The Trump administration adjusts the steel, aluminum, and copper tariff system: tiered reduction of derivative product tariffs

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Source: Caixin Network

Caixin Network April 3 News (Editor: Liu Rui) On Thursday in Eastern Time, U.S. President Donald Trump adjusted tariffs on imported goods of steel, aluminum, and copper to lower the tariff rates on derivative products made from these metals, simplify the filing process, and avoid overstating the declared value of imports.

According to a proclamation signed by Trump, the U.S. will maintain a 50% tariff on imports of steel, aluminum, and copper goods, based on Section 232 of the 1974 Trade Act, but apply this tariff rate to the actual price paid by American consumers.

In addition, the specific tariff changes include:

The U.S. will remove the 50% tariff on derivative products manufactured using steel, aluminum, and copper as raw materials, provided that the metal content of these products (by weight) is below 15%.

U.S. officials said that this measure will eliminate the “Section 232” tariffs imposed on products with very low metal content, such as perfume bottles with aluminum caps, or floss containers with small steel blades.

Tariffs on certain industrial equipment and grid facilities made from metal will be lowered from the previous 50% to 15%. This measure will last until 2027, aiming to speed up industrial construction. Previously, U.S. steel manufacturers had been calling for tariff reductions on steel production equipment manufactured in Germany and Italy to lower levels.

In addition, derivative products made of steel, aluminum, or copper with a metal weight ratio exceeding 15% will enjoy a lower tariff rate of 25%. Therefore, laundry machines or gas stove appliances mainly made of steel will be subject to a uniform 25% tariff.

For products manufactured abroad but made entirely using U.S.-made steel, aluminum, and copper, their tariffs will be reduced to 10%.

Simplified Tariff System

The above changes are intended to simplify the tariff system. Previously, the U.S. metal tariff regime was overly complicated, which had caused significant trouble for many importers, as they needed to confirm the metal content in thousands of derivative products, ranging from tractor parts to stainless-steel sinks and rail equipment.

U.S. officials said: “That way, the process will be more convenient, more straightforward, and also clearer. For many products, costs will go down. For some products, costs might rise a bit, but overall, things are still pretty good.”

The official said that overall, these changes would not make too much of an economic difference compared with the previous tariff regime. However, imposing a 50% tariff on the total sales value of metals in the goods could bring some additional tariff revenue.

He also added that the Trump administration has discussed the matter with relevant industries and received positive feedback.

It is worth noting that market participants pointed out that although the above adjustments appear to lower tariff rates, in practice they may actually increase business costs. The reason is that the new rules expand the basis for tariff collection from “metal value” to “the value of the entire finished product.” For products where steel and aluminum account for a low proportion but the added value is high, the actual tariff burden borne by businesses could rise significantly.

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