What is a derivative?
A derivative article is a product made from a primary material, such as auto parts, 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.
How are the additional duties applied specific to these new derivatives?
The 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.
This duty applies only to derivatives classified outside USTHS Chapters 73 and 76. 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 steel 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?
No, articles and derivatives of steel and aluminum subject to Section 232 duties are excluded from the reciprocal tariffs; pursuant to heading 9903.01.33, HTSUS.
In looking at Annex III examples below, is the interpretation correct that the entire value 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 entire 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 outside of CH. 76 or 73?
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.
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 U.S., or aluminum that was “smelted and cast” in the U.S.
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.
It is critical to ensure this information is included in your import documentation. For further clarification, refer to CBP messages CSMS #55438432 and CSMS #62582900.
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