Feb 13, 2025 – MAJOR CHANGES IN STEEL AND ALUMINUM TARIFFS

Source: Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP By: Erik Smithweiss and Sarah Raymond

The Trump Administration issued Presidential Proclamations on February 10, 2025, under Section 232 of the Trade Expansion Act of 1962, making major changes to U.S. tariff policy on steel and aluminum imports.

Effective March 12, 2025, all steel and aluminum imports covered by the prior Section 232 actions — regardless of origin — will be subject to an additional 25% tariff. Countries that once benefitted from alternative tariff agreements — Australia, Canada, Mexico, South Korea, Brazil, Argentina, the EU, Japan, and the UK — will now face the same treatment as all other exporting countries.

The product exclusion process is being eliminated effective February 11, 2025. As with previous Section 232 tariffs, Foreign Trade Zone (FTZ) processing will not provide a duty advantage, and the section 232 duties will not be eligible for duty drawback. In addition, CBP is directed to strictly enforce perceived misclassifications that avoid the steel and aluminum tariffs.

Below is a breakdown of the key changes.

Tariff Reinstatement and Adjustments

The proclamation reinstates and modifies tariffs on aluminum and steel imports from Argentina, Australia, Brazil, Canada, Mexico, South Korea, the EU, Japan, and the UK. Starting March 12, 2025, steel and aluminum imports from these countries, including the derivatives currently listed in Chapter 99 Notes 16 and 19, will be subject to an additional 25% ad valorem tariff. Previous proclamations that exempted or reduced tariffs for these countries are revoked, meaning all imports of steel and aluminum from every country (except Russia) will now face the same tariff treatment.

Elimination of Product Exclusions

Effective February 11, 2025, the product exclusion process will be terminated, meaning no new exclusions will be granted and any pending applications will be denied.  Previously granted exclusions will remain in effect until their expiration date or until the allotted volume is imported — whichever happens first. General Approved Exclusions (GAEs) will continue to be valid until March 12, 2025.

Companies currently importing from exempt countries, or utilizing GAEs, should pay particular attention to ensure that imports arriving close to March 12 obtain a “date of entry for consumption” no later than March 11 in order to avoid liability for the additional 25% duties.

Derivative Aluminum and Derivative Steel

In addition to the “derivative” steel and aluminum articles previously enumerated in Presidential Proclamation 9980 (January 24, 2020), and that are currently identified in HTSUS Chapter 99 Notes 16 and 19 (e.g., steel bumpers), Commerce will identify additional derivative steel and aluminum products that will also become subject to the additional 25% tariffs in a yet to be published Annex. Tariffs on these new derivative products will not become effective until a later date, when the Secretary of Commerce certifies that adequate systems are in place to collect tariff revenues for such products.

The proclamations require Commerce, within 90 days, to establish a process to identify additional derivative products that may become subject to the additional 25% tariffs. This process will also allow U.S. domestic producers to request that Commerce add additional derivative products to the list of products  subject to the additional 25% tariffs.

Derivatives produced outside of the United States from steel melted and poured in the U.S., or aluminum smelted and cast in the U.S., will be exempt from the additional 25% duties.

For derivatives classified outside of Chapter 73 or 76, the additional 25% tariff will only apply to the value of the steel or aluminum, not the entire product.

Russian Aluminum and Derivative Aluminum

Imports of derivative aluminum articles containing any primary aluminum smelted or cast in Russia will face an even higher 200% tariff.

Restrictions on FTZ Use

Steel products subject to the additional 25% tariffs admitted into a Foreign Trade Zone (FTZ) on or after March 12, 2025, must be admitted under “privileged foreign status” (19 CFR 146.41) (except articles eligible for admission under “domestic status” as defined by 19 CFR 136.43). The status of products currently in an FTZ under privileged status that are entered for consumption prior to March 12 is unclear.

For aluminum products, the requirement to declare privileged status will not take effect until after the Commerce certification date noted above.

Prohibition of Duty Drawback

As with the existing Section 232 duties on steel and aluminum, drawback will not be available for duties imposed under this proclamation. This means that importers cannot claim refunds on these duties even if the imported aluminum or steel is later exported.

Misclassification Penalties

The proclamations direct CBP to impose maximum monetary penalties for misclassification of steel and aluminum articles and even suggest that CBP is not permitted to mitigate such penalties.

CBP is also required to notify Commerce if CBP believes that steel and aluminum products are being processed in third countries in an improper manner to fall outside the tariff classifications covered by the Section 232 tariffs. Commerce can then consider whether to add such products to the list of covered derivatives. In light of the strong enforcement language, importers and their customs brokers are cautioned to exercise reasonable care before declaring steel or aluminum products under tariff provisions not covered by the Section 232 tariffs. Under this heightened enforcement directive, reasonable care may necessitate obtaining a classification opinion from experienced customs counsel or a CBP binding ruling.

The implementation details under these new proclamations will be set forth in a future Federal Register notice, which will include the Annexes listing new derivative products.  Also note that such Federal Register notices may modify the terms of the Proclamations discussed above. These future notices should also provide guidance as to whether duty exemptions under Chapter 98 of the HTSUS will be available.