Late yesterday, President Trump, acting pursuant to his authority under Section 232 of the Trade Expansion Act of 1962, revoked existing country- and product-specific exclusions from 25 percent ad valorem U.S. tariffs on steel imports and certain derivative steel articles.
The original "steel 232 duties" had been put in place by President Trump in 2018 following an investigation and report from then-Commerce Secretary Ross, and in the intervening years were liberalized by both President Trump and President Biden. Yet nearly from the start of the steel 232 measures, some steel and steel-derivative imports were allowed to enter the United States unencumbered by duties — either due to country-specific exemptions negotiated with the United States, or through a product-specific exclusion process first implemented in 2018.
All such country- and product-specific exemptions are to be rescinded and wound down following President Trump's February 10 Proclamation.
As noted below, however, some of the modifications included in the Proclamation will not take effect for weeks or months — a window that could theoretically be used by the Trump Administration to negotiate further changes to the steel 232 tariff landscape. The Proclamation itself also requires the Commerce Department to establish a process for bringing more imports of steel derivatives within the scope of the steel 232 duties.
Clock Ticking on Country-Specific Exclusions
Pursuant to the Proclamation, existing country-specific arrangements with Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, European Union (EU) member countries, Ukraine, and the United Kingdom will terminate as of 12:01AM ET on March 12, 2025. This will effectively end any free trade in steel, quota agreements, or tariff-rate quotas, as applicable.
As of that date, imports of steel articles and derivative steel articles from Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, EU member countries, Ukraine, and the United Kingdom will be subject to the additional 25 percent ad valorem steel 232 tariffs announced in Proclamation 9705 (with respect to steel articles) and Proclamation 9980 (with respect to derivative steel articles). Of note, this Proclamation does not increase duties by another 25 percent on countries already subject to existing steel 232 duties; rather, all other countries not subject to country-specific arrangements remain subject to the 25 percent ad valorem steel 232 tariff and are unaffected by this new Proclamation.
The President rationalized his decision by describing increases in volumes and U.S. market shares of steel and steel derivatives imported from these countries, as well as decreases in capacity utilization of domestic steel producers below the targeted 80 percent level. Given the 30-day implementation period, foreign governments could utilize this time to further negotiate with the Trump Administration to maintain some country-specific arrangement, including by offering to, e.g., (a) take action adverse to Chinese shipments, (b) agree to "melted and poured" limitations, or (c) propose alternative quota-based arrangements calibrated to U.S.-demand fluctuations. None of these concessions, however, would guarantee that a country will be able to maintain its existing arrangement. Already, President Trump has reportedly signaled that Australia could be treated differently due to the trade surplus the United States has with Australia.
Product-Specific Exclusions Eliminated
President Trump's Proclamation also withdrew authority from the Secretary of Commerce to provide for new or extended product-specific exclusions, effective immediately.
In doing so, the President noted "certain ongoing challenges with the product exclusion process" that "has resulted in exclusions for a significant volume of imports, in a manner that undermines the purpose of the Section 232 measures and threatens to impair national security."
As of 11:59PM ET on February 10, 2025, the Secretary of Commerce is (1) no longer permitted to consider new product exclusion requests, (2) no longer permitted to renew any product exclusion requests already in effect, and (3) to take all necessary steps to rescind the product exclusion process itself. As of this writing, the former Section 232 exclusions portal is temporarily out of service to effectuate these changes, but will become publicly available again "as soon as possible."
The Proclamation provides that previously granted product exclusions shall remain effective until the earlier of (a) their expiration date or (b) importation of the excluded product volume. Pending Section 232 exclusion requests should be assumed void pending their rejection and/or denial by Commerce.
Furthermore, the existing "general approved exclusions," which heretofore had remained in effect once granted, will be rescinded effective March 12, 2025.
Planned Expansion of Steel-Derivative Coverage Directly and Through Domestic Industry Petitions
The Proclamation instructs the Secretary of Commerce to publish in the Federal Register an "Annex" ("Annex I") containing specifics on the additional derivative steel articles now subject to the 25 percent steel 232 duties originally instituted in Proclamation 9980. The Proclamation notes that Annex I will not cover derivative steel articles processed in another country from steel articles that were "melted and poured" in the United States. Additionally, for any derivative steel article identified in Annex I that is not in Chapter 73 of the HTSUS, the 25 percent duty will apply only to the steel content of the derivative steel article. Given the broad range of steel-derivative products likely to be impacted, importers and others can be expected to make use of these forthcoming details in their supply chain planning.
The Proclamation also provides for the steel 232 duties to be imposed on imports of additional derivative steel articles to be identified both on the Commerce Secretary's own initiative and via a producer-initiated request process. The Proclamation gives Commerce 90 days — until May 11, 2025 — to create a process by which Commerce will consider whether to apply the steel 232 duties to additional derivative steel articles. In filing a request, a producer (or an industry association representing one or more such producers) must establish that imports of a derivative steel article have increased in a manner that threatens to impair the national security (or otherwise undermine the objectives set forth in the Commerce Secretary's original 2018 report or in the various Presidential Proclamations issued thereafter). Commerce will then have 60 days to rule on a request to cover an additional steel derivative article under the steel 232 duties.
More details are expected in a forthcoming Federal Register notice, but the Proclamation itself does not obligate Commerce to allow for significant engagement from the trade other than the request for product inclusion.
CBP Instructed to Fortify Enforcement
The Proclamation also directs U.S. Customs and Border Protection (CBP) to enhance its enforcement of Section 232 tariff measures.
CBP is instructed to prioritize reviews of the classification of imported steel articles and derivative steel articles and, in the event that it discovers misclassification resulting in non-payment of applicable steel 232 duties, to assess monetary penalties in the maximum amount permitted by law. The Proclamation states that CBP is precluded from considering any evidence of mitigating factors in its penalty determination.
The Proclamation instructs that importers will need to provide CBP with "any information necessary" to identify the steel content used in the manufacture of steel derivative articles imported and instructs CBP to establish relevant "information requirements" as soon as possible.
Similar to the original steel 232 duties and prior Presidential actions imposing tariffs, this Proclamation provides that no drawback is available with respect to the duties imposed. Furthermore, any merchandise entered into a U.S. foreign trade zone on or after 12:01AM ET on March 12, 2025, must be admitted as "privileged foreign status" as defined in 19 C.F.R. § 146.41, which generally locks in place the duty amount regardless of how the steel article is transformed within the zone.
Substantiation for Actions
Unlike the 2018 Proclamation that first imposed the steel 232 duties, yesterday's Proclamation does not follow a lengthy investigation by the Commerce Department. Instead, yesterday's Proclamation itself catalogues several findings relied upon by the President to support these actions, specifically:
- The original duties were "an effective means of reducing imports, encouraging investment and expansion of production by domestic steel producers, and mitigating the threatened impairment of U.S. national security;"
- "{I}mports of steel articles from certain countries exempted from the tariff or subject to alternative agreements have increased significantly," citing share of U.S. consumption and increases from particular countries and country-combinations"
- "{T}hese alternative agreements have not resulted in sufficient action by these trading partners to address non-market excess capacity caused primarily by China, or sufficient cooperation by these trading partners on issues like trade remedies and customs matters or monitoring bilateral steel trade;" and
- "{T}he domestic industry's performance has been depressed, resulting in capacity utilization rates persistently lower than the 80 percent target level highlighted in the Secretary's report."
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