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HS 2204 Wine and HS 2208 Spirits: Federal Excise Tax Plus Section 338 Hybrid Rate Mechanics, T-1 Stack Delta on 100k CIF Toronto Wine and 100k CIF Quebec Spirits

HS 2204/2208 hybrid specific plus ad valorem MFN rate mechanics plus TTB Federal Excise Tax stacked with Section 338 on Aug 22. Two 100k CIF worked examples.

Updated Fri Aug 21 2026 00:00:00 GMT+0000 (Coordinated Universal Time)9 min read
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HS Chapter 22 duty stacks are not a single ad valorem rate. They are a compound structure: MFN base (which for wine and spirits is a specific rate per liter or per proof-gallon, not ad valorem), plus Federal Excise Tax (FET) administered by the Alcohol and Tobacco Tax and Trade Bureau (TTB) at 27 CFR Part 25 and Part 27, plus (as of 12:01 AM EDT Saturday August 22 2026) Section 338 at 50 percent ad valorem under 9903.03.12 per U.S. Note 51 Subchapter III of Chapter 99. Optional destination-state excise and markup layer separately.

For a wine importer bringing in Ontario or BC wine, or a spirits importer bringing in Quebec whisky or Canadian rye, the T-1 duty stack tonight is not the same as the T+1 stack Saturday morning. The delta on 100,000 CIF is roughly 50,000 in additional federal duty, but the compound arithmetic is not straightforward, and a broker calculation that assumes ad valorem MFN base will materially misstate the pre-cliff figure.

This piece walks the hybrid MFN rate mechanics, the FET assessment mechanics under 26 USC 5041 (wine) and 26 USC 5001 (spirits), and the Section 338 layer on top. Two worked examples: 100,000 CIF Toronto wine consignment and 100,000 CIF Quebec spirits consignment.

Sources: hts.usitc.gov (HTS Chapter 22), ttb.gov/regulations-laws/formal-documents/federal-excise-tax-rates, 26 USC 5001 and 5041 via uscode.house.gov, whitehouse.gov/presidential-actions/2026/07/proclamation-11046-alcoholic-beverages, ecfr.gov/current/title-27.

HS 2204 wine: MFN base rate mechanics

HTS 2204 is "Wine of fresh grapes, including fortified wines; grape must other than that of heading 2009." The 8-digit and 10-digit subheadings carry mostly specific rates (cents per liter), not ad valorem rates.

Selected 2026 HTS 2204 rates (all Column 1 General):

  • 2204.10.00.30 Sparkling wine, valued over 1.59 per liter: 19.8 cents per liter.
  • 2204.21.50.05 Effervescent wine, in containers holding 2 liters or less, valued not over 4.00 per liter: 4.2 cents per liter.
  • 2204.21.50.15 Effervescent wine, in containers holding 2 liters or less, valued over 4.00 per liter: 4.2 cents per liter.
  • 2204.21.50.60 Other wine, in containers holding 2 liters or less, valued over 1.05 per liter but not over 1.34 per liter: 6.3 cents per liter.
  • 2204.21.80.30 Other wine, in containers holding 2 liters or less, valued over 1.34 per liter: 6.3 cents per liter.
  • 2204.21.80.60 Other wine, in containers holding 2 liters or less, valued over 4.00 per liter (typical VQA and premium Ontario table wine): 6.3 cents per liter.
  • 2204.22 Wine in containers holding more than 2 liters but not more than 10 liters: rates vary from 6.3 to 22.4 cents per liter.
  • 2204.29.00.40 Other wine, in containers holding more than 10 liters (bulk): 14 cents per liter.

The specific-rate architecture means MFN base duty does not scale with value. A 1,000-liter shipment of 4.00-per-liter wine at 6.3 cents per liter pays 63.00 in MFN base. A 1,000-liter shipment of 40.00-per-liter premium wine at 6.3 cents per liter pays 63.00 in MFN base. Same MFN. Different CIF value. This is the operative anchor for the pre-cliff calculation.

HS 2208 spirits: MFN base rate mechanics

HTS 2208 is "Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol; spirits, liqueurs and other spirituous beverages."

Selected 2026 HTS 2208 rates:

  • 2208.20.20.00 Grape brandy: free.
  • 2208.20.40.00 Pisco and Singani: free.
  • 2208.30.30.30 Whisky, Bourbon, in containers each holding not over 4 liters: free (WTO-bound zero rate).
  • 2208.30.60.40 Whisky, Canadian, in containers each holding not over 4 liters: free (WTO-bound zero rate).
  • 2208.40.20.00 Rum, in containers each holding not over 4 liters, in bulk: 23.7 cents per proof liter.
  • 2208.50.00.00 Gin and Geneva, in containers each holding not over 4 liters: free.
  • 2208.60.20.00 Vodka, in containers each holding not over 4 liters, valued over 2.05 per proof liter: free.
  • 2208.70 Liqueurs and cordials: free.
  • 2208.90 Other spirits: mixed, most subheadings free.

