President Trump Modifies Section 232 Steel and Aluminum Tariffs

On February 10, 2025, President Trump issued two new proclamations that modify the steel and aluminum tariffs originally imposed in 2018 under Section 232 of the Trade Expansion Act of 1962. These actions expand the existing tariffs and introduce significant changes to duty rates, the scope of covered products, and exemptions. The modifications will take effect on March 12, 2025, at 12:01 a.m. EDT, unless any new country-specific exemptions are successfully negotiated beforehand.

Next Steps for Businesses

• Audit Supply Chains
  Companies should review their sourcing strategies for steel and aluminum inputs. They should document origin information and prepare to address higher tariffs, particularly for newly added derivative products. AGG attorneys have extensive experience in determining the appropriate HTS codes and exclusions, and can help you identify viable strategies to minimize tariff exposure.
• Prepare for Additional Costs
  Businesses that rely heavily on foreign steel or aluminum should revise their budgeting and pricing strategies. They may consider alternative suppliers or shift production timelines to mitigate the cost impact.
• Monitor Regulatory Guidance
  The Secretary of Commerce and U.S. Customs and Border Protection (“CBP”) will issue Federal Register notices and supplementary guidance on new exclusion processes, expanded product lists, and revised duty rates. Companies should remain alert for these updates to ensure compliance.
• Engage Strategically With Policymakers
  Trade officials occasionally offer opportunities to comment on the scope and impact of new Section 232 measures. Companies can advocate for exclusions or voice concerns regarding potential job losses and other economic harms.

Key Changes Under the February 10 Proclamations

1. Elimination of All Country Exemptions and Product Exclusion Processes
   • The proclamations end all existing quotas, tariff-rate quotas, national exemptions, and General Approved Exclusions (“GAEs”).
   • The Secretary of Commerce must rescind the product-specific exclusion process and refuse to consider or renew any exclusion requests after 11:59 p.m. EST on February 10, 2025.
   • Previously granted exclusions remain valid until either their expiration date or until the specified excluded product volume enters the U.S., whichever occurs first.
2. Increase in Aluminum Tariffs
   • The aluminum tariffs for articles and derivative products will rise from 10% to 25%.
   • Derivative aluminum articles from Russia, or those containing primary aluminum smelted or cast in Russia, will be subject to a 200% duty rate.
   • These new duties apply on top of any other tariffs, fees, or charges.
3. Expansion of Tariffs to Additional Downstream Products
   • Both steel and aluminum proclamations expand coverage to new derivative products not previously specified.
   • Within 90 days, the Secretary of Commerce must establish a process allowing interested parties to request coverage for additional steel or aluminum derivatives if they threaten national security or undermine the goals of previous Section 232 actions.
4. Limited Exclusion for Certain U.S.-Origin Inputs
   • Covered derivative steel and aluminum products that are processed outside the U.S. but made from U.S.-origin steel (“melted and poured”) or aluminum (“smelted and cast”) will qualify for a limited exemption.
   • CBP will issue guidance on the required documentation to prove compliance with these new origin requirements.

Potential Implications

• Retaliatory Responses
  Countries losing their exemptions may impose retaliatory tariffs on U.S. goods. This risk could disrupt multiple industry sectors.
• Supply Chain Disruptions
  Higher tariffs on a broader range of steel and aluminum products may prompt cost increases and delivery delays, requiring swift adjustments to sourcing strategies.
• Administrative Challenges
  The termination of product-specific exclusions and GAEs removes an important avenue for reducing or eliminating tariffs. Importers must now navigate the expanded tariffs without relief unless they can qualify under the new limited exemption.
• Uncertain Negotiations
  President Trump indicated a willingness to discuss new country exemptions before the March 12, 2025, deadline, but the outcome of any such talks remains unpredictable.

Looking Ahead

President Trump has also suggested the possibility of using Section 232 to impose tariffs on additional products, including automotive parts, pharmaceuticals, and semiconductors. He may also rely on other trade remedy measures, such as Section 301, to address perceived unfair trade practices. Companies should track these developments carefully and adjust their strategies to anticipate further changes in U.S. trade policy.

For further guidance on how these changes may impact your business, please contact AGG partners Allison Raley and  Mike Burke. AGG will continue to monitor developments and will update as needed.