18 February 2025 US modifies and expands tariffs on steel and aluminum imports, citing national security
President Donald Trump signed two proclamations on 10 February 2025 reinstating the tariff on steel at 25%, reinstating and increasing the aluminum tariff to 25% as well as adjusting the amount of these imports into the United States (US).1 The changes will apply for products that are entered for consumption or withdrawn for consumption as of 12 March 2025.2 These two new proclamations are an extension of Proclamations 9704 (Adjusting Imports of Aluminum into the United States) and 9705 (Adjusting Imports of Steel into the United States), signed on 8 March 2018 after the US Department of Commerce's 2018 Section 232 investigation and finding of national security impairment. Effective 23 March 2018, President Trump used his Section 232 authority to impose 25% and 10% tariffs on certain steel and aluminum imports, respectively, after the US Department of Commerce led an investigation about their impact on national security. Trump expanded the scope of products to impose additional tariffs in February 2020. Section 232 of the Trade Expansion Act of 1962 allows a President to impose restrictions based on investigation and Department of Commerce affirmative determination that certain imports threaten US national security. Countries such as Brazil and South Korea were permanently exempt from steel tariffs in exchange for limitations on quantities imported, while Argentina received the same treatment but for steel and aluminum. Mexico and Canada were exempt from the US steel and aluminum tariffs and the three countries agreed on an import monitoring mechanism. In January 2022, President Biden suspended the tariffs on steel and aluminum imports from the European Union and implemented a tariff rate-quota system. To encourage investment and expand domestic steel production, President Trump has reinstated the 25% tariff on steel imports, emphasizing the tariff's effectiveness in mitigating the threat to national security. For context, steel imports increased from certain countries exempted from the original 25% tariff or under alternative agreements. For example, volumes of steel imports from Canada and Mexico increased from 7.77 million metric tons to 9.14 million metric tons between 2020 to 2024. The People's Republic of China exceeded 114 million metric tons through November 2024, resulting in greater volumes of steel articles and derivative steel articles imported into the US while displacing production in other countries. Trump's current proclamations cancel exemptions and duty-free quotas that affect countries such as Canada and Mexico as they were originally exempted from the steel tariff. The President also cited concerns about increased aluminum capacity, specifically from China and South America. Citing statistics, the new proclamations indicate that primary aluminum production decreased by about 30% from 2020 to 2024 with US smelter capacity utilization sitting at 52% in 2024. Concerns about downstream aluminum producers experiencing economic detriment, including those producing aluminum extrusions and aluminum sheets, have contributed to the increase in the tariff rate from 10% to 25%. The tariffs, set to go into effect on 12 March 2025, at 12:01 a.m. ET, apply to all countries with alternative agreements as well as steel and aluminum articles, including certain derivative products. Affected products include certain:
To implement the 10 February 2025 proclamation, Customs and Border Protection (CBP) will require importers of steel derivative articles to identify the steel content used to manufacture the products. Moreover, for all steel and aluminum articles and derivatives the country of origin that used the "melted and poured" or "smelted and cast" standard will need to be identified. Within 90 days of the proclamation, a process must be established to include additional derivative steel articles falling within the scope of the ad valorem duties in the proclamation. The Secretary of Commerce cannot consider any product exclusion requests or renewals effective 10 February 2025 11:59 p.m. ET. Additionally, CBP will prioritize classification of imported aluminum and derivative articles and penalize efforts to evade the ad valorem duties. Finally, no duty drawback will be available for these imposed duties. Given the proposals relating to trade and national security, businesses must take proactive steps to ensure compliance with the new requirements. The following actions should help businesses financially and operationally prepare for and adapt to these regulatory changes:
Document ID: 2025-0504 | ||||||||
