The Trump Administration Reinstates and Expands Section 232 Tariffs on Steel and Aluminum

The renewed measures, set to take effect on March 12, 2025, impose a flat 25% tariff on all steel and aluminum imports, bringing aluminum tariffs in line with those on steel. No duty drawbacks will be available, eliminating a key mechanism that previously allowed companies to reclaim tariffs on exported finished products. These changes signal a fundamental shift away from the previous administration’s approach, which had relied on bilateral and regional agreements to manage global overcapacity concerns while preserving limited market access for allied nations.

Revocation of Country-Specific Agreements and Justifications for the Policy Shift
A key highlight of the Proclamations is the termination of country-level exemptions and TRQs established under prior administrations. Beginning March 12, existing agreements with Canada, Mexico, the EU, the UK, Japan, Brazil, Argentina, and South Korea—which had provided certain trading partners with partial or total relief from Section 232 duties—will cease to apply. Notably, the Trump administration has also revoked exemptions for Ukraine, which had been in place since 2022 following Russia’s full-scale invasion. The Proclamations do not directly address whether Ukrainian steel will receive preferential treatment in future agreements, but they signal an across-the-board policy of strict tariff application.

The Trump administration’s stated justification for terminating these arrangements centers on concerns regarding persistent global excess capacity, primarily attributed to China, and a lack of meaningful cooperation from U.S. allies in mitigating these distortions. The Proclamations cite data from the Organisation for Economic Co-operation and Development (OECD) and other sources to support claims that Chinese overproduction has resurged in recent years, resulting in an increase in the volume of Chinese steel exports and a corresponding rise in total steel imports as a percentage of U.S. consumption—a scenario reminiscent of the conditions identified in the original 2018 Section 232 report.

Moreover, the Trump administration highlights growing concerns over transshipment and circumvention tactics, alleging in particular that Chinese and Russian steel products and substrate are being routed through trading partners previously exempt from Section 232 duties, including Canada and Mexico. The Proclamations assert that certain U.S. trading partners have failed to take adequate measures to prevent Chinese state-owned enterprises and other non-market actors from making strategic investments in their domestic steel and aluminum industries, thereby enabling continued penetration of non-market subsidized metal products into the U.S. market.

While the Trump administration has definitively scheduled the termination of all existing country-specific agreements, it has left open the possibility of renegotiating select bilateral arrangements. In response to inquiries from the press, President Trump suggested that Australia, in particular, could be a candidate for a new exemption or alternative agreement. However, no formal commitments have been made, and the extent to which additional partners may seek revised terms remains uncertain.

Elimination of the Section 232 Product Exclusion Process
Beyond the revocation of country-specific agreements, the Proclamations also dismantle the existing product exclusion mechanism, which had previously allowed domestic importers to request tariff exemptions for steel and aluminum products deemed unavailable from U.S. sources or critical to national security interests. Effective immediately, the Department of Commerce will no longer accept new exclusion requests, eliminating a key avenue that many U.S. manufacturers have relied on to mitigate the impact of Section 232 duties.

Previously granted exclusions will remain valid only until their expiration date or until their specified import volume is reached, whichever occurs first, but they will not be eligible for renewal. Additionally, Commerce’s list of generally approved product exclusions—which had facilitated streamlined relief for certain widely used steel and aluminum products—will be eliminated entirely as of March 12, 2025.

While the Proclamations do not outline a new framework for seeking product-specific tariff relief, it remains possible that the Trump administration will introduce alternative pathways for exclusions in the future. In the interim, companies importing covered steel and aluminum products should promptly assess existing exclusion grants, confirm expiration dates, and explore potential supply chain adjustments.

Potential Retaliatory Measures and Global Trade Consequences
The broader trade implications of these measures remain highly uncertain, particularly as key U.S. trading partners evaluate potential responses. Prior to these Proclamations, the EU had suspended retaliatory tariffs on U.S. goods, including bourbon whiskey and motorcycles, as part of the 2021 U.S.-EU framework negotiations on global steel overcapacity. However, these tariffs are now expected to be reimposed, particularly given the failure of U.S.-EU negotiations on a broader steel agreement intended to coordinate policies against Chinese excess production. Meanwhile, other major steel suppliers—including Canada, Mexico, Brazil and Vietnam—are likely to respond with countermeasures, potentially impacting a broad range of U.S. exports.

Expansion of Tariffs to Steel and Aluminum Derivative Products
In addition to the blanket reimposition of tariffs on primary steel and aluminum products, the Proclamations contemplate a substantial expansion of duties on derivative products. Tariffs on such articles will only apply to the valuation of the steel and aluminum components of such articles. The Department of Commerce will soon issue a Federal Register notice identifying an initial list of steel and aluminum derivative products that will immediately be subject to the 25% tariffs. Also, within 90 days of the Proclamations, or around May 12, the Department of Commerce will provide for a process to allow domestic steel and aluminum producers and industry groups to request that other steel and aluminum derivatives be added to the list subject to the 25% tariffs. Derivative products could potentially include fabricated structural steel, concrete strands, electrical steel (such as GOES and NOES), and other finished products not currently covered in Chapters 72 and 73 of the HTS code. These products have applications across key industries, including power transformers and automobiles.

Note that the Proclamations clarify that imported derivative products made from steel melted and poured within the United States will remain exempt from these duties.

Looking Ahead
With March 12 rapidly approaching, we recommend that companies across the manufacturing, construction, automotive and energy sectors act swiftly to assess the impact of these sweeping tariff changes. The elimination of country-specific agreements, the removal of product exclusions, and the expansion of tariffs on derivative products introduce substantial regulatory and cost uncertainties for global supply chains. As U.S. trading partners evaluate potential countermeasures, the risk of retaliatory tariffs and broader trade disputes remains high, with potential consequences for U.S. exports across multiple industries. We continue to monitor developments closely and will provide further guidance on potential avenues for tariff relief and trade strategy adaptation in the coming months.

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