US opens new S232 tariff-relief path for Canadian and Mexican producers

The US Department of Commerce has released new procedures allowing certain steel and aluminum producers in Canada and Mexico to qualify for reduced Section 232 tariffs. But only if they commit to building new primary production capacity inside the United States.

New rule follows 2025 proclamation

The policy stems from Presidential Proclamation 10984, issued in late 2025. The directive authorized tariff reductions for companies that supply the US automotive and heavy-vehicle sectors and agree to invest in new US steel or aluminum facilities. The new rule, published in the Federal Register, explains how companies can apply and what documentation they must provide.

Eligibility requirements for producers

To qualify, companies must already produce steel or aluminum in Canada or Mexico. They must also already supply US automakers or heavy-duty vehicle manufacturers. All imported material must meet USMCA rules and be melted and poured or smelted in Canada or Mexico.

Approved producers will receive a reduced Section 232 tariff rate. The cut can reach 50%, but never drop below 25%. The reduced rate applies only to limited quarterly volumes tied directly to the amount of new US primary capacity the company commits to building. Commerce will notify Customs and Border Protection (CBP) which importers of record are eligible for the reduced rate.

Applicants are required to submit detailed project plans. These plans must identify the proposed US facility’s location, expected annual capacity, equipment suppliers, construction contractors, and hiring plans. Companies must also commit to milestone dates for land acquisition, design, construction, equipment installation, and first production. Quarterly progress reports are mandatory.

Enforcement and compliance

Under the program, Commerce can suspend or revoke tariff reductions if companies miss milestones, fail to report, or fall behind for reasons within their control. If a project fails, CBP may retroactively apply the full tariff rate to past imports.

The rule also creates two new HTSUS categories – 9903.82.18 for steel and 9903.82.19 for aluminum – to track shipments receiving the reduced tariff.

The policy is designed to push new US primary steel and aluminum investments while maintaining integrated North American supply chains for the automotive and heavy-vehicle sectors.

Laura Miller

Laura Miller is a reporter and editor for Steel Market Update. She has held various editorial positions with steel industry publications, associations, and mills since 2007. She joined the SMU team in 2022. She is a member of the Association of Women in the Metal Industries and a past-president of the AWMI Pittsburgh Chapter. She holds a BA in Latin American Studies from Edinboro University of Pennsylvania.