New Presidential Proclamations – Section 232 Duties on Certain Steel and Aluminum Products from Mexico

On July 10, 2024, the President issued two Presidential Proclamations related to the imposition of Section 232 duties on certain steel and aluminum products from Mexico.  The first establishes a “melt and pour” requirement for imports of steel articles that are products of Mexico and will increase the section 232 duty rate for imports of steel articles and derivative steel articles that are products of Mexico that are melted and poured in a country other than Mexico, Canada, or the United States.  In order to be eligible for importation free from section 232 tariffs, steel articles and derivative steel articles that are products of Mexico must be melted and poured in Mexico, Canada, or the United States. The second proclamation established a “country of smelt” and “country of most recent cast requirement” for imports of aluminum articles that are products of Mexico, and will increase the section 232 duty rate for imports of aluminum articles and derivative aluminum articles that are products of Mexico containing aluminum for which the reported primary country of smelt, secondary country of smelt, or country of most recent cast is China, Russia (subject to paragraph 10 of this proclamation), Belarus, or Iran.  In order to be eligible for importation free from section 232 tariffs, aluminum articles and derivative aluminum articles that are products of Mexico must be accompanied by a certificate of analysis and must not contain primary aluminum for which the reported primary country of smelt, secondary country of smelt, or country of most recent cast is China, Russia, Belarus, or Iran. Steel Proclamation Effectively, this action requires steel importers, for certain steel imports from Mexico, to provide U.S. Customs and Border Protection (“CBP”) with the information necessary to identify where the steel has been melted and poured. If the country of melt and pour is any country other than the U.S., Mexico, or Canada, then the steel articles are subject to an additional 25% duty. Some sources are claiming that steel imports melted and poured in Brazil are also exempt from this action; however, this was taken from verbal statements made by the President of Mexico and have not been confirmed by any primary U.S. source of information. Per the U.S. Steel Import Monitoring and Analysis System, the Country of  Melt and Pour is defined as: where the raw steel is (1) first produced in a steel-making furnace in a liquid state; and then (2) poured into its first solid shape.  The first solid state can take the form of either a semi-finished product (i.e., slab, billets, or ingots) or a finished steel mill product.  The location of melt and pour is customarily identified on mill test certificates that are commonplace in steel production. The affected steel articles covered by the new melt and pour requirement include the following products:

• bars and rods provided for in headings 7213, 7214, 7215, 7227, or 7228; angles, shapes and sections of 7216 (except subheadings 7216.61.00, 7216.69.00 or 7216.91.00); wire provided for in headings 7217 or 7229; sheet piling provided for in subheading 7301.10.00; rails provided for in subheading 7302.10; fish-plates and sole plates provided for in subheading 7302.40.00; and other products of iron or steel provided for in subheading 7302.90.00;
• tubes, pipes and hollow profiles provided for in heading 7304 or 7306; tubes and pipes provided for in heading 7305;
• ingots, other primary forms and semi-finished products provided for in heading 7206, 7207 or 7224; and
• products of stainless steel provided for in heading 7218, 7219, 7220, 7221, 7222 or 7223.

Covered derivative steel articles include the following products:

• nails, tacks (other than thumb tacks), drawing pins., corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material (excluding such articles with heads of copper), suitable for use in powder-actuated hand tools, threaded {described in subheading 7317.00.30); and
• nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material (excluding such articles with heads of copper), of one piece construction, whether or not made of round wire; the foregoing described in statistical reporting numbers 7317.00.5503, 7317.00.5505, 7317.00.5507, 7317.00.5560, 7317.00.5580 or 7317.00.6560 only and not in other statistical reporting numbers of subheadings 7317.00.55 and 7317.00.65;
• bumper stampings of steel, the foregoing comprising parts and accessories of the motor vehicles of headings 8701 to 8705 (described in subheading 8708.10.30); and
• body stampings of steel, for tractors suitable for agricultural use (described in subheading 8708.29.21)

