Section 232 Steel and Aluminum Tariffs: What Manufacturers Need to Know in 2026

The Origins of Section 232: A National Security Tariff

Section 232 tariffs did not emerge from the trade wars of the 2020s — they trace their roots to legislation passed during the Cold War. The Trade Expansion Act of 1962 granted the President broad authority to adjust imports whenever the Secretary of Commerce determines that import volumes threaten to impair the national security of the United States. For nearly five decades, this authority sat largely dormant. That changed on March 8, 2018.

In January 2018, the Commerce Department released two reports — one on steel, one on aluminum — concluding that import surges had depressed domestic production capacity utilization below the 80% threshold deemed necessary to sustain a viable defense and critical infrastructure industrial base. The steel report noted that US steel capacity utilization had fallen to approximately 73%, compared to the 80% minimum identified as necessary for a healthy domestic industry. The aluminum report found similar erosion in smelter capacity.

Acting on those findings, President Trump issued Presidential Proclamation 9705 (steel) and Proclamation 9704 (aluminum) on March 8, 2018, imposing the 25% and 10% tariffs respectively, effective March 23, 2018. The proclamations covered a broad list of HTS subheadings spanning basic steel mill products and primary aluminum forms — and were subsequently expanded in scope, country coverage, and product definitions through a series of follow-on proclamations through 2020 and 2022.

Critically, unlike most tariff actions which are temporary trade remedies subject to sunset reviews, Section 232 actions are treated as indefinite national security measures. There is no statutory sunset. Unless a President revokes the proclamation, the tariffs remain in place. As of 2026, they have been continuously in effect for over eight years across multiple administrations.

Current Section 232 Tariff Rates in 2026

Steel: 25% on Covered HTS Subheadings

The base Section 232 rate on steel is 25% ad valorem — applied to the customs value of covered steel imports at the time of entry. The covered HTS subheadings span a substantial portion of Chapters 72 and 73 of the Harmonized Tariff Schedule, including:

• HTS 7206–7207: Iron and non-alloy steel ingots, blooms, billets (basic feedstock forms)
• HTS 7208–7212: Flat-rolled steel products — hot-rolled coil, cold-rolled sheet, coated and galvanized steel
• HTS 7213–7215: Steel wire rod, bars and rods (structural and reinforcing)
• HTS 7216: Angles, shapes, and sections — I-beams, channels, wide-flange beams
• HTS 7219–7223: Stainless steel in flat-rolled and wire forms
• HTS 7304–7306: Tubes, pipes, and hollow profiles — seamless and welded
• HTS 7308: Structural steel components — bridges, towers, lattice masts

The definitive covered product list is set out in Appendix I to Proclamation 9705, as amended. Manufacturers should verify their specific 10-digit HTS subheadings against the current proclamation text rather than assuming coverage based on chapter alone.

Aluminum: 10% on Covered HTS Subheadings

Aluminum imports face a 10% Section 232 tariff under Proclamation 9704. Covered products include unwrought aluminum (HTS 7601), aluminum alloyed and unalloyed, aluminum powders and flakes (7603), bars and rods (7604), wire (7605), plates and sheets (7606–7607), tubes and pipes (7608–7609), and certain aluminum castings and forgings. The derivative articles expansion (Proclamation 10086, January 2021) brought additional finished aluminum components within the tariff's reach.

Country-Specific Rate Modifications

Not all trading partners face the headline rates. A complex patchwork of country-specific arrangements has developed since 2018:

• Canada and Mexico: Subject to modified rate arrangements under subsequent proclamations linked to USMCA; effective rates differ from the 25%/10% baseline depending on product category and quota status.
• European Union: Subject to tariff-rate quotas (TRQs) established through negotiated arrangements; within-quota imports may enter at reduced or zero Section 232 rates, while over-quota imports face the full rate.
• South Korea, Japan, UK, Argentina, Brazil: Various negotiated quota arrangements provide reduced-rate access for specified volumes.
• All other countries (including China, India, Turkey): Face the full headline rates — 25% on steel, 10% on aluminum — with no preferential quota access.

For China-origin steel in particular, Section 232 tariffs stack on top of Section 301 tariffs (typically 25% on steel mill products) and any applicable Section 122 tariffs, producing cumulative effective rates that can exceed 50–60% of customs value. See our Section 301 tariffs guide for a full breakdown of China-specific duty stacking.

The Section 232 Product Exclusion Process

Recognizing that the 25% steel tariff would impose hardship on downstream manufacturers who have no viable domestic source for certain specialty products, the Commerce Department established a product exclusion process. This process allows individual importers to request relief from Section 232 tariffs for specific steel or aluminum products — but the process is rigorous, slow, and far from guaranteed.

