Annexed Opportunity: Proclamation Provides a Targeted Reduction of Section 232 Tariffs

President Donald Trump on April 2, 2026, issued Proclamation 11021, "Strengthening Actions Taken to Adjust Imports of Aluminum, Steel, and Copper into the U.S.," which applied duties to the full value of covered articles and expanded the scope of tariffs on steel, aluminum and copper products under Section 232 of the Trade Expansion Act of 1962 (Section 232).

That proclamation was followed by another on June 1, 2026, titled "Further Adjusting the Tariff Regimes for Imports of Aluminum, Steel, and Copper into the U.S." It builds on the previous proclamation's framework by providing a targeted reduction for domestic manufacturing sectors that rely on imported metals derivatives as inputs. Only products covered by the annexes to these proclamations are affected.

The U.S. Department of Commerce and U.S. Customs and Border Protection have indicated that they will issue guidance on implementing the new annex classifications and attestation requirements.

This table summarizes the applicable tariffs.

Major Changes by Annex

1. Annex I-A (50 Percent Base Rate): Articles listed in Annex I-A (i.e., articles made largely or entirely of the metals subject to this tariff) remain subject to a 50 percent tariff. The June 1 proclamation made no changes to Annex I-A.
2. Annex I-B (Derivative Products at 25 Percent): Derivative products listed in Annex I-B and classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) Chapters 72, 73, 74 and 76 remain subject to a 25 percent tariff.

However, parts classifiable under Chapters 84, 85 or 87 that are imported exclusively for use in manufacturing mobile industrial equipment listed in Annex I-C or agricultural equipment or fixed industrial equipment listed in Annex III qualify for a reduced tiered duty structure:

• 15 percent maximum combined duty (i.e., general duty plus Section 232 tariff cannot exceed 15 percent)
• 10 percent maximum combined duty (i.e., general duty plus Section 232 tariff cannot exceed 10 percent) for products composed entirely of U.S. steel or aluminum
• 25 percent for partner countries without normal trade relations (e.g., Cuba, North Korea and Belarus); Russia remains subject to a higher 200 percent tariff rate

3. Annex I-C (Mobile Industrial Equipment and Machinery – New): Twenty-eight HTSUS codes under Chapters 84 and 87, corresponding to mobile industrial equipment and machinery, were moved from Annex I-B to the new Annex I-C.

From June 8, 2026, through December 31, 2027, steel and aluminum articles in Annex I-C are subject to the following four-tier duty structure:

• 25 percent tariff
• Eligible Partner Economies. 15 percent maximum combined duty (i.e., general duty plus Section 232 tariff cannot exceed 15 percent)
• 10 percent maximum combined duty (i.e., general duty plus Section 232 tariff cannot exceed 10 percent) for products composed entirely of U.S. steel or aluminum
• United States-Mexico-Canada Agreement (USMCA)-Qualifying Products. The 25 percent tariff is assessed only on non-U.S. content (total value minus U.S.-produced parts), with a minimum effective rate of 15 percent on the full value of the product. Steel articles are also subject to a limitation under which only 40 percent of U.S. content may benefit from the exemption (i.e., the non-U.S. content and the remaining U.S. content are subject to a 25 percent tariff).

Partner Economies Eligible for the 15 Percent Maximum Combined Duty: Argentina, Ecuador, El Salvador, Guatemala, Japan, Liechtenstein, South Korea, Switzerland, Taiwan, the United Kingdom and European Union member states

Lowest-Rate Rule: Where multiple rates apply under this section, the lowest duty rate governs.

USMCA: "U.S. content" is the value of the article attributable to parts produced in the U.S.

For steel articles, U.S. content representing up to 40 percent of the article's value may be entered duty-free. See 9903.82.21. However, for these products, the 25 percent tariff applies to the non-U.S. content (total value minus U.S.-produced parts) and any U.S. content that exceeds 40 percent of the product's value. See 9903.82.20.

For example, if a duty-free steel article worth $100 contains 60 percent U.S. content, 40 percent of the value would not be subject to Section 232 tariffs. The remaining 60 percent of the value (the additional 20 percent of U.S. content plus the 40 percent foreign content) would be subject to an additional 25 percent tariff. The steel article therefore would be subject to a $15 tariff (25 percent of $60).

Beginning January 1, 2028, the scope will expand to include steel, aluminum and copper articles. Articles in Annex I-C will be subject to the following three-tier duty structure:

• 25 percent tariff
• 15 percent for products composed entirely of UK steel and aluminum
• 10 percent tariff for products composed entirely of U.S. steel, copper or aluminum

4. Annex III (Expanded to Include Agriculture and Heating, Ventilation and Air Conditioning (HVAC)): Annex III has been expanded to include agricultural equipment and implements and certain residential HVAC systems and components.

Articles in Annex III are subject to the same reduced tiered duty structure as in Annex I-B:

• 15 percent maximum combined duty (i.e., general duty plus Section 232 tariff cannot exceed 15 percent)
• 10 percent maximum combined duty (i.e., general duty plus Section 232 tariff cannot exceed 10 percent) for products composed entirely of U.S. steel or aluminum
• 25 percent for partner countries without normal trade relations (e.g., Cuba, North Korea and Belarus); Russia remains subject to a higher 200 percent tariff rate

5. Annex IV (USMCA and Composed Entirely Rules): As discussed above, Annex IV clarifies the calculation of tariffs for USMCA-qualifying steel articles. It also reduces the "composed entirely" threshold.

Following the proclamation, the "composed entirely of" threshold is reduced from 95 percent to 85 percent, measured by requiring at least 85 percent of the product's aluminum, steel and copper content, measured by weight, to be U.S.-origin smelted and cast (aluminum and copper) or melted and poured (steel)

In addition, the copper tariff program established under Proclamation 11021 continues in full force and is not altered by the June 1, 2026, action, except that copper is incorporated into the "composed entirely" pathway beginning January 1, 2028.

The "composed entirely" threshold is most relevant to eligibility for the 10 percent reduced tariff on U.S. products.

Next Steps for Importers

Companies importing covered products or using them as manufacturing inputs should consider taking the following actions immediately:

• Confirm whether products are classified under Annex I-A, I-B, I-C or III and determine the applicable duty rates.
• Obtain certifications regarding metal origin and content percentages to support "composed entirely" treatment (85 percent U.S. content by weight) and USMCA value calculations.
• Update supply agreements to address tariff surcharge allocation, landed-cost adjustments and force majeure provisions.
• For Annex I-B products seeking reduced rates, prepare documentation demonstrating exclusive use in Annex I-C or Annex III manufacturing.

Further Context

• The Trump Administration recently issued a notice of proposed tariffs for countries pursuant to its investigations of prohibitions on imports of products made with forced labor and is expected to issue a similar notice of proposed tariffs pursuant to its investigation of target country practices related to manufacturing excess capacity. Both investigations are being carried out by the Office of the U.S. Trade Representative (USTR) under authority in Section 301 of the Trade Act of 1974.
• Finalization and imposition of these Section 301 tariffs is expected to coincide with the July 24, 2026, end of 10 percent global tariffs under Section 122 of the Trade Act of 1974.
• It is further expected that these country-specific Section 301 tariffs will likely not stack on top of any applicable Section 232 tariffs, including those for steel, aluminum and copper and their derivatives. However, review of final determinations by USTR is required.

For more information or questions, please contact the authors.

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