Canadian and Mexican steel and aluminum producers supplying the U.S. automotive sector can now apply to reduce their Section 232 tariff rate from 50% to 25%—but only if they commit to building or expanding primary production facilities in the United States. The Commerce Department published the application process in the Federal Register, creating a conditional duty structure that compliance systems must now account for.
The tariff reduction isn't automatic. To qualify, applicants must currently supply steel or aluminum—directly or indirectly—to U.S. manufacturers of automobiles or medium- and heavy-duty vehicles. Additionally, their exports must qualify for preferential treatment under USMCA rules of origin. This dual requirement means the reduced rate applies to a narrow subset of Section 232-covered goods, not broad product categories.
Rate variability by supplier: The same HTS code could now carry either 50% or 25% depending on whether the specific foreign producer holds an approved tariff adjustment. This breaks the assumption that duty rates are static per classification.
The Commerce Department is capping the tariff adjustment in two ways. First, the quantity eligible for the 25% rate is limited to the projected annual output of the new U.S. facility. Second, the adjustment applies only for a fixed time period determined by the agency. Once either threshold is exceeded, the full 50% rate applies to remaining imports. For compliance engineering teams, this means tracking not just classification and origin, but supplier-specific quotas and time windows.
Applications require certification by a CFO or general counsel and must include detailed facility information: Canada or Mexico plant locations, product types, U.S. customer data, and raw material sourcing including known or expected suppliers. The Commerce Department also requires an overview of the planned U.S. facility covering location, objectives, current status, expected employment, and workforce expansion projections.
Milestone tracking required: Approved applicants must commit to specific project milestones—land purchase, facility design completion, construction completion, and production start. Failure to meet these could affect continued eligibility for the reduced rate.
This conditional rate structure stems from the Trump administration's April revision to Section 232 calculations, which imposed the 50% tariff on goods made almost entirely of aluminum and steel, including steel coils and aluminum sheets. The new application pathway creates a carve-out that rewards North American suppliers willing to relocate production, but it also introduces data complexity that static tariff schedules cannot capture.
For trade compliance teams building duty calculation engines, the takeaway is clear: Section 232 rates on Canadian and Mexican steel and aluminum are no longer uniform. Accurate landed cost calculations now require supplier-level data on application status, approved quantities, and milestone compliance—none of which exists in standard HTS rate tables.