Eligibility Criteria

To qualify for a product exclusion, the applicant must demonstrate one or more of the following:

• Domestic unavailability: The specific steel or aluminum product is not produced in the United States in sufficient quantity to meet the applicant's needs. "Sufficient" is evaluated on a product-specific basis — a domestic producer offering similar but not identical specifications may not satisfy this criterion.
• Quality or specification constraints: The domestic product does not meet the technical requirements of the applicant's manufacturing process or end-use application.
• Timely delivery constraints: The domestic product cannot be delivered within the timeframe required by the applicant's production schedule.
• National security alignment: Granting the exclusion will not adversely affect US national security (the overarching Section 232 objective).

Filing the Exclusion Request

Exclusion requests are filed through the Bureau of Industry and Security (BIS) online portal at bis.doc.gov/232. The submission must include:

• The specific 10-digit HTS subheading for the product
• A detailed technical description of the product (chemical composition, dimensions, tolerances, mechanical properties)
• Confirmation of the country of origin and supplier identity
• Annual import quantity and customs value (current and projected)
• Certification that the applicant has contacted domestic producers and they cannot supply the product
• Evidence of domestic producer solicitation (quotes, correspondence, technical exchange)

Once filed, domestic producers have a 30-day window to file objections. BIS then evaluates both the original request and any objections. Final determinations typically take 90–120 days, though complex cases have taken longer. Approved exclusions are product-specific and importer-specific — they apply only to the company that filed the request, for the specific product described, from the specific country identified.

General Exclusions and Retroactive Relief

In limited circumstances, BIS may grant a "general exclusion" — available to all importers of the covered product, not just the petitioner. General exclusions are granted when BIS determines there is no domestic production of the product anywhere in the US. These are significantly harder to obtain but provide broader market relief.

Exclusions can be retroactive to the date of filing if the applicant has been paying Section 232 duties during the pendency of the review. Retroactive refunds are processed through CBP via the standard protest mechanism — applicants should coordinate with their customs broker to ensure timely protest filings to preserve refund eligibility.

Impact on Domestic Manufacturers: The Downstream Cost Problem

Section 232 tariffs were designed to protect domestic steel and aluminum producers — but their economic impact cascades downstream to the far larger universe of manufacturers who use steel and aluminum as inputs. This creates a structural tension at the heart of Section 232 policy: what benefits upstream mills imposes costs on downstream fabricators, auto manufacturers, construction companies, appliance makers, and industrial equipment producers.

The Scale of Downstream Exposure

The downstream exposure is substantial. Studies by the Peterson Institute for International Economics and the Trade Partnership estimated that for every job preserved in the domestic steel industry by Section 232 tariffs, approximately 16 manufacturing jobs in steel-consuming industries face increased costs. The auto parts sector, construction products, industrial machinery, HVAC equipment, and packaging industries collectively employ far more workers than the steel and aluminum production sectors they source from.

For a typical mid-size manufacturer with significant steel input costs, the 25% Section 232 tariff translates to a direct input cost increase of 25% on imported steel purchases — net of any domestic sourcing premium, which often runs 5–15% above import parity. The net cost impact on the fully-manufactured product depends on steel's share of total cost of goods sold, but for fabricated metal products (NAICS 332), machinery (NAICS 333), and transportation equipment (NAICS 336), steel input costs often represent 15–35% of COGS.

Industries Facing the Highest Section 232 Exposure

Several manufacturing sectors carry disproportionate Section 232 exposure in 2026:

• Automotive and auto parts: Both finished vehicles and components are steel-intensive. See our auto parts and vehicle tariffs guide for the full picture, including how Section 232 interacts with the Section 232 derivative articles tariff on auto parts introduced in 2025.
• Power generation and industrial equipment: Turbines, generators, switchgear, and heavy equipment frames are high-steel-intensity products. Specialty steel grades used in power equipment frequently lack domestic equivalents, making exclusion requests particularly common in this sector.
• Construction and infrastructure: Structural steel, rebar, and pipe products are core inputs for building and civil construction. Unlike manufacturers who can seek exclusions, construction firms typically purchase from domestic steel service centers who have already absorbed Section 232 costs in their pricing.
• HVAC and appliances: Sheet steel and aluminum are core inputs for HVAC equipment housings, refrigerator cabinets, and washer/dryer shells. Major appliance manufacturers have largely absorbed Section 232 through a combination of domestic sourcing shifts and price increases to end consumers.
• Can and container manufacturing: Aluminum can sheet is highly specialized; only a handful of domestic rolling mills produce it to beverage-grade specifications. This sector has been a significant user of Section 232 aluminum exclusions.

Cost Mitigation Strategies for Manufacturers

Manufacturers facing Section 232 costs have a toolkit of mitigation strategies, ranging from administrative relief to supply chain restructuring. The right combination depends on your product specifications, volume profile, supply chain structure, and export activity.

