Two North American industrial unions representing 1.45 million workers have asked U.S. Trade Representative Jamieson Greer to abandon the Section 338 tariffs on Canada, arguing that Washington is aiming a protectionist weapon at the wrong country three weeks before the duties take effect
PITTSBURGH and OTTAWA, August 2, 2026 (Peacock Tariff Consulting) – The most consequential pushback yet against the United States’ first ever use of Section 338 of the Tariff Act of 1930 has come not from Ottawa, not from Canadian industry associations, and not from the U.S. Chamber of Commerce, but from two labour organisations that have spent decades arguing for tougher American trade enforcement.
United Steelworkers International President Roxanne Brown and IAM Union International President Brian Bryant wrote jointly to U.S. Trade Representative Jamieson Greer urging him to reconsider the 50 per cent tariffs scheduled to hit roughly US$20 billion of Canadian goods on August 19, and to replace them with a trade policy built on what the two leaders called the long history and unique relationship the two nations share.
The letter, released publicly by the USW and amplified across Canadian media through the final days of July, describes a bilateral relationship “marked more by division than co-operation.” Its central argument is not that tariffs are wrong. It is that these tariffs are pointed at the wrong target.
“Our priority must be to align our trade policies to address the challenges posed by unfair and predatory trade practices of countries like China, not to drive a further wedge between our nations,” the letter reads, according to the text reported by CTV News and CP24.
Together, the USW and the International Association of Machinists and Aerospace Workers represent approximately 1.45 million active and retired workers across North America. The USW puts its own membership at 850,000 across metals, mining, pulp and paper, rubber, chemicals, glass, auto supply, energy, technology, higher education and the public sector. The IAM reports roughly 600,000 in aerospace, defence, airlines, shipbuilding, rail, transit, healthcare and automotive.
Both unions have members on both sides of the border. That is the fact that gives the letter its force, and it is the fact that makes the Section 338 measures uncomfortable for a trade agenda built on the promise of restoring industrial employment.
What the letter says
The unions are careful to position themselves inside the administration’s broader trade project rather than outside it.
“Our unions have supported several of the administration’s trade actions,” the letter states. “We will continue our work to abandon the outdated and misguided free trade orthodoxy in favor of trade policies that address the reality of markets and the policies of many of our trade partners.”
That is followed immediately by the objection. “However, we must also speak out against policies that undermine our ability to strengthen our economic and national security. Canada has been a trusted and valued partner for decades.”
The letter also draws an explicit contrast between the two North American trading relationships. “Unlike our trade relationship with Mexico, U.S.-Canada trade is more balanced with wage, labor, environmental and other key issues that are aligned and compatible,” it says.
Brown put the argument in blunter terms in the USW’s accompanying statement. “While it’s true that workers and their communities have suffered greatly from decades of so-called free trade, Canada has never been the problem,” she said. “Our two nations share a deep collaboration built on decades of economic integration as well as intelligence and defense cooperation. Rather than imposing further tariffs through Section 338 or any other mechanism, we should instead work together with our Canadian allies to limit illegal trade practices and advance our shared prosperity.”
Bryant framed the IAM position around enforcement priorities. “Unfair trade has no place in the global economy, and the IAM Union supports strong trade enforcement that protects human rights, defends good-paying jobs, and holds bad actors accountable,” he said. “But trade policy should also strengthen partnerships with allies that share our commitment to fair labor standards. Canada is one of our closest economic partners, and we urge the administration to work with the Canadian government to preserve the integrated manufacturing relationship that supports workers on both sides of the border.”
The two unions’ Canadian leaders reinforced the cross border framing. Marty Warren, USW National Director for Canada, pointed to the physical structure of North American production. “USW members in Canada proudly work in coordination with their U.S. counterparts, with materials and components historically passing back and forth across our border several times before becoming a finished good,” Warren said. “Canadian workers also understand what’s at stake for their jobs and communities if we fail to curb the illegal trade practices that are fueling global overcapacity. Providing a united front against bad actors will help advance the interests of workers in both countries.”
David Chartrand, IAM Union Canadian General Vice President, made the aerospace case. “Canadian and American IAM Union members build some of the most advanced aerospace and manufacturing products in the world together every day,” he said. “Our economies and our members succeed when the United States and Canada work together as partners.”
In a follow up statement issued as the letter drew Canadian coverage, the Canadian arm of the USW welcomed the intervention. “When workers are threatened in one country, our union stands together across borders,” it said.
The measure the unions are contesting
President Donald Trump signed three proclamations on July 20, 2026, imposing an additional 50 per cent ad valorem tariff on specified Canadian products under Section 338 of the Tariff Act of 1930. The duties take effect at 12:01 a.m. Eastern on August 19 on goods entered for consumption or withdrawn from warehouse for consumption on or after that date.
