of balance sheet resilience when finance and procurement read the same facts on the same day. This week shows three costs of operating in silos.
First, duty cash. A $100,000 Canadian entry withdrawn from bond after September 29 costs $50,000 in duty. If finance has not reserved it, the bill reaches the P&L as a surprise. The proclamations are silent on drawback, so no recovery path exists to offset it.
Second, refund cash. CBP has accepted about $134.7 billion of IEEPA refunds into CAPE and holds $1.3 billion for missing ACH banking details. The refund is owed. Treasury data blocks it. A procurement team logging duty by entry and a finance team owning bank details must connect before October 6, or the refund waits.
Third, price against margin. WPC 34 percent doubled in 23 months. Procurement sees a supplier price. Finance sees gross margin and inventory carrying value. A source removal on September 29 makes the replacement price a margin question for the CFO and a qualification question for the category lead, in the same week. Organizations connecting entry-level duty, supplier origin and unit cost in one view decide in days. Others decide when the quarter closes.
Boardroom questions
- What annual spend, in dollars, is Canadian-origin product under HTS headings 0404, 1702, 1703, 2202 through 2208 and 8711, and how much of it matches an annex line?
- What is your whey protein days of cover, and what share of whey volume comes from one origin?
- What is the dollar value of Canadian-origin goods in bonded warehouses or foreign trade zones awaiting withdrawal at 50 percent duty?
- Are you a Court of International Trade plaintiff holding a reliquidation order, and what dollar value of IEEPA duties sits on finally liquidated entries?
- How many dollars of Section 301 forced-labor duty have you paid since July 24, 2026, by origin and rate, and does the ledger exist at entry level?
Conclusion
A rule change from duty to prohibition moves risk from price to access. Prices respond to negotiation. Access does not. This week gave you a hard date, an annex of lines and an importation-date test, and 21 days to apply them. The organizations defending margin hold the HTS code and importation date for every open order, a ledger of duties paid by entry, and a qualified second source for each restricted ingredient. The organizations absorbing erosion learn the cutoff from a rejected entry.
Frequently asked questions
Which HTS headings does the September 29 ban cover?
CBP guidance for Proclamations 11061, 11062 and 11063 lists headings 0404 (whey), 1702, 1703 (molasses), 2202 through 2208 (non-alcoholic beer and alcoholic beverages) and 8711 (motorcycles). The annexes set the exact 8-digit lines. Two customs advisories count 68 lines. Match your code to the annex, not to the heading.
Does USMCA qualification exempt a Canadian good?
No. The White House fact sheet of September 8 states Section 338 duties apply whether or not a good originates under USMCA. The ban follows the same logic.
Does paying the 50 percent duty restore entry of a banned good?
No. For goods imported at or after 12:01 a.m. ET on September 29, no rate admits them. For goods imported before the cutoff, the 50 percent duty under Proclamations 11046, 11047 and 11048 still applies.
What happens to goods already in a bonded warehouse or foreign trade zone?
If importation occurred before 12:01 a.m. ET on September 29, the goods remain eligible for withdrawal for consumption at the 50 percent duty. The importation date decides, not the date you file the entry.
What happens if a court voids a ban?
Each proclamation includes a severability clause. If a court invalidates a ban for a particular import, the 50 percent duty from the underlying proclamation applies to it.
Who qualifies for CAPE Phase 3 on October 6?
Plaintiffs with a Court of International Trade reliquidation order covering finally liquidated IEEPA entries, with entries liquidated more than 80 days earlier, and with an importer of record number filed with CBP by July 30, 2026. Phase 3 removes IEEPA duties only. It does not refund Section 301 or Section 338 duties.
What are the Section 301 forced-labor rates and effective date?
Sources describe tiered duties effective July 24, 2026, with no expiry date, replacing the Section 122 surcharge of 10 percent. The rate is 10 percent for 17 economies including the United Kingdom, India and Mexico, and 12.5 percent for about 38 including China, Vietnam and Thailand. EU, Japan, Korea, Taiwan and Switzerland face rates subject to trade agreement ceilings. Confirm treatment and stacking in the Chapter 99 note for your line.
When does Commerce decide on the corrugated box petition?
Commerce extended the adequacy determination deadline to October 19, 2026 for the September 9 petition on certain corrugated die-cut cardboard boxes from China, Malaysia and Turkey. The petitioners are Smurfit Westrock and Pratt Industries with a labor union (Federal Register, October 2).
Sources. Federal Register documents 2026-18835, 2026-18836 and 2026-20257. CBP CSMS 70050970. White House fact sheet, September 8, 2026. ISM, October 1, 2026. USDA NASS, September 30, 2026. EIA weekly diesel series. Trading Economics, October 2, 2026. Drewry via DCN, October 1, 2026. Trade Law Daily, October 1, 2026. C.H. Robinson, September 17, 2026. National Law Review, September 18, 2026. Full source log in the Working Notes document.