White House Issues Two Proclamations on Section 232 Requirements for Aluminum and Steel
On July 10, 2024, President Biden issued two proclamations on steel and aluminum, which impose new requirements regarding the application of special tariffs under Section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”)1 to imports of steel and aluminum into the United States based on the countries from which the steel was “melted and poured” and the aluminum was “smelted or cast.”
As background, in 2018, following the Secretary of the US Department of Commerce’s (“Commerce”) transmission of reports to the President on its investigations into the effect of imports of steel mill articles and aluminum articles on the national security of the United States under Section 232, the President imposed a 25% ad valorem tariff on steel mill articles and a 10% ad valorem tariff on aluminum articles from all countries, except Canada and Mexico.
The President’s July 10th proclamations follow information received from the Commerce Secretary that domestic steel and aluminum producers’ “capacity utilization remains below the target 80 percent capacity utilization” recommended by Commerce’s 2018 report. Accordingly, the President found that “it is appropriate to revisit” the applicability of tariffs imposed on steel mill and aluminum articles imported from Mexico.
For steel mill articles, the President’s Proclamation on Adjusting Imports of Steel Into the United States (the “Steel Proclamation”) found it “necessary and appropriate, at this time, to maintain the current tariff level [25% ad valorem] as it applies to other countries.” The President also imposed a new “melt and pour” requirement for imports of steel articles that are products of Mexico and “will increase the section 232 duty rate for imports of steel articles and derivative steel articles that are products of Mexico that are melted and poured in a country other than Mexico, Canada, or the United States.” The Steel Proclamation states that this “will provide an effective, long-term alternative means to address any contribution by Mexican steel articles imports to the threatened impairment of the national security by restraining steel articles imports to the United States from Mexico, limiting transshipment, and discouraging excess steel capacity and production.”
For aluminum articles, the President’s Proclamation on Adjusting Imports of Aluminum Into the United States (the “Aluminum Proclamation”) implements a new “country of smelt and country of most recent cast requirement for or imports of aluminum articles that are products of Mexico” and increases section 232 duty rates “for imports of aluminum articles and derivative aluminum articles that are products of Mexico containing aluminum for which the reported primary country of smelt, secondary country of smelt, or country of most recent cast is China” or certain other named countries.2 And, “[i]n order to be eligible for importation free from section 232 tariffs, aluminum articles and derivative aluminum articles that are products of Mexico must be accompanied by a certificate of analysis and must not contain primary aluminum for which the reported primary country of smelt, secondary country of smelt, or country of most recent cast” is China (or another named country). As above, these actions will “provide an effective, long-term alternative means to address any contribution by Mexican aluminum articles imports to the threatened impairment of the national security by restraining aluminum articles imports to the United States from Mexico, limiting transshipment, and discouraging excess aluminum capacity and production.”
Both the Steel and Aluminum Proclamations require importers of steel, steel derivative articles, and aluminum articles to provide to the US Customs and Border Protection (“CBP”) the information necessary to 1) identify the countries where the steel used in the manufacture of steel articles imports and derivative steel articles are melted and poured and 2) identify the countries where the primary aluminum used in the manufacture of aluminum articles imports are smelted and where such aluminum articles imports are cast to be eligible for duty-free treatment. The President has also tasked the Office of the US Trade Representative (“USTR”), in consultation with the Commerce Secretary, to advise the President if there is a surge in imports of steel articles or aluminum articles to the United States from Mexico and on the appropriate means to ensure that such imports from Mexico do not undermine the national security objectives of the tariffs imposed under these proclamations.
The “melt and pour” and “smelt and cast” requirements were made effective after 12:01 a.m. EDT on July 10, 2024, and shall continue in effect until reduced, modified, or terminated by the President. These new requirements demonstrate the need for interested parties to pay close attention to the development of novel, non-traditional US country-of-origin rules in assessing duty implications of current and future supply chains, especially when it involves China at any level.
1 Section 232 allows the President to impose import restrictions based on an investigation and affirmative determination by Commerce that certain imports threaten to impair US national security.
2 These countries are Russia, Belarus, and Iran, all of which raise special and complex issues regarding importation into the United States that are beyond the scope of this article.