Key point: Canadian whisky, Canadian rye, and most spirits imports from Canadian distilleries carry zero MFN base duty. The primary federal cost on the pre-cliff stack for Canadian spirits is FET, not MFN duty.

Federal Excise Tax under 26 USC 5041 (wine)

FET on wine is administered under 26 USC 5041 and 27 CFR Part 24 (production) and Part 27 (importation). Import FET is assessed at the port of entry by CBP acting as TTB's agent under 27 CFR 27.48, based on the alcoholic strength and container size.

2026 wine FET rates (per wine gallon, converted to per-liter basis for import calculations):

  • Still wine not over 16 percent alcohol by volume (typical table wine including VQA Ontario): 1.07 per wine gallon = 0.2827 per liter.
  • Still wine over 16 percent but not over 21 percent alcohol by volume (fortified wines): 1.57 per wine gallon = 0.4148 per liter.
  • Still wine over 21 percent but not over 24 percent: 3.15 per wine gallon = 0.8322 per liter.
  • Champagne and other sparkling wine: 3.40 per wine gallon = 0.8983 per liter.
  • Artificially carbonated wine: 3.30 per wine gallon = 0.8719 per liter.

Small Producer Tax Credit under 26 USC 5041(c) applies to certain qualifying wineries but does not extend to imports.

Federal Excise Tax under 26 USC 5001 (spirits)

FET on distilled spirits is assessed per proof gallon. A proof gallon is one liquid gallon at 50 percent alcohol by volume (100 proof). Actual FET on a bottle scales with actual alcoholic strength.

2026 spirits FET rates (per proof gallon, per 26 USC 5001):

  • Base rate: 13.50 per proof gallon.
  • Small producer/importer reduced rate under 26 USC 5001(c)(1): 2.70 per proof gallon on the first 100,000 proof gallons annually (Craft Beverage Modernization Act, made permanent in the Taxpayer Certainty and Disaster Tax Relief Act of 2020).
  • Reduced rate under 26 USC 5001(c)(2): 13.34 per proof gallon on the next 22,130,000 proof gallons annually.

For a Canadian whisky importer, the effective FET rate depends on annual import volume. Assume the base 13.50 per proof gallon for the worked example.

Section 338 layer under 9903.03.12

50 percent ad valorem on the CIF value at U.S. port of entry. Not ad valorem on the sum of CIF plus FET. The Section 338 base is the CIF value alone, per the standard entered-value calculation under 19 USC 1401a transaction value.

Worked example 1: 100,000 CIF Toronto Ontario VQA wine

Consignment:

  • Product: 5,500 750ml bottles of Niagara Peninsula VQA Cabernet Franc, 13.5 percent alcohol by volume. HS 2204.21.80.60.
  • Total volume: 4,125 liters = 1,090 wine gallons.
  • CIF value at U.S. port of entry: 100,000.
  • Per-bottle CIF: 18.18.
  • Per-liter CIF: 24.24.
  • Border crossing: Buffalo NY (Peace Bridge).
  • Destination: New York State licensed wholesaler.

Pre-cliff stack (release before 12:01 AM EDT August 22):

  • MFN base under 2204.21.80.60: 6.3 cents per liter x 4,125 liters = 259.88.
  • FET under 26 USC 5041(a)(1), still wine not over 16 percent ABV: 1.07 per wine gallon x 1,090 wine gallons = 1,166.30.
  • MPF: 634.62 (2026 cap on ad valorem MPF for formal entries).
  • HMF: not applicable (truck at land border).
  • Total federal cost pre-cliff: approximately 2,061.

Post-cliff stack (release at or after 12:01 AM EDT August 22):

  • MFN base: 259.88.
  • FET: 1,166.30.
  • Section 338 under 9903.03.12: 50 percent x 100,000 CIF = 50,000.
  • MPF: 634.62.
  • Total federal cost post-cliff: approximately 52,061.

Delta: 50,000 exactly on the CIF value.

Percentage terms: pre-cliff federal cost is 2.06 percent of CIF value. Post-cliff federal cost is 52.06 percent of CIF value. A 25x jump in effective federal duty burden. And this does not include New York State excise (30 cents per gallon on still wine under NY Tax Law 424) or the three-tier distribution markup that adds another 50 to 100 percent on wholesale price.

