Industry reacts to S232 overhaul as US shifts to full-value tariffs on derivatives

Enforcement concerns surface

The Steel Tube Institute (STI) emphasized that the success of the new structure will depend heavily on how rigorously it is enforced. STI Executive Director Dale Crawford called the updates “a constructive and necessary step toward reinforcing the integrity of the U.S. steel market, particularly for downstream products like steel conduit.”

But he warned the policy could falter without strict oversight. “It is critical that imported products are accurately classified and meet the definition of steel conduit, rather than circumventing trade measures through mislabeling or minor modifications,” he said. “Without strong enforcement, even well-intentioned policy actions risk being undermined in practice.”

What’s in each annex

The presidential proclamation includes four annexes to clarify which metal products fall under each tier. Annex I-A covers the core steel, aluminum, and copper articles – mainly items in tariff chapters 72, 73, 74, and 76, according to an alert published by Wiley – that are typically made entirely or almost entirely of metal and now face a 50% duty on their full value, with reduced rates for qualifying UK or US-origin metal.

Annex I-B captures a broader set of derivative goods, including more complex manufactured items such as steel sinks, tableware, and bakeware, which will now be tariffed at 25% of the full value.

Annex II removes 247 codes from Section 232 coverage, mostly goods packaged in metal containers – such as foods, chemicals, pharmaceuticals, and soaps – along with buckets, machine parts, motorcycles and their parts, and certain furniture items.

Annex III lists production-related inputs, equipment, and machinery that will temporarily face a capped 10-25% duty through 2027 before shifting to Annex I-B rates.

Annex IV sets the rules for determining whether an imported product contains enough steel, aluminum, or copper to be subject to Section 232 tariffs by defining how to calculate the combined metal content and whether it falls below the 15% exemption threshold.

The proclamation also ends the formal inclusion request process for adding derivative products, giving the administration direct authority to expand coverage.

Producers applaud the move

Domestic producers and trade associations strongly backed the administration’s decision, arguing that full-value tariffs will prevent importers from exploiting valuation gaps.

Steel Manufacturers Association (SMA) President Philip K. Bell called the update a “critical fix,” saying the previous system allowed “bad-faith importers… to underreport value and avoid paying the full cost of tariffs.”

American Iron and Steel Institute (AISI) CEO Kevin Dempsey praised the administration for ensuring that “all steel mill products, including steel pipe and tube, receive the full benefit of the 50% tariff.”

Zekelman Industries Executive Chairman Barry Zekelman issued one of the strongest endorsements, saying the measures are “vital to maintaining the integrity and effectiveness of the Section 232 program,” and enable domestic manufacturers to “compete on a level playing field, invest in our facilities, and create great-paying jobs.”

Clevealnd-Cliffs Chairman, President, and CEO Lourenco Goncalves also welcomed the proclamation, calling it “a clear demonstration of President Trump’s continued commitment to maintaining strong and durable Section 232 tariffs on steel and steel derivative products.”

During the last inclusion request window, the Ohio-based steelmaker had applied to have certain transformers included as a tariffed derivative. Under the new regime, the transformers will face a 25% tariff on their full value.

Goncalves emphasized that Section 232 remains “fundamentally about defending US national and economic security.”

He also noted the tariffs have “proven highly effective in reducing the influx of unfairly traded and dumped steel imports… resulting in rising steel industry capacity utilization.”

Indeed, capacity utilization is rising. On Monday, AISI reported an overall utilization rate of 79.1% for the domestic steel sector, up from 77.9% the week prior and just shy of the 80% goal established when Section 232 tariffs were first put in place.

Downstream users warn of competitive imbalances

While steel producers celebrated the update, downstream manufacturers expressed concern that the new structure maintains – and in some cases worsens – cost disadvantages for US producers of packaged goods.

The Can Manufacturers Institute (CAMI) said the tariff adjustments “keep costs high to make metal cans in America and low to import canned goods from foreign competitors.” CAMI President Scott Breen argued that the changes “solidify a win for foreign canned goods – the opposite of an America First trade agenda.”

Food producers and brewers voiced similar concerns. The American Fruit & Vegetable Coalition warned that the lack of relief will worsen the trend of foreign-sourced canned foods displacing US products, noting that “more than a dozen American fruit and vegetable canners have been driven out of business by cheap foreign imports.”

The Brewers Association said the updated tariff schedule “taxes domestic production while now allowing importers to bring in finished beer in lower or tariff-free cans.”

Steel buyers express caution

Steel buyers responding to an SMU mini-survey this week expressed little confidence that the updated tariff structure will benefit their businesses. More than half (57%) said the administration’s tariff policies are not helping their businesses, while the remainder said they are unsure if they’re helping. No one reported that tariff policies are helping.

Several manufacturers cited higher costs and shorter planning horizons, with one noting the tariffs are “one of the factors causing customers to only make small, short-term commitments.” Others were more blunt, describing the changes as “absolutely not” helping and pointing to “increased costing” across their supply chains.

The overall sentiment reflects continued uncertainty among downstream users even as domestic producers welcome the strengthened Section 232 framework.

Market analysts: Enforcement simplified, costs may rise

CRU analysts said the revisions will “cut red tape” and reduce administrative friction for importers, particularly those previously held up at the border due to metal-content declarations. But they cautioned that the shift to full-value tariffs could increase costs for certain derivative goods.

CRU noted that a filled aluminum beer can previously tariffed at 50% of its metal content – roughly $0.30-0.50 per can – will now face a 25% duty on the full value, or $2-3. The effect is magnified for large, manufactured goods such as machinery.

The firm does not expect the changes to materially move domestic steel or aluminum prices, but said the impact will be “product specific.”

Analysts: Tariff uncertainty reinforces bullish steel outlook

Wells Fargo Equity Analyst Timna Tanners said market sentiment improved after the White House “definitively reiterated” support for 50% tariffs on commodity-grade steel and aluminum. She said the reinforced Section 232 structure strengthens the bull case for domestic producers, especially amid tight aluminum markets and Middle East supply disruptions.

“US aluminum and steel exposure remains compelling so long as Section 232 stays intact,” she wrote in a research note.

A more rigid, more predictable framework

The proclamation’s four-tier tariff structure, expanded annex lists, and full-value methodology represent the most significant overhaul of derivative tariffs since their introduction. While the changes simplify enforcement and close valuation loopholes, they also shift more cost burden onto downstream importers – a divide reflected clearly in the industry’s reaction.

With the new system taking effect April 6, stakeholders across the supply chain are now recalibrating sourcing strategies, compliance processes, and cost expectations under a more rigid but more predictable Section 232 regime.