Section 232 tariffs on imported steel and aluminum increased to 50% in June 2025, pushing U.S. Hot-Rolled Coil (HRC) prices to $1,175 per short ton as of March 30, 2026. For trade compliance teams calculating landed costs on heavy equipment components, this rate change fundamentally alters duty exposure across multiple HTS chapters.

Caterpillar Inc. has quantified the impact: a projected $2.6 billion tariff hit for fiscal year 2026, with approximately $800 million in trade-related costs recorded in Q1 2026 alone. The company cited duties on raw steel, hydraulic components, and engines as primary cost drivers, pushing adjusted operating margins toward the lower end of their 15% to 19% target range.

Key Rate Update: The 50% Section 232 rate applies to steel (HTS Chapter 72) and aluminum (HTS Chapter 76) articles. Compliance systems must validate that ad valorem calculations reflect this rate for all covered subheadings, including derivative products classified under Chapters 73 and 84.

A February 2026 Supreme Court ruling limited certain emergency executive trade powers, introducing potential classification uncertainty. However, the decision left core industrial tariffs intact. For engineering teams managing rate caches, this means Section 232 duties remain active and require no rollback—but monitoring for future executive action constraints is advisable.

The tariff burden varies by supply chain architecture. PACCAR, manufacturing over 90% of its U.S.-sold trucks domestically, avoided the brunt of import duties by eliminating tariff surcharges in early 2026. Deere & Company faces $1.2 billion in projected tariff costs with net income guidance compressed to $4 billion–$5 billion. Cummins reports a 50-basis-point EBITDA margin drag from tariffs on its heavy-truck engine operations.

Classification Risk: Hydraulic components and engine assemblies may fall under multiple HTS subheadings within Chapter 84 and Chapter 87. At 50% duty rates, misclassification on derivative steel content can produce six-figure cost variances per shipment. Validate country of origin and steel content declarations against current Section 232 exclusion lists.

For compliance engineering teams building landed cost calculators, the $1,175/ton HRC benchmark creates a cascading effect on finished goods valuations. Heavy equipment containing imported steel—excavators, generators, construction machinery—requires duty calculations that account for both raw material tariffs and any applicable Section 232 coverage on fabricated components. Systems pulling HTS rates must reflect the June 2025 increase and flag any subheadings subject to Section 232 coverage.

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