Section 338 Canada Alcohol Scope: HS 2204 Wine, HS 2205 Vermouth, HS 2206 Fermented Beverages, HS 2208 Spirits, and a Worked Stack on 100k Ontario VQA Wine Plus 200k Quebec Whisky

HS Chapter 22 alcoholic beverages sit inside Annex I of the July 20 2026 Presidential Proclamation on Canadian alcoholic beverages. That is the alcohol-specific proclamation, one of the three Section 338 Canada proclamations. The Chapter 99 heading for alcohol under U.S. Note 51 to Chapter 99 Subchapter III is 9903.03.12. Fifty percent ad valorem stacks on top of the MFN rate. USMCA does not waive it.

For a U.S. importer bringing in Ontario VQA wine, Nova Scotia craft rum, or Quebec whisky post-August 19, the delta versus pre-cliff is substantial and the destination-state distributor compliance overlays (Federal Excise Tax, state excise, TTB label approval, state alcohol beverage control paperwork) stack on top of the federal duty. Here is the scope map, the regional supply route context, and a worked stack.

HS 2204 wine

Heading 2204 covers wine of fresh grapes, including fortified wines, and grape must other than that of heading 2009.

Subheadings that matter for Canadian imports:

• 2204.10: Sparkling wine. Includes Ontario and Quebec sparkling wines produced under the traditional method or the Charmat method. MFN base rate on 2204.10.00.30 (sparkling wine valued over 1.59 per liter): around 19.8 cents per liter.
• 2204.21: Wine in containers holding 2 liters or less (standard 750ml bottled wine). Includes Ontario VQA (Vintners Quality Alliance) Cabernet Franc, Riesling, Chardonnay from Niagara Peninsula, Prince Edward County, and Lake Erie North Shore. MFN base rate on 2204.21.50.60 (wine valued over 1.05 per liter but not over 1.34): around 6.3 cents per liter. On 2204.21.80.90 (wine valued over 4.00 per liter): around 6.3 cents per liter or the specific rate depending on the exact 10-digit line.
• 2204.22: Wine in containers holding more than 2 liters but not more than 10 liters (large-format bottles, 3L and 5L formats).
• 2204.29: Wine in containers holding more than 10 liters (bulk wine for domestic bottling or blending). Includes Ontario and BC bulk wine to U.S. blenders.

All 2204 subheadings are covered under Annex I alcohol scope. All map to 9903.03.12 as the Chapter 99 heading.

Trap: ice wine (Ontario Niagara ice wine specifically, a significant export category) classifies under 2204.21 or 2204.22 depending on container size. Do not drift to 2206 (other fermented beverages) because ice wine is made from fresh grapes.

HS 2205 vermouth

Heading 2205 covers vermouth and other wine of fresh grapes flavored with plants or aromatic substances. Small volume from Canada but on the scope. MFN base rate around 3.7 cents per liter on the standard subheading. Maps to 9903.03.12.

HS 2206 other fermented beverages

Heading 2206 covers other fermented beverages (cider, perry, mead) and mixtures of fermented beverages. Canadian cider from Ontario, Quebec, and Nova Scotia is a growing export category and classifies here.

• 2206.00.15: Cider (fermented apple juice). MFN base rate around 0.4 cents per liter.
• 2206.00.30 through 2206.00.90: Other fermented beverages including mead, perry, and mixed beverages.

Covered under Annex I. Maps to 9903.03.12.

HS 2208 undenatured ethyl alcohol and spirits

Heading 2208 covers undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent, spirits, liqueurs, and other spirituous beverages.

Subheadings that matter for Canadian imports:

• 2208.20: Spirits obtained by distilling grape wine or grape marc (brandy, cognac-style). Small Canadian volume.
• 2208.30: Whiskies. Canadian whisky is a defined term in U.S. TTB regulations (27 CFR 5.22) and requires production in Canada. Includes Crown Royal, Canadian Club, Forty Creek, Lot 40, J.P. Wiser's. Quebec and Ontario distillery output.
  • 2208.30.30: Canadian whisky in containers each holding not over 4 liters. MFN base rate: free (0 percent).
  • 2208.30.60: Canadian whisky in containers each holding over 4 liters. MFN base rate: free.
• 2208.40: Rum and other spirits obtained by distilling fermented sugar-cane products. Includes Nova Scotia craft rum (Ironworks, Glenora area distilleries).
• 2208.50: Gin and geneva. Canadian craft gin volume.
• 2208.60: Vodka. Canadian craft vodka.
• 2208.70: Liqueurs and cordials. Canadian ice-wine-based liqueurs from Ontario and BC.
• 2208.90: Other. Includes non-standard spirits and mixed spirits products.

All 2208 subheadings are covered under Annex I. All map to 9903.03.12. Note that Canadian whisky under 2208.30 has an MFN base rate of free, so pre-cliff there was no federal duty at all. Post-cliff, the 50 percent Section 338 layer is the entire federal duty exposure.

Canadian regional supply route context

Ontario. Niagara Peninsula and Prince Edward County are the two main VQA wine regions. Ontario also has significant craft distillery output (Toronto, Prince Edward County, Kingston). Ontario wine and spirits typically ship to U.S. importers via truck through Windsor-Detroit, Fort Erie-Buffalo, or Sarnia-Port Huron border crossings.

