On February 10, 2025, President Trump signed two Presidential Proclamations (PPs) imposing updated tariffs of 25% ad valorem that will apply to all imports of steel and aluminum products from all countries starting March 12, 2025. Canada is the largest supplier of steel to the U.S., followed by Brazil, Mexico, South Korea, and Vietnam.
These duties will be imposed in addition to any Normal Trade Relations or other trade remedy tariffs that might apply, e.g., the Section 301 “China tariffs” already in place at 100%, 50%, 25%, or 7.5% (depending on the imported item’s classification code under the Harmonized Tariff Schedule of the United States (HTSUS)), as well as any antidumping and countervailing duties.
Overview of the Tariffs
These updated tariffs amend the original trade remedy tariffs imposed in 2018 under Section 232 of the Trade Expansion Act of 1962. The original tariffs were levied at 25% on steel raw materials and 10% on aluminum raw materials (based on individual HTSUS classification codes). U.S. courts later upheld the imposition of these Section 232 tariffs as a legitimate use of the President’s jurisdiction over matters affecting U.S. national security.
The new PPs note that global overcapacity in the primary aluminum industry fueled by expansions in the People’s Republic of China and South America has harmed downstream aluminum producers, including producers of aluminum extrusions and aluminum sheet. Mexico was specifically cited for surging levels of aluminum imports into the U.S. beyond historical volumes, as was Australia.
Canada was singled out for steel imports surging 18% after it was excluded from the original 2018 tariffs, as was Mexico, from which imports of long steel reinforcing bars increased 1,678% during the period 2020-2024. The PPs also note that imports from China have recently surged (exceeding 114 million metric tons in November 2024) and displaced production in other countries, leading to greater exports of steel products from those countries to the U.S.
Due to these and other cited reasons and factors in the PPs that the original trade remedy tariffs were not effective in eliminating threats to U.S. national security, the 10% tariff on aluminum raw materials is increased to 25% and the existing 25% tariff on imports of steel raw materials is “reinstated.”
In addition, several countries (Including those which have free trade agreements with the U.S., such as Australia, Canada, and Mexico) were exempt from these original trade remedy tariffs. The PPs revoke the exclusions that had been granted to these countries, as well as to Argentina, Brazil, Japan, South Korea, Ukraine, the UK, and all EU member states.
The PPs also revoke the “general exclusions” that were available for many products under the original 2018 PP, although any current product-specific exclusions will remain in place until their current expiration date.
The new PPs further note that many producers covered by the original 2018 Section 232 tariffs were evading them by processing covered products into additional derivative products that were not listed by tariff code in the original 2018 PP. Thus, these new PPs order the inclusion of these downstream steel and aluminum articles to be included in the assessment of the 25% tariffs. The Commerce Department and U.S. Customs & Border Protection will work together to establish a process to compile the list of new downstream products (by tariff code) made of steel and aluminum within 90 days.
As with the new tariffs of 25% on imports from Canada and Mexico that were announced on February 1 but later paused for 30 days and the 10% tariffs on goods imported from China that went into effect February 4, no exclusion process is allowed in the new PPs. Hence, no relief for any importer of these products from any country seems to be on the horizon, even if the product is not produced in the U.S. such that only foreign suppliers can provide the steel or aluminum merchandise needed to fulfill U.S. domestic demands.
As with the recent imposition of the 10% tariffs on goods of Chinese origin imported into the U.S., no duty drawback will be permitted when those goods are later exported in the same form as imported as further manufactured articles or if they are destroyed after importation.
Announcement of these new tariffs is expected to generate responses and possible retaliatory tariffs from the governments of steel and aluminum-producing nations, especially Canada and Mexico. In addition, many American industries that consume these metals (e.g., automotive and food packaging sectors) are expected to push back against the new tariffs.
Reciprocal Tariffs
President Trump indicated that “reciprocal” tariffs with all countries would be announced later this week. Under this action, countries that levy a higher tariff on a good imported into their country than the U.S. levies on the same product when imported into the U.S. would see the U.S. duty rate increase to match that of the foreign supplier, based on the all-important “country of origin” criteria. Thus, a motor vehicle imported into the U.S. from an EU member state which now carries a 2.5% Normal Trade Relations duty rate would see that rate jump to 10%, the same rate the EU applies to U.S.-origin vehicles when imported into the EU.
BDO Insight
As President Trump seeks to stop the flow of undocumented immigrants and illicit narcotics (such as fentanyl and its precursor agents) into the U.S., uncertainty abounds not only about the legal authority (IEEPA) he used to impose the new tariffs, but about the retaliatory measures that target countries will adopt in response.
The overriding question facing U.S. companies (and nonresident companies, which include many Canadian entities that import into the U.S.) is whether the cost of the new tariffs which are paid by the U.S. importer of record can be passed on to U.S. consumers in whole or in part. Canada, Mexico, and China account for more than 40% of all U.S. imports that include motor vehicles, pharmaceuticals, shoes, electronics, lumber, steel and aluminum, and a host of other products ultimately purchased by American retail consumers.
In sum, many view these new tariffs as the opening “salvo” in a new global trade war in which all major trading nations will ultimately become enmeshed. In fact, President Trump has indicated that tariffs on imports from the EU and the BRICS countries may be forthcoming. Multinational companies trading in goods should monitor developments closely and prepare to adopt mitigation strategies to lessen or eliminate the impact of the significant tariffs for merchandise imported into the U.S., as well as counter measures adopted by tariff countries.
How BDO Can Help
The BDO Customs and International Trade team is closely monitoring the rapidly evolving trade landscape relating to the newly announced U.S. tariffs and the expected responses from the targeted countries.
For further assistance and detailed analysis tailored to your business needs, please contact our team of international trade experts at BDO. We are here to help you assess key vulnerabilities, ensure compliance with new measures, and identify opportunities for tariff relief and supply chain diversification moving forward.
Please visit BDO’s International Tax Services page for more information on how BDO can help.