New Section 232 Tariff Overhaul: Winners, Losers, and Unintended Consequences

On April 2, 2026, President Donald J. Trump issued a proclamation modifying the Section 232 tariff regime for aluminum, steel, and copper (which we will collectively refer to here as the “metal”) and derivative aluminum and steel articles, effective April 6, 2026. One of the most significant changes is that Section 232 duties will be assessed on the full customs value of covered derivative articles rather than solely on the metal-content portion. The proclamation also introduces a de minimis concept, under which certain metal derivative articles are excluded if their applicable metal content is below 15% by weight.

There are clear winners, clear losers, and some unresolved questions—particularly around how remaining non-Section 232 duties (e.g., Section 122 tariffs) will interact with this new “full value” methodology.

Tiered Tariff Structure

The Section 232 regime is now a four-tier structure, with different rates applicable to metal articles and their derivatives. The applicable tier is determined by HTS classification. If a product is listed as an article/derivative of more than one metal (e.g., aluminum plus steel), the proclamation provides it will be subject only once to the applicable duty rate—there is no stacking of multiple Section 232 charges for multiple covered metals.

• Annex I-A (50%): Articles made entirely or almost entirely of aluminum, steel, or copper are subject to 50% tariff on their full value. This category includes HTS codes primarily found in Chapters 72-74 and 76.
• Annex I-B (25%): Certain derivative articles substantially made of steel, aluminum, or copper are subject to 25% tariff on their full value.
• Annex III (15% “cap”): Certain metal-intensive industrial equipment and electrical grid equipment are subject to a temporary reduced 15% tariff-rate “cap.” If the product’s general (Column 1) duty rate is less than 15%, then the Section 232 rate will be the difference. If a product’s existing Column 1 rate is already at or above 15%, no additional Section 232 duty applies. On January 1, 2028, Annex III products will transition to the 25% rate applicable under Annex I‑B.
• Annex IV (de minimis exemption): Articles that are found in Annex I-B (25% rate) and III (15% “cap”) and are outside Chapters 72, 73, 74, or 76 whose weight of applicable metals is below 15% of the total weight of the imported article are excluded from those tariff rates.

Notably, the order removes various HTS codes from the Section 232 tariff regime. Those removed can be found in Annex II.

Reduced Rates

Reduced rates apply in certain circumstances:

• U.S. origin metal 10% rate: If an article is manufactured entirely with U.S.-origin metals, a 10% rate applies.
• UK rates: For UK-origin metal articles and derivatives, articles normally subject to the 50% rate are subject to 25%, and articles normally subject to the 25% rate are subject to 15%.

Prior Metal Content Methodology vs Full-Value Assessment

Before this overhaul, certain metal derivative articles were subject to Section 232 duties only on the value of their metal content. The non-metal content value was subject to the now-defunct IEEPA tariff rates or Section 122 tariff rates.

Now, the Section 232 tariffs on all aluminum and steel derivatives will apply to the full customs value of the imported product, regardless of metal content.

Critically, the 10% Section 122 tariff would still apply to the non-metal content of the products (similar to how IEEPA tariffs were applied to the non-steel/aluminum content). Chapter 99 of the HTSUS as currently written notes that the additional duty imposed by heading 9903.03.01 (Section 122 tariff) shall not apply to the steel/aluminum product but shall apply to the non-steel/non-aluminum content.[1] In our view, the new regime would be more rational if the Section 122 tariff rate would no longer apply, because the Section 232 tariff is now applicable to the entire value of the metal article. But for now, at least on its face, the new regime essentially double-taxes the non-metal component of covered articles.

Another question that arises is for the derivative articles that meet the de minimis exemption. As currently written, the Section 122 tariff would only apply to the non-steel/non-aluminum content rather than to the entire value.

FOOTNOTES

[1] Subdivision (aa)(v) of U.S. note 2 to subchapter III states: