The 2025 changes to Section 232 tariffs have significantly tightened the screws on importers of steel and aluminum. With Section 232 exclusions terminated for new applications and country exemptions eliminated , finding ways to reduce steel tariffs and secure an aluminum tariff exemption has become more challenging. However, a few narrow avenues for metal tariff mitigation remain, alongside strategic considerations for derivative product tariffs.
The New Reality: Limited Direct Relief
It’s crucial to understand that the broad product exclusion programs many relied on are no longer available for new requests. This means proactive strategies are more important than ever.
Potential Mitigation Strategies in the Current Environment:
- The “Melted and Poured” / “Smelted and Cast” in U.S. Provision for Derivatives: A specific, though narrow, exemption exists for certain derivative articles of steel or aluminum. If these derivative products are manufactured abroad (e.g., in China) but use steel originally “melted and poured” in the United States, or aluminum “smelted and cast” in the U.S., they may be exempt from the 25% Section 232 tariff upon re-importation.
- Key Limitation: This melted and poured steel exemption or smelted and cast aluminum exemption generally applies only to new derivative articles added to the Section 232 scope by the February 2025 Presidential Proclamations. It does not apply to primary metals or derivatives covered by earlier (2020) proclamations.
- Actionable Insight: This requires robust supply chain documentation and traceability. For manufacturers who can structure their operations this way, it offers a potential cost saving.
- Understanding Derivative Product Tariffs – Duty on Metal Content Only: For certain derivative product tariffs (specifically, derivative steel articles not in HTS Chapter 73 and derivative aluminum articles not in HTS Chapter 76, covered by the February 2025 proclamations), the 25% duty applies only to the value of the steel or aluminum content, not the entire product value.
- Actionable Insight: If your product qualifies, designing it with a lower proportion of steel or aluminum content (by value) could legitimately reduce the Section 232 duty liability. This is a form of tariff engineering steel (or aluminum) products.
- Tariff Engineering (Proceed with Extreme Caution): Tariff engineering steel involves legally designing or modifying products before importation so they qualify for a more favorable HTS classification, potentially one outside the scope of Section 232 tariffs or one that benefits from the “metal content only” rule for derivatives.
- Critical Warning: This is a lawful strategy only if modifications are bona fide and the product genuinely meets the new classification at the time of entry. It is NOT about misrepresenting goods. This carries high compliance risks and requires expert customs law knowledge to avoid severe penalties.
- Automotive-Specific Mechanisms (Indirect Benefits): For the automotive sector, an “import adjustment offset” allows U.S. OEMs to offset Section 232 duties on imported auto parts. While this doesn’t directly grant an aluminum tariff exemption or help reduce steel tariffs for a parts supplier, it can indirectly lower costs if the OEM allocates this benefit.
What’s Off the Table?
- New Product-Specific Exclusions: As mentioned, this avenue is closed for new applications.
- Duty Drawback: Section 232 duties are NOT eligible for duty drawback. If you import, pay Section 232 tariffs, and then re-export, you won’t get those duties back.
Given that Section 232 exclusions terminated for new requests, proactive and compliant strategies for metal tariff mitigation are essential.
Looking for a manufacturing partner who understands the nuances of derivative product tariffs and can help you explore compliant cost management strategies? Contact Redstone Manufacturing to discuss your needs.
Legal Disclaimer: The information provided in this blog post is for general informational purposes only and does not constitute legal or financial advice. Tariff laws, regulations, and mitigation strategies are complex and subject to change. Attempting tariff engineering or claiming specific exemptions without expert guidance carries significant risks. You should consult with a qualified professional, such as a customs broker or trade attorney, for advice tailored to your specific circumstances. Redstone Manufacturing assumes no liability for any actions taken based on the information presented here.