Price: As key trade deadlines loom, Section 232 remains as important as ever

Indeed, the United States and Mexico concluded their first bilateral negotiating round on May 28-29. It focused heavily on automotive rules of origin as well as steel and aluminum provisions. A second round is set for June 16-17 in Washington, DC. And a third is planned for the week of July 20 in Mexico City. To keep negotiating, under the terms of the agreement, the United States will need to give notice that it does not intend to renew USMCA or give 6 months’ notice of its intention to terminate the agreement.

As we have noted previously, fundamental to the USMCA negotiations will be issues related to the steel and autos supply chain. In this regard, Section 232 and USMCA are in many ways interrelated, especially as Canada and Mexico have called for exemptions from Section 232 duties. However, as we argue below, a strong Section 232 program is fundamental for US manufacturing. And we think it should be a top priority both in the USMCA joint review process and other upcoming trade negotiations and determinations.

A vigorous defense of Section 232 is essential for the US steel industry

Last week, on Monday, June 1, President Trump announced adjustments to the Section 232 steel, aluminum, and copper programs. The changes were relatively minor and primarily affected tariffs on certain agricultural, industrial, and HVAC equipment. But these modifications are a reminder of the importance of the Section 232 program for domestic steel producers and the entire US manufacturing sector. Especially as the USMCA and other trade negotiations heat up, it is critical the benefits of Section 232 not be traded away.

The Section 232 steel program is a cornerstone of American trade policy – and it is working. Steel imports declined by 13% from 26.2 million metric tons in 2024 to 22.9 million metric tons in 2025. And they have continued to decrease in 2026. For example, according to Eurofer, EU steel exports to the United States have fallen by 34% since Section 232 steel duties were increased to 50% last year. Relief from European and global overcapacity has allowed domestic steel producers to increase their production and capacity utilization rates in 2026. Meanwhile, US mills have also invested billions of dollars in new capacity. To illustrate, according to AISI, through May 2026, domestic steel production is up 7% year-over-year compared to 2025.

This sustained decline in US imports, coupled with a corresponding increase in US production, has materially narrowed the steel trade deficit since Section 232 has been in place. The US International Trade Commission (ITC) confirmed as much in a 2023 report. ITC found Section 232 tariffs reduced steel imports by 24% and increased by domestic production by $1.3 billion. That is exactly what the Trump administration sought to accomplish with its strengthened Section 232 measures. And it’s what the administration should continue to encourage through its trade policy.

Section 232 shouldn’t be lowered as part of USMCA talks

We think calls to reduce or eliminate the Section 232 steel tariffs as part of USMCA or other trade negotiations are misguided and often based on entirely inaccurate premises. The windfall of any reduction in Section 232 measures would fall squarely in the hands of foreign producers. And it would be at the direct expense of American industry and US government revenue.

We saw this before when Canada and Mexico were previously exempted from the Section 232 steel program. They used their exemptions to increase export volumes and take additional US import market share. Canadian and Mexican producers are eager to do the same again because their industries are oriented to export heavily to the United States. Plus, ongoing capacity expansions in Mexico and massive government subsidies in Canada are further designed to target the US market. The benefits of the program should not be allowed to be simply transferred to foreign manufacturers.

Moreover, the need for robust Section 232 protections is as strong as ever. On Thursday, June 4, the Organization for Economic Co-operation and Development (OECD) released its Steel Outlook 2026. It projected global steel excess capacity to reach 745 million metric tons by 2028. That exceeds the OECD’s current steel production by 319 million metric tons. The OECD pointed to planned capacity additions of up to 139 million metric tons through 2028, representing a 6% increase from 2025 levels. And that’s despite expectations that global steel demand growth will remain below 1% per year. With rising global excess steel capacity and subdued global demand, now is not the time to create carveouts in the Section 232 program for steel imports.

A (good) unintended consequence? S232 bolsters decarb efforts

In addition, an unanticipated aspect of the Section 232 program is the positive effect it has on lowering the greenhouse gas emissions associated with steel production. As we have noted in the past, American steel producers are among the lowest emitting in the world. Section 232 facilitates this. It remains a key part of the mix of market-oriented trade, tax, and industrial policies pursued by the United States that have allowed domestic steel producers to innovate and pursue more efficient technologies as well as production pathways that happen to result in the lowest emissions. At the same time, by reducing import volumes, the US market is reducing embedded emissions of domestically consumed steel.

Climate and environmental groups would do well to recognize the emissions benefits of the Section 232 program. Too often, Europe is lauded for its climate policies. The European bureaucratic industrial decarbonization model favors government subsidies, carbon taxes, and raw material export restrictions. The result? It has stifled investment, entrenched higher emitting producers, and led to emissions levels that are far higher than the American steel industry. Instead, by imposing duties that allow sufficient returns for investment in modern, more efficient technology—but without prescribing climate goals or creating a costly carbon bureaucracy and massive regulatory burdens—the United States is producing superior results.

Recent trade announcements present opportunities to strengthen trade protections

Last week, in addition to the ongoing USMCA and Section 232 developments, the Trump administration made several notable Section 301 determinations related to Brazil, Vietnam, and forced labor. To start, in its Section 301 investigation on forced labor, USTR is proposing a 10-12.5% tariff on the 60 countries it has investigated for failing to either effectively impose or enforce import prohibitions on goods made with forced labor. Importantly, the tariffs would not apply to goods covered by Section 232 tariffs or USMCA-compliant goods from Canada or Mexico, as well as various other exempted products.

Similarly, in its Section 301 investigation into various allegedly unfair and preferential Brazilian acts, policies, and practices, USTR is proposing a 25% tariff on Brazil. Like the forced labor duties, these tariffs would be subject to various exemptions and would not cover goods already subject to Section 232 tariffs. USTR is soliciting public comments and plans to hold public hearings in both investigations in early July. USTR is also expected to make similar announcements soon regarding its Section 301 investigation into excess capacity in various manufacturing sectors.

Vietnam and Section 301

On Vietnam, USTR has announced a Section 301 investigation into Vietnamese acts, policies, and practices related to intellectual property protection and enforcement. In many ways, this investigation appears to mimic the Chinese Section 301 investigation launched during the first Trump administration. That should come as no surprise. We see Vietnam as a non-market-economy that has repeated many of the same unfair trade practices as China to gain an upper hand against the United States and other market economies.

In fact, in many sectors, we see Vietnam as little more than an export platform to import and export Chinese products. For instance, in 2024, according to the World Bank, Vietnamese exports comprised more than 90% of Vietnam’s GDP. In that sense, this investigation will serve as an important bulwark against unfair trade from both Vietnam and China. Lastly, the Trump administration also announced on Wednesday, June 3 several new policies for US Customs and Border Protection (CBP) to strengthen trade enforcement and tariff collection. As with many executive orders, the devil will be in the details of implementation. Some of the announced changes could require regulatory or legislative changes as well as operational changes within CBP. We will certainly continue to monitor as these policies develop.