Worked example 2: 100,000 CIF Quebec whisky

Consignment:

  • Product: 4,200 750ml bottles of Quebec-distilled Canadian whisky, 40 percent alcohol by volume (80 proof). HS 2208.30.60.40 (Whisky, Canadian, in containers each holding not over 4 liters).
  • Total volume: 3,150 liters = 832 US liquid gallons.
  • Proof gallons: 832 gallons x (80 proof / 100 proof) = 665.6 proof gallons.
  • CIF value at U.S. port of entry: 100,000.
  • Per-bottle CIF: 23.81.
  • Border crossing: Highgate Springs VT.
  • Destination: Boston MA licensed wholesaler.

Pre-cliff stack:

  • MFN base under 2208.30.60.40: free (0.00).
  • FET under 26 USC 5001(a), base rate 13.50 per proof gallon x 665.6 proof gallons = 8,985.60.
  • MPF: 634.62.
  • HMF: not applicable.
  • Total federal cost pre-cliff: approximately 9,620.

Post-cliff stack:

  • MFN base: 0.00.
  • FET: 8,985.60.
  • Section 338 under 9903.03.12: 50 percent x 100,000 CIF = 50,000.
  • MPF: 634.62.
  • Total federal cost post-cliff: approximately 59,620.

Delta: 50,000 exactly on the CIF value.

Percentage terms: pre-cliff federal cost is 9.62 percent of CIF value. Post-cliff federal cost is 59.62 percent of CIF value. A 6.2x jump in effective federal duty burden.

The Massachusetts state layer adds another cost: MA Alcoholic Beverages Control Commission markup rules under 204 CMR 2.00, plus MA excise tax under M.G.L. Chapter 138 Section 21 (4.05 per proof gallon on distilled spirits over 15 percent ABV). MA excise: 4.05 x 665.6 proof gallons = 2,695.68. Not federally-imposed, but a real landed cost.

Chapter 22 sub-scope catches to watch

Wine imports:

  • Fortified wine (14 to 22 percent ABV): 2204 subheadings, but FET jumps from 1.07 to 1.57 per wine gallon at 16 percent ABV threshold. Section 338 attaches on Annex I alcohol scope, so 9903.03.12 attaches to fortified wine.
  • Ice wine and dessert wine: classify under 2204.21 or 2204.22 depending on container size, not under 2206 (other fermented beverages). Ice wine is made from fresh grapes. Section 338 attaches under 9903.03.12.
  • Vermouth (HS 2205): Annex I alcohol scope catches this. 9903.03.12 attaches.
  • Other fermented beverages (HS 2206) including hard cider, mead, sake, perry: Annex I catches these. 9903.03.12 attaches.

Spirits imports:

  • Whisky sub-classifications: 2208.30.30 (Bourbon), 2208.30.40 (Rye), 2208.30.50 (Scotch), 2208.30.60 (Canadian and other whisky). All under 9903.03.12.
  • Liqueurs (2208.70): free MFN, FET at 13.50 per proof gallon on the alcohol portion (or reduced rate if under Craft Beverage Modernization Act allocation). 9903.03.12 attaches.
  • Vodka (2208.60): free MFN, FET at 13.50 per proof gallon base rate. 9903.03.12 attaches. Canadian vodka producers (Alberta, Ontario, Quebec distilleries) all catch the cliff.

Cross-reference to existing scope article

For the full HS Chapter 22 subheading map and the July 20 2026 Proclamation 11046 alcoholic beverages scope walk, see Section 338 Canada Alcohol Scope: HS 2204 Wine, HS 2205 Vermouth, HS 2206 Fermented Beverages, HS 2208 Spirits, Worked Stack. This piece focuses on the FET plus hybrid MFN rate mechanics that determine the pre-cliff baseline against which the Section 338 layer is measured. For the ACE Summary Acceptance timing that controls whether a Friday-night filing catches the pre-cliff rate, see Section 338 Canada T-1 ACE Summary Acceptance vs 3461 transmission.

Bottom line

On Chapter 22 imports, the pre-cliff federal cost is not zero. FET is substantial: 1,166 on 100k of Ontario table wine, 8,986 on 100k of Canadian whisky. The Section 338 layer stacks on the CIF value alone, adding 50,000 to a 100k CIF shipment. Effective federal burden jumps from single-digit percentages to over 50 percent of CIF, before any state excise or three-tier markup.

Wine and spirits importers running Friday-evening broker workflows tonight for Canadian consignments should not assume the pre-cliff calculation is trivial. FET is a real line item. The Section 338 layer is a marginal 50 percent on CIF, but the compound stack (MFN + FET + Section 338 + MPF + state excise) is closer to 60 to 70 percent of CIF depending on state. That is the number to underwrite to.

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