The U.S. Commerce Department has laid out a process allowing Canada and Mexico's steel and aluminum producers to request a lower Section 232 tariff in exchange for a binding commitment to build or expand production facilities in the U.S.
If the agency approves the request, an applicant could reduce the current 50% tariff to 25%, according to a Federal Register document filed by the Commerce Department.
To qualify, the Canada and Mexico companies must currently provide steel and aluminum, either directly or indirectly, to U.S. manufacturers of automobiles or medium- and heavy-duty vehicles, per the document. Their U.S.-bound exports must additionally qualify for preferential treatment under the U.S.-Mexico-Canada Agreement.
The tariff adjustment offer stems from the Trump administration’s April revision to the calculation of Section 232 tariffs on steel and aluminum imports, based on a proclamation by President Donald Trump. The revised calculation imposed a 50% tariff on goods made almost entirely of aluminum and steel, including steel coils and aluminum sheets.
To be considered for the lower duty under Commerce Department rules, applicants must make a binding commitment to build or expand facilities that produce primary steel or primary aluminum for key products of makers of autos and medium- and heavy-duty vehicles, not simply upgrade or reconfigure existing plants.
The tariff adjustment is limited to quantities equal to the projected annual output of the new U.S. plant and to a fixed time period determined by the Commerce Department.
Companies applying for the lower tariff must submit a written document certified by a senior corporate officer, such as the CFO or general counsel, the Commerce Department said. The document must explain why the company qualifies for the adjustment and include the location of its Canada and Mexico plants, product types and information about U.S. customers.
Applicants must also submit information on major raw material sources, including known or expected suppliers and an overview of the planned U.S. facility, including its location, objectives, current status and expected employment and workforce expansion.
Additionally, companies must commit to specific project milestones, including the purchase of land, the completion of facility design, the completion of construction and the start of production, according to the Commerce Department.