Nova Scotia. Craft distillery output (rum, gin, whisky) from Halifax and Cape Breton. Wine from Annapolis Valley (Tidal Bay appellation). Typically ships to U.S. importers via Portland ME or Boston.

Quebec. Whisky production (JP Wiser's Quebec facility, Sazerac's Old Montreal operation) plus craft distilleries in Montreal and the Eastern Townships. Ships via Champlain-Rouses Point, Highgate Springs, or Derby Line border crossings.

British Columbia. Okanagan Valley wine and Vancouver Island craft distilleries. Ships to U.S. importers via Blaine-Surrey (Peace Arch) border crossing or via ocean containers Vancouver to Seattle-Tacoma.

For each origin, the destination-state distributor is typically a state-licensed importer under the three-tier distribution system (post-Prohibition state-level regulation). The distributor holds the state-level import license and handles the state-level excise and TTB paperwork.

Destination-state distributor compliance overlays

Federal Excise Tax (FET) is separate from the customs duty and stacks on top:

• Wine 14 percent alcohol or under: FET around 1.07 per gallon (Small Producer Tax Credit under IRC 5041 can reduce this for foreign wineries producing under 250,000 gallons annually, but the credit is being phased for foreign producers under current law).
• Wine over 14 percent alcohol: FET around 1.57 per gallon.
• Distilled spirits: FET 13.50 per proof gallon (a proof gallon is one gallon at 100 proof, or 50 percent alcohol by volume).
• Beer: FET around 0.58 per barrel for the first 60,000 barrels imported by any brewer, otherwise 3.50 per barrel.

State excise on top of that varies wildly. California wine excise is around 0.20 per gallon. Washington wine excise is around 0.87 per gallon. Distilled spirits state excise ranges from around 2.00 per gallon (Missouri) to over 30 per gallon (Washington markup on state-controlled sales).

TTB label approval under 27 CFR 4 (wine) and 27 CFR 5 (distilled spirits) is required for the U.S. market before the product can be sold. Certificates of Label Approval (COLA) turn around in 15 to 30 days for standard labels, longer for label revisions or new brand registrations.

State alcohol beverage control (ABC) paperwork varies. Control states (Pennsylvania, Utah, New Hampshire, others) sell alcohol through state-run stores. License states have private distributors under state license. The state-level workflow is separate from and additional to the CBP customs entry.

Worked stack: 100k CIF Ontario VQA wine plus 200k CIF Quebec whisky, post-Aug 19

Shipment A: 100,000 CIF Ontario VQA wine, HS 2204.21.

• Volume: assume 20,000 liters (about 26,600 bottles at 750ml).
• MFN base rate under USMCA: 0 percent (USMCA-qualifying wine of fresh grapes originating in Canada).
• Section 338 under 9903.03.12: 50 percent of 100,000 = 50,000.
• MPF: 0.3464 percent of 100,000 = 346.40, capped at 634.62 (this shipment is under the cap).
• HMF: 0 (land border via Fort Erie-Buffalo).
• Federal Excise Tax on 20,000 liters (about 5,283 gallons) at 1.07 per gallon (wine 14 percent or under): about 5,653.
• Total federal duty and fees and FET: 50,000 + 346.40 + 5,653 = about 55,999.

Shipment B: 200,000 CIF Quebec whisky, HS 2208.30.

• Volume: assume 8,000 liters at 40 percent ABV (about 2,113 gallons at 80 proof, which is 1,690 proof gallons).
• MFN base rate under USMCA: free (0 percent).
• Section 338 under 9903.03.12: 50 percent of 200,000 = 100,000.
• MPF: 0.3464 percent of 200,000 = 692.80, capped at 634.62.
• HMF: 0 (land border via Champlain).
• Federal Excise Tax on 1,690 proof gallons at 13.50 per proof gallon: about 22,815.
• Total federal duty and fees and FET: 100,000 + 634.62 + 22,815 = about 123,450.

Combined federal exposure post-cliff on the two shipments: about 179,449. State excise and TTB compliance costs stack on top of that at the state distributor level.

Pre-cliff equivalent (August 18 filing): Shipment A about 5,999 (FET plus MPF, no S338). Shipment B about 23,450 (FET plus MPF, no S338). Combined about 29,449.

Delta across the cliff: about 150,000 on the combined shipment. The 50 percent Section 338 layer is the entire delta.

Related

For the Chapter 99 heading assignment map covering all three S338 categories (alcohol, dairy, wood and vehicle) and how the 9903.03.12 through 9903.03.14 headings line up against the annexes, see HS 9903.03.12 through 9903.03.14 Canadian Goods Chapter 99 Heading Map.

Primary sources

• HTSUS (2026 revision), Chapter 22 headings 2204, 2205, 2206, 2208.
• U.S. Note 51 to Subchapter III of Chapter 99, HTSUS, alcohol category mapping to 9903.03.12.
• Presidential Proclamation of July 20, 2026 (alcoholic beverages).
• 27 CFR 5.22, TTB definition of Canadian whisky.
• 27 CFR 4 (wine labeling) and 27 CFR 5 (distilled spirits labeling), TTB COLA requirements.
• IRC 5041 (wine excise), IRC 5001 (distilled spirits excise), IRC 5051 (beer excise).
• 19 USC 4462, HMF (ocean unlading only).
• USMCA (United States-Mexico-Canada Agreement) Chapter 4 (rules of origin).