US: Overpaying on Steel & Aluminum Tariffs?

Arne Mielken
Mar 23, 2025
5 min read

Steel and aluminum tariffs could be eating into your profits. Learn how to reduce these costs and optimize your trade compliance strategy.

Laptop on desk in warehouse displays a world map. Text reads "Steel Aluminum" and "Trade Compliance". Calculator and documents nearby. — Optimize your trade compliance strategy to navigate steel and aluminum tariffs and enhance your profits.

When it comes to importing steel and aluminum, many businesses are unknowingly overpaying due to stacked trade tariffs. These tariffs, when combined, can surpass 60%, significantly impacting your bottom line. Understanding these duties and how to minimize them can result in substantial savings for your business. As customs professionals, compliance officers, and importers, staying ahead of these charges is crucial in optimizing your trade strategy.

In this blog, I’ll break down the key tariffs that may be affecting your imports and share actionable strategies to help you reduce your exposure. This is a key area of focus for anyone in trade compliance—whether you're handling imports in the EU, UK, or USA, or managing export operations.

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Key Questions Covered in This Blog

What are the key tariffs that impact steel and aluminum imports?
How can I avoid the additional 25% IEEPA tariff on Mexican or Canadian goods?
What are the benefits of sourcing U.S.-made steel and aluminum to avoid Section 232 tariffs?
How can I minimize duties by paying only on the material content in my products?

"Understanding the layers of tariffs on steel and aluminum imports is not just about compliance—it's about ensuring your business isn't overpaying and maximizing your bottom line."— Arne Mielken, Managing Director, Customs Manager

Abbreviations Used in This Blog

IEEPA: International Emergency Economic Powers Act
USMCA: United States-Mexico-Canada Agreement
Section 232: U.S. Trade Expansion Act (national security tariffs on steel and aluminum)
HTS: Harmonized Tariff Schedule
CBP: Customs and Border Protection

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What Are the Key Tariffs Affecting Steel and Aluminum Imports?

Tariffs are critical to understanding trade costs, especially with products like steel and aluminum, which are often subjected to several layered measures. The main tariffs to be aware of are:

IEEPA Tariffs:This tariff is imposed under the International Emergency Economic Powers Act. Products of Chinese origin face a 20% tariff, and products from Mexico or Canada that don't meet USMCA's Rules of Origin face an additional 25% tariff.
Section 301 Tariffs:Section 301 tariffs are applied based on the product classification and its origin, with rates ranging from 7.5% to 25%. These are designed to address unfair trade practices by specific countries.
Section 232 Tariffs:Under Section 232 of the Trade Expansion Act, a flat 25% tariff applies to most steel and aluminum products, particularly those imported from countries outside of the U.S.
Original HTS Code Tariff:In addition to the above tariffs, the Harmonized Tariff Schedule (HTS) will apply additional duties, depending on the classification of the goods.

How Can I Avoid the Additional 25% IEEPA Tariff on Mexican or Canadian Goods?

One of the biggest challenges for importers of steel and aluminum from Mexico and Canada is avoiding the additional 25% IEEPA tariff. If your goods don’t meet USMCA Rules of Origin, you could be subject to this hefty tariff.

To avoid this, here’s what you can do:

Conduct a Rules of Origin Analysis: Ensure your products meet the necessary criteria to qualify for preferential treatment under the USMCA.
Obtain a Certificate of Origin: This document will prove that your goods meet the USMCA’s Rules of Origin.
Stay Compliant with USMCA: By ensuring that your goods meet the rules and having the proper documentation, you can avoid this additional 25% tariff entirely.

Note: After April 2nd, 2025, USMCA renegotiations are expected to change the tariff structure, so keep an eye out for updates.

What Are the Benefits of Sourcing U.S.-Made Steel and Aluminum to Avoid Section 232 Tariffs?

Sourcing steel and aluminum that is smelted, poured, and cast in the U.S. can help you avoid the Section 232 tariff. U.S.-made steel and aluminum are exempt from the 25% tariff under HTS codes 9903.81.92 and 9903.85.09.

How to benefit from this exemption:

Source from U.S. suppliers: This eliminates the need to pay the 25% tariff.
Obtain Mill Certificates: This will support your claim that the materials are U.S.-sourced.
Prepare for CBP Inspection: Customs and Border Protection (CBP) may request documentation to verify the origin of materials.

Sourcing domestically may cost slightly more upfront, but it saves you from incurring hefty tariffs down the line.

How Can I Minimize Duties by Paying Only on the Material Content in My Products?

For derivative products, duties may only apply to the steel or aluminum content, not the entire value of the product.

Here’s how you can save on duties:

Separate Material Costs on Your Invoice: Clearly break down the material costs between steel/aluminum and other materials.
Provide a Bill of Materials (BOM): This supports the breakdown of materials in your product and provides transparency.
Include Supplier Affidavits and Mill Certificates: These documents help verify the breakdown and prove the origin of the materials.

For example, if steel constitutes 30% of the product value, your 25% tariff should only apply to that 30%, not the entire value of the product. This strategy can lead to significant cost savings.

Arne’s Takeaway

By adjusting your sourcing strategy and ensuring compliance with trade regulations, you can avoid overpaying on steel and aluminum tariffs. Whether you’re sourcing from Mexico, Canada, or the U.S., or simply looking to better manage your tariff obligations, the key is staying informed and proactive.

Take Action Now: Make sure your products comply with the necessary rules to reduce tariffs, and don't miss out on cost-saving opportunities.

Expert Recommendations

Review your current sourcing practices: Ensure compliance with USMCA and Section 232 rules to avoid unnecessary tariffs.
Document your materials: Accurate documentation can save you money by reducing the duties applied to your products.
Stay updated on regulatory changes: Keep an eye on future changes to the USMCA and Section 232 tariffs post-2025.

Sources & Further Information

U.S. Customs and Border Protection - Section 232 Tariffs
USMCA Rules of Origin

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Disclaimer

The information provided in this blog is for educational purposes only and is not legal advice. For specific compliance and legal matters, consult a legal professional.