Tariff Changes on Steel and Aluminum Articles from Mexico

On July 10, 2024, the Biden Administration issued two proclamations Proclamation No. 10783, 89 Fed. Reg. 57347 (July 10, 2024) and Proclamation No. 10782, 89 Fed. Reg. 57339 (July 10, 2024) concerning imports of steel and aluminum products from Mexico and imports of aluminum products from Russia, China, Belarus, and Iran. The proclamations allow additional import duties of 25% for steel and 10% for aluminum to be levied on these categories of merchandise under the Trade Expansion Act of 1962.

To avoid these additional duties, i.e., duties imposed in addition to the Normal Trade Relations duties and any other trade remedy duties such as antidumping and countervailing duties, the importer must certify to U.S. Customs & Border Protection (CBP) that (a) the steel in any finished good was melted and poured in the US, Canada, or Mexico; and (b) that aluminum products were not smelted and cast using primary aluminum from Russia, China, Belarus, or Iran.

The Section 232 statute allows the President to impose import restrictions if the Department of Commerce determines that certain imports threaten US national security. On March 18, 2018, the Trump Administration applied tariffs of 25% on steel and 10% on aluminum based on such a finding. These tariffs applied to imports from all countries, with certain exceptions, e.g., Australia, Argentina, Canada, and Mexico. These actions were challenged in court but ultimately found to be a lawful exercise of the President’s authority over matters of national security. Effective January 1, 2022, the Section 232 duties on imports from the EU of steel and aluminum were removed and replaced with a Tariff Rate Quota in line with historical levels of trade. 

The first July 10 proclamation closes a loophole in the Section 232 exemption for Mexico. Previously, raw steel materials – primarily from China due to that country’s overcapacity in steel production – were shipped to Mexico for further processing into finished articles. The country of origin of the finished articles would then become “Mexico” and, in most cases, enter the US duty-free under the United States-Canada-Mexico Agreement. The new proclamation puts an end to this version of “transshipment” that has allowed China to escape the Section 232 tariffs on steel products. Thus, effective July 10, only steel and derivative steel articles that are melted and poured in Mexico, Canada, or the US qualify for tariff exemptions. Imports of steel and derivative steel articles that are products of Mexico but were melted and poured in a country other than Mexico, Canada, or the US are subject to the Section 232 tariff rate of 25%. Importers of steel and steel derivative articles will need to provide to CBP the information necessary to identify the countries where the steel used in the manufacture of these articles is melted and poured.

The second July 10 proclamation addressed a similar issue of Mexico using other countries’ raw aluminum materials in manufacturing finished goods for export to the US, with a significant increase in those exports since 2019. Accordingly, the proclamation includes a new rule that imposes Section 232 tariffs of 10% on aluminum and derivative aluminum articles that are products of Mexico for which the reported primary country of smelt, secondary country of smelt, or country of most recent cast is China, Belarus, Iran, or Russia. (For the latter country, duties are imposed at the rate of 200% pursuant to Presidential Proclamation 10522 (February 24, 2023)). Imports of aluminum and derivative aluminum articles that are products of Mexico must be accompanied by a certificate of analysis to be exempt from Section 232 tariffs.

How BDO Can Help

BDO’s Customs & International Trade Services (CITS) team can assist clients with reviewing tariff classifications and countries of manufacture, including relevant production processes, to ensure products are accurately classified and their country of origin is properly identified. BDO helps businesses navigate the complex rules governing cross-border product movements to minimize the risk of noncompliance and maximize opportunities for cost reduction, supporting their competitive advantage in the global marketplace.

In addition to tariff classification and auditing of supply chain and sourcing, our services include:

• Duty drawback
• Origin determination
• Foreign-trade zones
• FTA qualification
• Customs valuation and transfer pricing
• Import and export compliance assessments
• Supply chain planning
• Customs rulings, protests, and other administrative filings