Today U.S. Customs and Border Protection (CBP) released modifications to the Harmonized Tariff Schedule of the United States ("HTSUS") intended to clarify how importers should apply tariffs and seek refunds pursuant to a "stacking" hierarchy governing tariffs imposed pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232) on automobiles, automobile parts, steel, derivative steel articles, aluminum, and derivative aluminum articles, as well as tariffs imposed pursuant to the International Economic Emergency Economic Powers Act (IEEPA) on Canada and Mexico. Relatedly, recent guidance has also narrowed the scope of "energy" and "energy resource" products subject to a 10% (rather than 25%) IEEPA Canada tariff rate. The updated guidance concerning the applicability of each regime will be relevant for a wide variety of importers.
Clarifying the Tariff "Stacking" Hierarchy
Executive Order 14289 of April 29, 2025, created a hierarchy whereby the "stacking" of certain types of tariffs was avoided by identifying which of those tariffs a product would incur if it otherwise fell within the scope of multiple tariff regimes. Of the five tariff regimes addressed (Section 232 autos, steel, aluminum, and IEEPA Canada/Mexico), a given product would generally only be subject to one. The exceptions are derivative articles of steel and aluminum, which incur both Section 232 steel and Section 232 aluminum tariffs if the article is otherwise covered by both regimes.
CBP's Federal Register publication and related agency guidance clarify the following with respect to application of the hierarchy:
- Whereas the "stacking" hierarchy is applied based on the tariff regimes to which a given product is "subject," CBP clarifies that being "subject to" a given tariff regime means that duty of more than 0% is owed.
- Related to the above, whereas certain USMCA-qualifying articles are exempted from the IEEPA Canada/Mexico tariffs and Section 232 tariffs on automobile parts, CBP clarifies that qualifying for preferential treatment under USMCA are NOT presently considered "subject to" those tariff regimes. Note, however, that this nuance to the hierarchy may change in the future with respect to USMCA-qualifying automobile parts. The Presidential Proclamation that exempts USMCA-qualifying automobile parts from Section 232 automobile part duties states that the carve-out will only apply until the Secretary of Commerce, in consultation with CBP, establishes a process for applying the Section 232 tariff exclusively to the value of the non-U.S. content of such automobile parts. Once established, notice of the process should be published in the Federal Register.
While the tariff "stacking" Executive Order provided that it would apply retroactively to entries on or after March 4, 2025, and that importers could request refunds for eligible entries, CBP previously instructed importers to await further guidance before requesting refunds. That further guidance has now been issued, such that refund requests may be submitted by filing a post summary correction for unliquidated entries or filing a protest under 19 U.S.C. 1514 for entries that have liquidated but where the protest period has not expired.
Narrowing the 10% Rate Carve-Out for IEEPA Canada Tariffs
While not issued pursuant to the tariff "stacking" Executive Order, additional CBP guidance has further implications for the application of the hierarchy. As clarified, a product of Canada exempted from IEEPA Canada tariffs on the basis that it was USMCA-qualifying would not be "subject to" those tariffs and would incur any otherwise applicable Section 232 steel and/or aluminum tariffs. However, while most products of Canada are subject to a 25% tariff rate under the IEEPA Canada tariffs, a lower 10% rate is provided for "energy" and "energy resource" products.
The relevant Executive Orders do not list "energy" and "energy resource" products by HTS code. CBP has done so through subsequent CSMS messages. A March 21, 2025, list included certain steel and aluminum products. However, a new list published last week has removed 386 such HTSUS subheadings. Specifically, no products classified under the following HTSUS subheadings currently fall within the "energy" or "energy resource" carve-out: 7206, 7207, 7208, 7209, 7211, 7212, 7213, 7214, 7215, 7217, 7218, 7219, 7220, 7221, 7222, 7223, Chapter 73, 7601, 7603, 7604, and 7606. Thus, if such products are otherwise subject to the IEEPA Canada tariffs, they would be subject to the 25% tariff rate, rather than the lower 10% tariff rate.
Supply Chain Management
Importers may decide to review recent entries to ascertain whether revisions are necessary or refunds may be available. The attorneys, licensed customs brokers, compliance specialists, and economists of Cassidy Levy Kent have extensive experience counseling companies in a wide range of industries on tariff matters as well as how to optimize their supply chains for tariff considerations and maintain U.S. market access.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
