What is a derivative?
A derivative article is a product made from a primary material, such as aluminum cans, steel fasteners, cookware, nails, or furniture.
What steel or aluminum derivatives are subject to additional duties under Section 232?
On February 10, 2025, the President issued Proclamation 10895 and 10896 on Adjusting Imports of Aluminum and Steel into the United States, under Section 232 of the Trade Expansion Act of 1962. These new proclamations target additional derivative articles that are further downstream than those covered in the original 2018 proclamation. On June 3, 2025, additional changes were made to further expand steel derivatives applicable to these tariffs. The Commerce Department published a notice on June 16, 90 FR 25208.
Will additional derivative articles be subject to Section 232?
The proclamations provided for inclusions by the Secretary of Commerce and by requests of a producer of an article in the US or an industry association, to determine if additional items shall be subject to these tariffs. Therefore, we encourage you to continually monitor Mohawk communications and the Federal Register to inform you of additional goods subject to these duties.
How are the additional duties applied specific to these new derivatives?
The Section 232 duty is applied to the value of the aluminum or steel content of the derivative, in the case where the value of the aluminum or steel content is less than the total value of the imported article.
Originally, the duty applied only to the metal content of the derivatives classified outside USTHS Chapters 73 and 76. Proclamation 10947 expanded the scope and effective June 4, 2025, allowed for the duties to be paid only on the metal content for goods in Chapters 73 and 76 versus the initial full value. If the content value is unknown or equal to the total value of the good, the Section 232 duty will be assessed on the full value.
Are importers expected to pay the reciprocal tariff on the value not declared as the metal content – and how would that be determined? Would the importer need to report an additional line for the non-streel value that may be subject to reciprocal tariffs?
Yes, articles and derivatives of steel and aluminum subject to Section 232 duties are no longer excluded from the reciprocal tariffs; pursuant to CSMS 65236374 and 65236645. Please note, this is an initial change provided for in the Presidential Proclamation issued on June 3, 2025.
In looking at Annex III examples below, is the interpretation correct that the entire iron, steel or aluminumvalue is exempt from reciprocal tariffs and the country rate would not apply regardless of the iron, steel or aluminum content (as applicable in the derivative product?)
Examples:
- (vii) The additional duties imposed by headings 9903.01.25, 9903.01.35, 9903.01.39, and 9903.01.43-9903.01.77 shall not apply to derivative iron or steel products provided for in headings 9903.81.89, 9903.81.90, 9903.81.91, 9903.81.92 and 9903.81.93.
- (ix) The additional duties imposed by headings 9903.01.25, 9903.01.35, 9903.01.39, and 9903.01.43-9903.01.77 shall not apply to derivative aluminum products provided for in headings 9903.85.04, 9903.85.07, 9903.85.08 and 9903.85.09
Correct, in the scenarios above, the iron, steel or aluminum value is exempt from the reciprocal tariffs.
How do I report the content value and required content kilograms?
Please coordinate with your providers to report the content value and weight in kilograms on the commercial invoice. This is in addition to the total value and weight. Please note that as the importer of record, you are required to provide CBP with any necessary information to identify the content used in manufacturing the derivative articles covered by these proclamations. This indicates CBP may seek information to support the value provided on your commercial invoice.
How to determine the value of aluminum or steel content for derivatives products?
The value of the steel/aluminum content should be determined in accordance with the principles of the Customs Valuation Agreement, as implemented in 19 U.S.C. 1401a. Thus, the value of the steel/aluminum content is the total price paid or payable for that content, which is the total payment (direct or indirect, and exclusive of any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the country of importation) made/to be made for the steel/aluminum content by the buyer to, or for the benefit of, the seller of the steel/aluminum content. Normally, this would be based on the invoice paid by the buyer of the steel/aluminum content to, or for the benefit of the seller of the steel/aluminum content. Note, cost of goods sold is not a valuation method under the principles of customs valuation.
Is there an exception to the derivative Section 232 duty?
An exception to the Section 232 duty is if the importer can demonstrate that the derivative was made abroad from steel that was “melted and poured” in the US, or aluminum that was “smelted and cast” in the US.
What additional Customs declaration reporting requirements are there?
The primary and secondary country of smelt and country of cast must be provided for aluminum derivatives. The primary country of melt and pour must be provided on steel derivatives. On June 13, 2025 CBP amended prior guidance when an importer does not know the country of smelt and cast. This amendment made effective June 28, 2025, any imports of derivative aluminum subject to Section 232 measures, where the importer does not know the country of smelt and/or cast then the importers should report “unknown” and they will be assessed the 200% duties on imports of aluminum from Russia (CSMS# 65340246)
It is critical to ensure this information is included in your import documentation. For further clarification, refer to CBP messages CSMS #65236374, CSMS #65236645 and CSMS #65405824. These resources also include a list of the current applicable HTS. Please note, the executive order allows the Secretary of Commerce to include additional derivatives when a threat to national security is determined.
Additional Resources: