The Trump Administration recently announced updates to Section 232 tariffs covering steel, aluminum and certain derivative products. Effective April 6, businesses importing products that contain steel and aluminum will be subject to a 25% tariff applied to the full value of the imported product. This replaces the prior system, which imposed a 50% tariff on the value of the embedded steel or aluminum content.

• The revised approach is intended to simplify compliance while maintaining strong protections for domestic metals producers.

Upstream Metals Impact

President Trump's proclamation announced that the existing 50% tariff on upstream, commodity-grade metals will remain in place. Products that are made almost entirely of steel or aluminum may also be reclassified into this category. Products with limited metal content, defined as 15% or less (measured by weight), will no longer be subject to Section 232 tariffs. Instead, those goods will be subject to the Administration's separate 10% global baseline tariff.

• The practical impact of these changes will vary significantly across sectors and supply chains. Importers of complex manufactured goods may face higher duty burdens despite the reduction in nominal tariff rates. The shift to full-value assessment is expected to generate additional tariff revenue for the federal government and partially offset declines following recent court decisions that invalidated other tariff authorities.

The overhaul follows months of internal deliberations over how to address longstanding industry concerns about the complexity of the existing system. Manufacturers had argued that "Liberation Day" tariffs raised input costs for domestic production while allowing many finished imports to enter the U.S. market with minimal duties. The current revisions are intended to close that gap while making compliance more straightforward for importers who previously struggled to calculate the value of embedded metal content.

April 6 Provisions

The updated framework continues to rely on Section 232 authorities under the Trade Expansion Act of 1962, which remain intact despite recent legal challenges affecting other trade tools. The following provisions take effect April 6 through an undetermined date:

• Articles in Annex I-A will have a 50% tariff. Products from the United Kingdom for which the steel was melted and poured/aluminum was smelted and cast in the United Kingdom will have a 25% tariff. Certain derivative articles for which the steel content is entirely steel melted and poured in the United States or the aluminum/copper content was entirely smelted and cast in the United States will have a 10% tariff.
   
• Articles in Annex I-B will have a 25% tariff. Products from the United Kingdom for which the steel was melted and poured/aluminum was smelted and cast in the United Kingdom will have a 15% tariff. Certain derivative articles for which the steel content is entirely steel melted and poured in the United States or the aluminum/copper content was entirely smelted and cast in the United States will have a 10% tariff.
   
• Articles in Annex II will no longer face a Section 232 steel or aluminum tariff.

Additionally, articles in Annex III will face, depending on the country, a 15% top-up (i.e., a product with a baseline tariff below 15% gets topped up to 15% and a baseline tariff above 15% faces no additional tariff), 10% (for products for which the steel content is entirely steel melted and poured in the United States or the aluminum content was entirely smelted and cast in the United States) or 25% (countries with no normal trading relations). This provision is to remain in place through December 31, 2026.

President Trump reserves the right to revoke this treatment if imports of a product increase in such a way that undermines national security. Revocation would subject Annex III products from the country to Annex I-B tariff rates.

Additional Details

• 200% aluminum tariffs will remain in effect for Annex I-A, I-B and III products that were smelted or cast in Russia.
   
• Products on Annex I-A, I-B or III that contain some combination of steel, aluminum and copper will only be subject to one tariff rate. In other words, the steel, aluminum and copper tariffs do not stack.
   
• Products on Annex I-B or III that do not contain any steel, aluminum or copper content (as laid out in Annex IV) will not be subject to tariffs.
   
• Products that fall under the WTO Agreement on Trade in Civil Aircraft and are civil aircraft or civil aircraft parts will not be subject to the steel, aluminum or copper tariffs.
   
• The inclusions processes for steel, aluminum and copper are terminated, though the Commerce Department and USTR reserve the right to add more derivative articles to the tariffs.
   
• Drawback is available to a product on Annex I-B or III that's not subject to an antidumping or countervailing duty order, from a trade agreement partner country (United Kingdom, European Union, Japan, South Korea, Mexico, Canada and others with a final Agreement on Reciprocal Trade (ART)), and the steel is completely melted and poured in the trade agreement partner country (or aluminum/copper smelted and cast).

Questions? Comments? Want to share your tariff story? Contact PRI Senior Manager for Federal Government Affairs Juan Mejia at JuanM@sema.org.

Image courtesy of Shutterstock | Robert V Schwemmer