As reported in our prior article, “What Every Multinational Company Should Know About … The New Steel and Aluminum Tariffs (Part I),” President Trump signed two proclamations on February 10, 2025, imposing 25-percent tariffs on aluminum and steel. Although President Trump previously imposed Section 232 tariffs on aluminum and steel during his first administration, the new tariff announcement represents a sharp expansion of those tariffs in the following ways:
- The aluminum proclamation reinstated and increased the aluminum tariff from 10 percent to 25 percent while wiping out the numerous product-specific exemptions that had built up over the last six-and-a-half years.
- The steel proclamation globally reinstated the tariff on steel at 25 percent (the same rate as before) while also wiping out the numerous product-specific exemptions that had built up over the last six and a half years.
- All previous negotiated exemptions and quotas of the prior Section 232 aluminum and steel tariffs with other countries were eliminated. Thus, the aluminum and steel tariff adjustments for Argentina, Australia, Brazil, Canada, Japan, Mexico, the United Kingdom, and the European Union are all now gone.
- The application of the tariffs to “derivative” products (basically, downstream products that contain a lot of aluminum and steel) was sharply expanded.
At the time of our previous article on the topic, the critical Annexes that listed the covered derivative products had just been released, meaning our article did not analyze the implications of the derivative product inclusion. For steel, the Annex I derivative steel products include:
- Steel screws, bolts, and nuts
- Steel tube or pipe fittings
- Steel wires, cables, and plaited band
- Steel structures or parts thereof
- Steel parts for passenger or freight elevators
- Metal furniture
- Steel modular building units
The aluminum tariff announcement states that because foreign aluminum producers “have continued to evade the tariff by processing covered aluminum articles into additional downstream derivative products,” it was expanding the Annex I derivative products to include:
- Aluminum base metal mountings and fittings
- Aluminum suspension systems
- Aluminum articles and equipment for general physical exercise
We are seeing a lot of concern from the importing community about these newly expanded aluminum and steel tariffs. To help provide some insight, we are providing responses to some of the most frequent questions we are seeing regarding these new and far-reaching tariffs, particularly with regard to derivative products:
When Do the Tariffs Start?
The tariffs go into effect for entries after 12:01 a.m. (Eastern Time) on March 12, 2025. At that time, all product-specific exclusions will cease to be effective as well.
How Will Customs Treat Products that Contain Both Steel and Non-Steel Items?
U.S. Customs and Border Protection (CBP) will require importers of steel-derivative articles to identify the aluminum and steel content used to manufacture the products. For derivative products, it appears the amount of the special tariff will be based on the amount of aluminum and steel content, not the entire value of the overall entry. In this regard, the aluminum and steel proclamations state as follows (using the aluminum proclamation as an example): “For purposes of implementing the requirements in this proclamation, importers of aluminum derivative articles shall provide to CBP any information necessary to identify the aluminum content used in the manufacture of aluminum derivative articles imports covered by this Proclamation. CBP is hereby authorized and directed to publish regulations or guidance implementing this requirement as soon as practicable.”
How Is the Country of Origin Determined?
For all aluminum and steel derivative products, the country of origin will use the “smelted and cast” or “melted and poured” standard, respectively. Importers will have to provide and certify the accuracy of this information, which will be used to determine the country of origin.
How Do I Identify the Exact Derivative Products Covered by the Aluminum and Steel Tariffs?
The Federal Register versions of the two proclamations include the exact HTS numbers, at a 10-digit level, in Annex I at the end of each respective publication. (Click here for a link to the Steel Proclamation and Annex, and click here for a link to the Aluminum Proclamation and Annex.)
Are the Listed Derivative Products Final?
No. Within 90 days of the proclamation, the U.S. government will establish a process allowing U.S. producers to petition to include additional derivative aluminum and steel articles falling within the scope of the special tariffs. Thus, there is every likelihood that the number of derivative products will increase over time.
Is Duty Drawback Allowed?
Duty drawback is a common tariff-saving measure that allows the refund of duties paid at the time of entry if the goods are subsequently re-exported. Both proclamations state that no duty drawback will be available for these special duties. This is likely a means to encourage the use of domestic product for downstream products that are intended for the export market.
Will CBP Issue Instructions to Help Companies Navigate These Tariffs?
In accordance with its normal practice, as well the directive in the proclamations, CBP will be issuing guidance to help the import community comply with the new tariffs. We also anticipate that there will need to be some adjustment on the part of the importing community, including the need for customs brokers to update their software to conform to the many new tariff requirements.
How Will CBP Enforce These New Tariffs?
We expect rigorous enforcement of the new tariffs. Taking the aluminum proclamation as the example, both proclamations state that “CBP shall prioritize reviews of the classification of imported aluminum articles and derivative aluminum articles and, in the event that it discovers misclassification resulting in loss of revenue of the ad valorem duties proclaimed herein, it shall assess monetary penalties in the maximum amount permitted by law. In addition, CBP shall promptly notify the Secretary regarding evidence of any efforts to evade payment of the ad valorem duties proclaimed herein through processing or alteration of aluminum articles or derivative aluminum articles as a disguise or artifice prior to importation.” The use of “shall” implies that CBP is directed to assess maximum penalties for misclassifications.
It is not yet clear how this requirement will interface with the normal approach of Customs for voluntary disclosures, where importers are allowed to correct errors without a penalty provided they perfect the disclosure properly and pay any underpaid duties plus interest.
What Actions Should Importers Consider Implementing?
We expect that these measures will stay in place for the long term, given this is the second time President Trump has imposed aluminum and steel tariffs. Further, given that the main purpose of the tariffs is to wipe out all previously negotiated exemptions and tariff alternatives, there seems to be little hope for meaningful (if any) future exclusions, including for forms of steel and aluminum that are not produced in the United States.
In our initial aluminum and steel article, we provided six practical steps that companies can take to help cope with the newly expanded aluminum and steel tariffs. Now that the Annexes are published and the full scope of derivative products are known, we are supplementing that list to include the following additional items:
- Review continuous entry bonds at all active importer of record numbers for sufficiency.
- Pull a report from the Automated Commercial Environment (i.e., ACE, the customs portal) to determine all imports that fall under the new aluminum and steel tariffs, including all covered derivative products.
- Conduct a classification review of prior or planned aluminum or steel products, as well as derivatives, to determine which ones fall within the scope of the two proclamations.
- Assess the potential impact of the new tariffs to determine how these new tariffs impact your company’s supply chain, cost structure, and import posture.
- Review all buy- and sell-side contracts to determine which ones offer tariff-related flexibility, including the ability to alter sourcing patterns on the buy side and to add tariff surcharges on the sell side. Further information is found in our white paper on Managing Import and Tariff Risks During a Trade War.
- Identify strategies to eliminate or defer potential duties for cashflow purposes, including the new aluminum and steel duties, such as the use of bonded warehouses, Foreign Trade Zones (FTZ), and Temporary Importation under Bond (TIB). Note that duty drawback is not available for these special duties.
- Continue to closely monitor for new derivative products that may be moved onto the list of Annex I derivative products as U.S. aluminum and steel producers file petitions to add new products, beginning 90 days from the publication of the two proclamations.
- Keep up with the latest news and developments in tariffs, as new pronouncements are coming very quickly.