Section 338 permits the president to impose duties of up to 50 per cent on imports from any country found to discriminate against United States commerce or to impose unreasonable restrictions on American goods that are not equally applied to other countries. It requires only a presidential finding and proclamation. No prior investigation by the U.S. International Trade Commission, the Office of the U.S. Trade Representative or the Department of Commerce is required.
The statute has never before been used to impose tariffs in its 96 year history. Holland & Knight, in a July 29 client alert, described the action as raising “significant legal questions that are likely to be tested in the U.S. Court of International Trade,” noting open issues including whether Section 301 superseded Section 338 and whether an ITC investigation is a precondition.
The three proclamations cite distinct triggering conduct. The motor vehicles proclamation targets Canada’s 25 per cent surtax on United States origin vehicles, imposed in April 2025 as a countermeasure to American Section 232 auto tariffs and applied only to American imports. The alcoholic beverages proclamation targets the decision by Canadian provinces and territories, beginning in early 2025, to halt purchase, distribution or retail sale of American alcohol while continuing to stock product from other countries. The dairy proclamation targets Canada’s administration of tariff rate quotas under the Canada United States Mexico Agreement, which the White House argues imposes eligibility criteria on American suppliers more restrictive than those afforded to European Union suppliers under the Canada European Union Comprehensive Economic and Trade Agreement.
USTR estimates the three proclamations collectively cover nearly US$20 billion in Canadian imports across hundreds of eight digit tariff classifications.
Why the scope is the real story
The gap between the stated justification and the actual coverage is where the unions’ complaint gains its substance.
According to Holland & Knight’s analysis, the motor vehicles proclamation alone spans 18 pages and hundreds of classifications, and none of its 439 traded lines falls in the tariff schedule’s vehicles chapter. Covered categories include agricultural products, textiles, wood products, cement, furniture, consumer goods, and selected machinery and electrical equipment.
Blake, Cassels & Graydon set out a comparable inventory in its July 23 bulletin: electronics including phones, cameras, monitors, circuit boards and GPS devices; machinery including hydraulic turbines, refrigeration equipment and agricultural machinery; wood and paper products including pulp, stationery, boxes, labels and envelopes; chemical goods including fuel additives and industrial chemicals; textiles including silk, wool, cotton, ropes, carpets and ribbons; plastics and rubber articles; furniture; and leather luggage, handbags, belts and gloves.
The alcohol proclamation reaches beyond beverages to hockey equipment, citrus essential oil, wooden cutting boards and kitchenware, and printing and writing paper. The dairy proclamation covers approximately 52 classifications, extending past milk and cream products to molasses, glucose and fructose syrups, bakery mixes and doughs, non alcoholic beer, hop cones and peppermint essential oils.
For unions whose members work in machinery, electrical equipment, aerospace supply, paper, chemicals and metals fabrication, that scope is not an abstraction. It describes the inputs their American plants buy and the outputs their Canadian plants sell.
The CUSMA carve out that is not there
The single most significant technical feature of the Section 338 measures, and the one that most directly threatens integrated production, is the absence of a CUSMA exemption.
The additional 50 per cent applies in full regardless of whether a good qualifies for preferential treatment under the Canada United States Mexico Agreement. Holland & Knight called this “a significant departure from other Canada tariff regimes.” Blakes flagged the same point, noting that unlike previous American measures, the new tariffs will apply to goods that would otherwise qualify for preferential treatment.
Under most of the tariff architecture built since 2025, a valid certificate of origin was the escape hatch. Companies restructured supply chains, re documented sourcing and re engineered bills of materials to achieve CUSMA origination, and in doing so absorbed real compliance cost in exchange for tariff relief. Section 338 removes that return on investment for covered lines.
There are carve outs, but they are structural rather than preferential. Articles already subject to Section 232 duties are exempt, which covers steel, aluminium, copper and derivatives, passenger and commercial vehicles and parts, specified wood products, semiconductors and patented pharmaceuticals. Qualifying civil aircraft and parts under General Note 6 are excluded, though unmanned aircraft are not. Energy, potash, fish and certain critical minerals do not appear on the lists. Relief under many Chapter 98 provisions is preserved.
The Section 232 carve out produces an unusual result. A Canadian good already carrying a 50 per cent Section 232 steel duty is spared the Section 338 duty. A Canadian good carrying no sectoral duty at all now faces 50 per cent. The measure is heaviest on the parts of the relationship that had, until now, been least disturbed.
The negotiating logic
Most trade analysts read the 30 day window between proclamation and effective date as a deliberate pressure device rather than an administrative necessity.
Section 338 ties the duty rate to the level of the discrimination it is meant to offset, which means resolution of the underlying issues could trigger a reduction. The president may suspend, amend or revoke any proclamation at any time. He may also, under Section 338(b), escalate to a full import ban if the discrimination continues.
Holland & Knight observed that addressing the three targeted issues is procedurally simple but politically complex for Ottawa. Two of the three involve Canadian retaliatory actions that could be reversed, namely the auto surtax and the provincial alcohol measures. The third, dairy tariff rate quota eligibility, is a technical problem addressable within the ongoing CUSMA review.
