President Trump has issued a proclamation that increased Section 232 tariffs on imports of steel and aluminum from 25 percent to 50 percent as of June 4. This increase applies to imports from all countries except the United Kingdom, for which tariffs remain at 25 percent, though the White House said that could change as early as July 9 “depending on the status of the U.S.-UK Economic Prosperity Deal.”
For goods classified under HTSUS chapters 73 and 76, the increased tariff applies only to the value of the steel or aluminum content. “Reciprocal” (and other applicable) tariffs apply to any non-steel/non-aluminum content of all steel and aluminum articles and derivative articles.
Tariff Stacking
Also effective June 4, the proclamation revises the order in which tariffs may be “stacked” when an imported article is subject to (i.e., a tariff more than zero is owed) more than one of the tariffs listed below.
- articles subject to Section 232 tariffs on automobiles and auto parts will not also be subject to (1) Section 232 tariffs on imports of steel, aluminum, and derivative articles or (2) tariffs on imports from Canada and Mexico imposed under the International Emergency Economic Powers Act due to concerns about fentanyl and illegal immigration
(U.S. Customs and Border Protection notes that parts of passenger vehicles and light trucks that qualify for preferential treatment under the USMCA are not subject to the Section 232 auto/auto parts, IEEPA Canada, or IEEPA Mexico tariffs.)
- articles subject to Section 232 tariffs on imports of steel or aluminum and derivative articles will not also be subject to IEEPA tariffs on Canada and Mexico
(CBP states that (1) for derivative products subject to both the aluminum and steel tariffs, duties will be owed on both the value of the aluminum and steel content of the product, (2) aluminum and aluminum derivative products from Russia, and aluminum products from any country containing aluminum smelt or cast in Russia, are subject to the corresponding Section 232 duty rate of 200 percent, and (3) articles that qualify for preferential tariff treatment under USMCA are not subject to the IEEPA Canada or IEEPA Mexico tariffs.)
Foreign-Trade Zones
The proclamation appears to limit the option of avoiding the higher 50 percent tariff by using a foreign-trade zone by providing that (1) any imports of articles in a forthcoming Annex II that were admitted into an FTZ under privileged foreign status before 12:01 a.m. EDT on June 4 will be subject to this tariff upon entry for consumption, and (2) any article in a forthcoming Annex I that is subject to this tariff and admitted into an FTZ on or after June 4 may be admitted only under privileged foreign status and will be subject to this tariff upon entry for consumption.
Enforcement
The proclamation requires CBP to issue authoritative guidance mandating strict compliance with declaration requirements for steel and aluminum content in imported articles and outlining maximum penalties for noncompliance. For example, importers who submit underreported declarations may be subject to consequences including “significant monetary penalties, loss of import privileges, and criminal liability.”
ST&R offers a three-pronged approach to avoiding, mitigating, and/or recovering these and other import tariffs. For more information on which of these strategies might be most effective for your business, please contact ST&R.
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