U.S. Signals 50% Canada Tariffs Will Hit Aug. 19 Midnight Deadline

The Trump administration signaled Aug. 18 that a last-minute deal with Canada to avert 50% tariffs is unlikely before the midnight deadline, according to people familiar with the negotiations. U.S. officials privately described the chances of an Aug. 18 agreement as a coin flip or worse. The tariffs would take effect Aug. 19 under Section 338 of the Tariff Act of 1930, covering billions of dollars in Canadian goods.

What happens to cross-border freight if the Aug. 19 tariffs take effect?

The 50% tariffs would apply to Canadian goods entering the U.S. starting Aug. 19 at 12:01 a.m. Eastern. The levies are part of the Trump administration's review of the U.S.-Mexico-Canada Agreement (USMCA), the continental trade pact that replaced NAFTA. Section 338 of the Tariff Act of 1930 has never been used before. The administration invoked it to increase pressure on Canada during USMCA renegotiations.

President Donald Trump and Canadian Prime Minister Mark Carney were scheduled to speak Aug. 18 in what U.S. officials described as a long-shot attempt to reach an agreement. The two leaders also held a phone call Aug. 17. The U.S. provided what one person familiar with the matter called its best offer to Canada.

Auto sector treatment remains the major sticking point

Treatment of the auto sector has been the primary obstacle in negotiations. The U.S. wants Canada to end provincial alcohol boycotts of American-made products and drop other retaliatory measures. Canada is seeking a deferral of the proposed Section 338 tariffs and relief from existing tariffs on autos and steel.

Canadian negotiators warned their U.S. counterparts that implementing the Section 338 tariffs would provoke a public backlash in Canada and effectively end Carney's ability to negotiate concessions. Provincial governments have already pulled American-made alcohol from retail stores, and many Canadians have canceled or avoided U.S. trips in response to earlier Trump tariff actions.

A delay of the duties to allow more time for talks is possible but appears unlikely, according to people familiar with the matter. The two countries have seen sharp reversals and 11th-hour swings in trade actions throughout Trump's second term. In February 2025, Trump delayed a plan to impose 25% tariffs on imports from Canada and Mexico, only to impose a watered-down version the following month. Canada responded with retaliatory tariffs, but Carney removed many of them several months later.

What cross-border carriers need to know about Section 338

Section 338 of the Tariff Act of 1930 gives the president authority to impose tariffs when foreign countries discriminate against U.S. commerce. The provision has sat unused for nearly a century. The Trump administration's invocation of Section 338 marks the first time a president has used the statute to levy tariffs.

Carriers moving Canadian goods into the U.S. would face 50% duties on the declared value of those goods starting Aug. 19. The tariffs would apply at the port of entry. Customs and Border Protection (CBP) would collect the duties before releasing shipments. Carriers should expect delays at border crossings as CBP processes the new tariff assessments.

The tariffs would hit automotive parts, steel, aluminum, and other manufactured goods hardest. Cross-border freight volumes could drop sharply if the tariffs take effect, as importers delay shipments or seek alternative suppliers. Carriers with dedicated cross-border lanes should prepare for load cancellations and route changes.

Canada has threatened retaliation if tariffs take effect

Carney has said he will keep all options on the table to respond to new U.S. levies, including trade retaliation. Canadian officials have not specified what retaliatory measures they would impose, but past responses have included tariffs on U.S. steel, aluminum, and agricultural products.

Retaliatory tariffs would hit U.S. exports to Canada, reducing southbound freight volumes for carriers running backhauls. The combination of 50% U.S. tariffs on Canadian goods and Canadian retaliation on U.S. exports could shrink cross-border freight demand in both directions.

The relationship between the two longtime allies has been tense since Trump returned to office in 2025. Trump began his second term by imposing tariffs on Canada and Mexico and has suggested he would rather discard USMCA, the North American trade agreement he negotiated during his first presidency. The threat of Section 338 tariffs amounts to an attempt to increase pressure on Canada amid the USMCA review.

What carriers should do before the midnight deadline

Carriers with loads scheduled to cross the border Aug. 19 should confirm with shippers whether those loads will proceed or be canceled. Importers may choose to delay shipments until after the tariff situation resolves, or they may rush to clear customs before the midnight deadline.

Carriers should also verify that all customs paperwork is complete and accurate. CBP will scrutinize shipments more closely once the tariffs take effect. Missing or incorrect documentation will cause delays and could result in penalties.

If the tariffs take effect, carriers should expect longer wait times at border crossings as CBP processes the new duties. Plan for extended dwell time at ports of entry. Drivers should carry extra food, water, and fuel in case delays stretch beyond normal wait times.

Carriers should also monitor announcements from CBP and the Office of the U.S. Trade Representative (USTR) for any last-minute changes. The Trump administration has made 11th-hour reversals on tariffs before. Even if the tariffs take effect Aug. 19, they could be suspended or modified in the days that follow.

Cross-border freight outlook remains uncertain

It is not clear whether U.S. signals that a deal is unlikely represent the true state of negotiations or an attempt to increase leverage. Trump routinely makes last-minute demands of trading partners. The White House, USTR, and Carney's office did not immediately respond to requests for comment Aug. 18.

Carriers should prepare for the tariffs to take effect while remaining ready to pivot if a deal materializes. The uncertainty makes planning difficult, but the midnight deadline is firm. If no agreement is reached, the 50% tariffs will apply to Canadian goods entering the U.S. starting Aug. 19.