The difficulty is that reversing the auto surtax and the provincial alcohol bans would mean unilaterally dismantling Canada’s principal countermeasures while American sectoral tariffs remain in place, and doing so under an explicit deadline. Provincial liquor decisions are also not Ottawa’s to make.
Prime Minister Mark Carney has said Canada “stands ready to engage intensively,” and Greer has confirmed that talks have not been cut off. Carney described the American action as raising costs for families, particularly in the United States, and characterised it as the latest in a run of one sided trade actions that violate the two countries’ free trade commitments.
Meeting the 13 premiers in Charlottetown in late July, Carney kept retaliation on the table without committing to it. “If these tariffs or other measures come into force, there’s a full range of things that we can do,” he said, adding that “everything is on the table if there’s no agreement, depending on the outcome of the negotiations.” He declined to specify what those measures would be, saying it would be counterproductive to discuss retaliation while talks continue.
The scale of what is at stake
The unions anchored their appeal in the size of the relationship. Total merchandise trade between the two countries exceeded US$700 billion last year.
United States Census Bureau data shows American goods imports from Canada at US$412 billion in 2024, falling to US$382 billion in 2025. From January to May 2026, Canadian goods exports to the United States totalled US$163 billion. The nearly US$20 billion covered by the Section 338 proclamations represents roughly 5.2 per cent of the 2025 import total.
Karl Schamotta, chief market strategist at Corpay, estimated that the Section 338 measures alone will raise the average tariff rate on Canadian goods by 2.3 percentage points.
That number understates the disruption for affected firms. A 2.3 point average across all Canadian exports is the arithmetic result of applying 50 per cent to a narrow base. For a Canadian manufacturer whose entire product line sits on an annex, the applicable figure is not 2.3 per cent. It is 50.
Implications for Canadian exporters
Canadian firms shipping into the United States have three weeks to complete a defined set of tasks.
Classification review is the first and most urgent. Every Canadian origin product line should be checked against the annexes to the three proclamations at the eight digit level. Holland & Knight specifically flagged Chapters 84 and 85, machinery and electrical equipment, as areas where classification accuracy will determine exposure, because the covered lines there are numerous and non intuitive.
The Section 232 carve out should be tested next. A product already subject to Section 232 duties escapes Section 338, and the boundary between the two regimes is worth establishing precisely rather than assumed.
Contract review follows. Supplier and customer agreements should be assessed for duty risk allocation, price adjustment mechanisms, force majeure and tariff escalation triggers. Where the American buyer is the importer of record, the immediate cash impact falls on them, but the commercial pressure returns to the Canadian seller within one negotiating cycle.
Pre effective date shipment is a live option for covered goods where the buyer has warehousing capacity. Goods entered before August 19 are outside the measure. Firms considering this route should confirm that foreign trade zone admissions on or after August 19 must enter under privileged foreign status, meaning the Section 338 duty attaches on consumption entry rather than being avoided by zone admission.
Litigation monitoring matters more here than in an ordinary tariff cycle. Because Section 338 has never been used, and because the Supreme Court struck down the administration’s emergency powers tariffs earlier in 2026, the probability that the measure is modified or vacated by a court is materially above zero. Firms should preserve entry records in a form that would support a refund claim.
Implications for Canadian importers and the domestic market
The mirror image also deserves attention. Canada’s own countermeasures, including the 25 per cent surtax on United States origin motor vehicles, remain in force and are now the named justification for the largest of the three American proclamations.
Canadian importers of American goods have also lost most of the relief they had been relying on. Broad based remission that had covered goods used in healthcare, public safety, national defence and security, food manufacturing and packaging, and agricultural processing has been phased out through 2026, with remission for steel goods used in manufacturing ending February 1 and remission for motor vehicle and aerospace manufacturing inputs ending July 1. Remission for aluminium and for public health, healthcare, public safety and national security goods also ended July 1.
The result is that the compliance environment has tightened on both sides of the border simultaneously. Canadian importers who built their 2026 costing on horizontal remission are now paying the full counter tariff, and case by case remission applications remain the only route to relief.
What the letter signals
The USW and IAM intervention will not on its own change the August 19 date. Neither union asked for the abandonment of tariffs as an instrument, and neither withdrew support for the administration’s enforcement agenda against China and other targets.
What the letter does is remove a rhetorical foundation. Tariffs aimed at allies are conventionally defended in the name of industrial workers. When the two largest industrial unions in North America state publicly that the measure damages their members on both sides of the border, that defence becomes harder to sustain.
For Canadian businesses, the letter is a reminder that the constituency opposing these tariffs inside the United States is broader than commonly assumed, and that it includes organisations with direct access to the administration’s trade team. It is also a reminder that access is not the same as outcome. The proclamations remain in force, the annexes remain unchanged, and the clock continues to run toward August 19.