Previously, steel that was melted and poured in a non-exempted country could have been imported into Mexico, undergone further processing in Mexico to effectuate a substantial transformation, and had Mexico as the country of origin to avoid the Section 232 duties on steel imports into the U.S.  Proclamation 10783 thwarts this course of action by now requiring proof that the steel article (of the above covered HTS or listed derivative products) was melted and poured in a North American territory in order to obtain the benefit of not paying Section 232 duties into the U.S.  Proof of country of melt and pour typically takes the form of a mill test certificate or report, which contains the heat number, lot number, chemical properties, and most importantly the location of this process. The new requirement only affects the products specifically identified by the above-listed HTS codes or listed derivative products. Additionally, we cannot confirm that Argentina, Brazil, and South Korea are exempted from the melt and pour requirements, as they have not been enumerated as exempt in an official U.S. Government notice. Aluminum Proclamation This action requires aluminum importers, for certain aluminum articles, to provide CBP with a certificate of analysis, such as a mill test certificate or report, confirming the primary aluminum of an article does not report a primary country of smelt, secondary country of smelt or country of most recent cast as China, Russia, Belarus, or Iran. All aluminum articles imported into the U.S. from Mexico that cannot provide information confirming these three factors will be subject to an additional 10% duty. The Proclamation defined the following terms: ‘‘Primary country of smelt’’ as the country where the largest volume of new aluminum metal is produced from alumina (or aluminum oxide) by the electrolytic Hall- Heroult process; ‘‘Secondary country of smelt’’ as the country where the second largest volume of new aluminum metal is produced from alumina (or aluminum oxide) by the electrolytic Hall-Heroult process; ‘‘Country of most recent cast’’ as the country where the aluminum (with or without alloying elements) was last liquified by heat and cast into a solid state. The final solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished aluminum product. Covered aluminum articles include the following products:

• unwrought aluminum provided for in heading 7601:
• bars, rods and profiles provided for in heading 7604; wire provided for in heading 7605;
• plates, sheets and strip provided for in heading 7606; foil provided for in heading 7607;
• tubes, pipes and tube or pipe fittings provided for in heading 7608 and 7609;
• castings and forgings of aluminum provided for in subheading 7616.99.51.

Covered derivative aluminum articles include the following products:

• stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.10.50);
• stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.20);
• stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing not comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.40);
• stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.90.50);
• bumper stampings of aluminum, the foregoing comprising parts and accessories of the motor vehicles of heading 8701 to 8705 (described in subheading 8708.10.30); and
• body stampings of aluminum, for tractors suitable for agricultural use (described in subheading 8708.29.21).

The new requirement only affects the products specifically identified by the above-listed HTS codes or listed derivative products. Additionally, aluminum products from Mexico containing aluminum from Russia may also be subject to the additional duties on Russian aluminum established by Presidential Proclamation 10522. This action is separate and distinct from that action. For any affected steel and aluminum imports from Mexico that are currently USMCA-eligible, if the country of “melt and pour” or “smelt and cast” cannot be established as Mexico, then the 25% duty on steel and 10% duty on aluminum would apply regardless of USMCA-eligibility. We have been seeing this more frequently in Customs decisions, as the tariff treatment for purposes of a free trade agreement can be different than for purposes of other trade remedies, such as Section 301 or Section 232 duties. Key Takeaways:

1. Only certain steel or aluminum products are affected by Proclamations 10782 & 10783.
2. Such steel products that are proven to be melted and poured in the U.S., Canada, or Mexico are exempt from the additional 25% duties, but we do not have any additional information on other countries that are currently exempt from the steel Section 232 tariffs under this action.
3. The exclusions under the aluminum Proclamation are broader in that such aluminum products are exempt from the additional 10% duties as long as primary aluminum of a specified article can prove the primary or secondary reported countries of smelt or most recent country of cast for aluminum products are not from a short list of countries (China, Russia, Belarus, or Iran).
4. Importers should analyze their steel and aluminum articles under the lens of the above-enumerated products.
5. Additionally, although the requirement to prove country of “melt and pour” or “smelt and cast” for these products is now in effect, CBP’s instructions and requirements for the proof are still forthcoming.