Products containing 84% U.S.-origin metal content that previously qualified for an approximately 8% effective tariff rate now face 25% duties on their entire product value following the removal of the Section 232 domestic-origin exemption for steel and aluminum. The change, flagged by trade associations ACCA and HARDI, represents a tariff cliff that compliance systems must account for immediately.
According to HARDI analysis of late 2025 import data, Mexico—the largest exporter of HVACR products to the United States—shipped goods at an effective tariff rate of roughly 8%. Because HVACR products were largely exempt from IEEPA (International Emergency Economic Powers Act) tariffs, nearly all duties paid fell under Section 232 metals provisions. That 8% effective rate indicated approximately 84% U.S.-origin metal content in those products, which previously qualified for exemption treatment.
The math has changed: Under prior rules, an 84% U.S.-origin metal product would qualify for the 10% tariff tier. Under current rules, that same product faces the full 25% tariff calculated on the entire product value—not just the foreign metal portion. For Mexico-origin HVACR equipment, effective rates will approach 25%.
This structural change to Section 232 duty calculations invalidates any cached rate assumptions for HTS classifications covering steel- or aluminum-containing products where domestic metal content was previously factored into duty optimization. Compliance engineering teams pulling rates for Chapter 84 (machinery, including HVAC compressors and heat pumps) and Chapter 73 (steel articles) entries should verify their rate logic against current CBP guidance.
Warning: Systems that cached effective rates based on domestic-content exemptions will return incorrect duty calculations. The exemption removal applies to all Section 232 steel and aluminum duties regardless of U.S.-origin metal percentage.
ACCA has formally requested the administration either exempt HVACR equipment from the new structure or provide a 90-day implementation delay to allow manufacturers to adjust supply chains. HARDI has submitted parallel outreach. Neither request has received a public response as of publication.
For teams serving landed cost calculations or duty drawback workflows, the April Section 232 modifications require immediate attention. Any API responses returning sub-25% rates for steel/aluminum-containing products from Mexico should be flagged for review. ACCA is advising downstream contractors to add material escalation clauses to contracts and coordinate with distributors for updated pricing—a signal that rate volatility will persist through at least Q2 2025.
Classification logic that previously branched on domestic metal content percentage must be updated. The 10% tier no longer applies based on U.S.-origin sourcing; the 25% rate is now the baseline for covered products regardless of where the metal was smelted or poured.