Section 232 steel tariffs: what procurement needs to know in 2026

The April 2, 2026 presidential proclamation did not just increase Section 232 tariff rates. It replaced the entire methodology by which tariffs are calculated, shifting from a metal-content-based system to a full-customs-value approach that applies to the complete entered value of covered steel, aluminum, copper, and derivative products. The June 1, 2026 follow-up proclamation — effective June 8, 2026 — added new product categories, lowered the US-origin metal threshold from 95% to 85%, and expanded relief for agricultural and HVAC equipment.

For procurement organizations, this is not a routine tariff adjustment. The methodology change means products that previously faced a small duty on their metal content alone now face 25% or 50% on their full import value. The White House fact sheet confirmed that tariffs now apply to the "full customs value of all covered metal articles and derivatives, regardless of metal content." Teams relying on pre-2026 landed cost models are almost certainly understating duty exposure.

Full-value tariff assessment eliminates a major compliance loophole

Under the previous framework, tariffs on derivative products — manufactured goods that contain steel or aluminum as a component — were calculated based on the declared value of the metal content only. Importers of machinery, equipment, and industrial goods paid duties only on the steel or aluminum portion of the product's value, not the full product value. This created significant administrative complexity but also kept duty costs manageable for complex manufactured goods.

The April 2026 changes eliminated this approach entirely. As described by White & Case in their April 7 analysis, "all tariffs imposed on products under the steel, aluminum, and copper Section 232 actions will now apply to the full customs value of the imported product, including derivative products." The previous system of splitting customs value between metal and non-metal content has been eliminated. No transition period was provided — the changes applied to goods entered on or after April 6, 2026, including goods already in transit.

The five-tier rate structure most importers will face

The April 2 proclamation established five distinct rate tiers determined by metal content share, country of origin, and whether the metal was produced in the United States. The GHY International guidance published April 2 and updated June 6, 2026, provides the clearest breakdown:

Products containing less than 15% aggregate steel, aluminum, or copper by weight are exempt from Section 232 duties entirely, provided they are not classifiable in HTSUS chapters 72, 73, 74, or 76. Hundreds of low-metal-content derivative products were removed from coverage under Annex II of the proclamation, as reported by C.H. Robinson in its April 6 advisory.

Critically, the tariffs do not stack. Products containing more than one covered metal pay only the highest applicable rate once. The 200% rate on Russian-origin aluminum remains in place under Proclamation 10522, and those products cannot claim the lower rates.

June 2026 adjustments: relief for some sectors, expansion for others

The June 1 proclamation, effective June 8, 2026 through December 31, 2027, introduced targeted modifications. According to the C.H. Robinson June 2 advisory, key changes include expanded eligibility for the 15% reduced rate to agricultural equipment (combines, harvesters) and residential HVAC systems and components. Mobile industrial equipment such as bulldozers and forklifts qualify for 15% but only when imported from trade deal partner countries including EU members, the UK, Japan, South Korea, and others.

The June proclamation also created a new Annex I-C temporary rate structure. For aluminum and steel articles listed in Annex I-C, the standard rate is 25%, with lower rates available for trade deal country imports and products made with at least 85% US-melted or smelted metal — down from the previous 95% threshold. Aluminum lithographic plates and steel racks were added as new derivative products subject to tariffs.

CBP issued implementation guidance on June 5, 2026 providing filing instructions for new Chapter 99 headings 9903.82.20 through 9903.82.26. Importers must now use special two-line entry reporting for USMCA-eligible derivative steel articles from Canada and Mexico, separating US content (up to 40% of value at 0%) from non-US content (25%).

What procurement teams must reclassify before the next shipment

The shift from content-based to classification-based methodology means that product classification is now the single determinant of duty exposure. Under the old system, importers had some flexibility in how they declared metal content. Under the new framework, the HTSUS classification alone determines the rate — and misclassification carries direct cost consequences.

The BDO advisory published April 15, 2026 notes that goods admitted into US foreign trade zones on or after April 6 must enter under privileged foreign status, reducing flexibility for tariff planning. Manufacturing drawback is available only for Annex I-B and Annex III articles that are products of Trade Agreement Partners — currently the UK, EU, Japan, South Korea, Mexico, Canada, and any future reciprocal partners — where the metal content was smelted or cast in one of those countries. All other drawback claims are eliminated.

• Reclassify all imported products against Annex I-A, I-B, I-C, and II to determine correct rate tier
• Update landed cost models to reflect full-value tariff assessment — not metal-content-only calculation
• Identify products eligible for the 10% US-origin metal rate and prepare CBP documentation
• Review FTZ admission procedures — privileged foreign status is now mandatory for covered goods
• Verify ACE entry filings use correct Chapter 99 headings and country-of-melt/pour reporting
• Assess whether products previously covered as low-metal-content derivatives are now exempt under Annex II

What this means for CPOs and category managers

The restructuring of Section 232 tariffs creates three distinct operational risks that procurement teams need to address before year-end 2026.

First: landed cost models are wrong. Every product that was previously classified under the old metal-content methodology needs re-pricing. The difference between paying 25% on metal content versus 25% on full customs value can be 10x or more for complex manufactured goods. Category managers who have not updated their total cost of ownership models are approving purchases based on cost projections that understate actual duty exposure by a significant margin.

Second: supplier contract terms need revisiting. Most international supply agreements specify Incoterms and pricing without accounting for mid-contract tariff restructuring. If procurement teams structured contracts with the assumption that tariffs applied only to metal content value, the April 2026 changes may have shifted duty liability in ways not anticipated. Teams should review force majeure, tariff adjustment, and pricing review clauses in supplier contracts for steel- and aluminum-intensive categories.

Third: the January 2028 cliff is closer than it seems. The transitional 15% rate on industrial and electrical grid equipment expires December 31, 2027. On January 1, 2028, those products revert to the standard 25% Annex I-B rate plus any applicable MFN tariff. For capital equipment purchases with long lead times, procurement teams need to factor in the 2028 rate reset now — not when the transitional rates expire. As the GHY guidance notes, CBP will issue additional guidance before January 1, 2028, but the rate change is already specified.

USMCA is also scheduled for review in July 2026, as noted in the Congressional Research Service product published May 18, 2026. Any changes to USMCA preferential treatment could further affect duty exposure for Canadian and Mexican steel and aluminum products.

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