1. Product Exclusion Requests (Direct Cost Elimination)

For specialty steel or aluminum products with no viable domestic equivalent, an approved exclusion eliminates Section 232 liability entirely on that product. The investment in documentation and filing time is significant — a well-prepared exclusion request for a technical steel product can require 40–80 hours of preparation — but for high-volume purchases, even a single approved exclusion can generate six- or seven-figure annual duty savings. Manufacturers purchasing specialty grades (tool steels, ultra-high-strength steels, specialty stainless grades, high-purity aluminum alloys) should treat exclusion eligibility analysis as a recurring procurement exercise.

2. Duty Drawback on Exported Products

If your manufactured product is subsequently exported, duty drawback under 19 U.S.C. § 1313 allows recovery of up to 99% of Section 232 duties paid on the imported steel or aluminum inputs. Manufacturing drawback (§ 1313(a)) applies when you import covered materials, use them in your manufacturing process, and export the resulting product. The drawback claim must be filed within five years of the original import date, and you must maintain traceability documentation linking imported materials to exported finished goods.

For manufacturers who export even a portion of their production — common in industrial equipment, specialty vehicles, and precision components — the duty drawback calculation can be surprisingly favorable. See our duty drawback program guide for the full filing methodology, ruling letter strategy, and record-keeping requirements.

3. Foreign Trade Zone Processing

Foreign Trade Zones (FTZs) offer a structural mechanism for manufacturers to manage tariff liability on imported inputs. Under FTZ inverted tariff relief, a manufacturer operating in an activated FTZ can elect to pay duties on the finished product rather than on the imported components — beneficial when the finished product carries a lower tariff rate than the steel inputs. FTZ processing also allows deferral of duty payment until the product exits the zone into US commerce, providing cash flow benefit. The economics of FTZ activation depend heavily on production volume, product mix, and the tariff rate differential between inputs and outputs.

4. Domestic Sourcing Optimization

For commodity-grade steel and aluminum products — hot-rolled coil, standard structural shapes, common aluminum sheet gauges — domestic sourcing is often commercially viable, especially as domestic steel capacity utilization has recovered toward and above the 80% target. While domestic prices have historically run 5–15% above import parity (reflecting the Section 232 protection effect), that premium may be lower than the 25% tariff rate on comparable imports, particularly for non-China origins. Manufacturers should conduct regular make-vs-import analyses for standard-grade inputs.

5. First-Sale Valuation

In supply chains with multiple layers between the foreign steel producer and the US importer, first-sale valuation allows customs value to be declared based on the producer's invoice price rather than the middleman's resale price. Since Section 232 duties are ad valorem (percentage-based), a lower customs value directly reduces the Section 232 duty dollar amount — not just MFN duties. The savings potential depends on the markup structure in your specific supply chain, but steel supply chains often route through trading companies or service centers with meaningful markups, making first-sale analysis worthwhile.

6. HTS Classification Review

Not all steel and aluminum products are Section 232-covered, and the line between covered and uncovered products can be technically complex. Downstream fabricated products — steel components that have been machined, welded, or otherwise substantially transformed beyond the basic mill product stage — may fall outside the covered HTS subheadings entirely. Similarly, certain alloy compositions or dimensional specifications may shift a product from a covered to an uncovered subheading. A systematic HTS classification review with a licensed customs attorney can identify classification positions that are both legally defensible and outside the Section 232 scope. For a primer on reading HTS tariff codes, see our HTS code reading guide.

Looking Ahead: Section 232 in the Broader Tariff Landscape

Section 232 tariffs on steel and aluminum exist within a broader and increasingly complex tariff architecture in 2026. While the Section 232 rates themselves have not changed since 2018, the overall tariff environment has evolved substantially: Section 301 China tariffs remain elevated post-IEEPA, Section 122 tariffs added a universal layer for a period, and derivative articles expansions broadened the effective Section 232 coverage to reach further downstream.

For manufacturers, the strategic implication is that Section 232 cannot be analyzed in isolation. Your total tariff burden on any given imported input reflects the interaction of all applicable duty regimes — and the mitigation strategies most worth pursuing are those that address the largest cost components first. A manufacturer importing $10 million in Chinese steel faces a fundamentally different analysis than one importing the same volume from Japan or South Korea.

Use our refund impact estimator to model your total tariff exposure across all duty programs and identify which mitigation strategies offer the highest return given your specific import profile.

The Bottom Line for Steel and Aluminum Importers

Section 232 steel and aluminum tariffs have become a permanent structural cost in the US manufacturing landscape — not a temporary trade remedy that will expire. After eight years in effect, manufacturers who have not systematically addressed their Section 232 exposure through exclusions, drawback, FTZ processing, or domestic sourcing optimization are leaving meaningful cost savings on the table.

The opportunity is largest for manufacturers of specialty products using non-commodity steel or aluminum grades, for exporters who can leverage duty drawback, and for multi-tier supply chain operators who can benefit from first-sale valuation. For commodity-grade steel users, domestic sourcing shifts remain the most practical long-term response.

Frequently Asked Questions