Trump suddenly "face-slapped"! Steel, aluminum, and copper tariffs were de-escalated overnight, and derivatives saw significant tax reductions

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Source: Huitong Finance and Economics

On Thursday (April 2), U.S. President Donald Trump signed a proclamation adjusting national security tariffs on imports of steel, aluminum, and copper. The tariffs on derivative products made from these metals have been lowered, compliance procedures have been simplified, and importers will be prevented from undervaluing and misdeclaring the declared value.

This move is based on Section 232 of the 1974 Trade Act. It aims to make the tariff framework simpler and more intuitive, while also balancing the need to protect U.S. domestic industries with the cost pressure faced by downstream companies.

Tariffs on bulk commodities: steel, aluminum, and copper

The Trump administration will continue to impose a 50% import tariff on bulk commodity imports of metals such as steel, aluminum, and copper. However, the tariff rate will apply to the actual sales price paid by U.S. consumers, rather than the import declared value that may have been underreported previously.

U.S. government officials said that, previously, some importers reduced their tariff costs by artificially lowering import values. The new rule will effectively close this loophole, which may increase tariff revenue.

New rules for tariffs on derivative products

For derivative products, the adjustments are divided into two categories:

If the content of steel, aluminum, or copper in a derivative product is less than 15% by weight, the previous 50% tariff will be removed. For example, perfume bottles with aluminum caps, or products such as a dental floss container with a very small steel cutting insert, will be exempt. If the content of steel, aluminum, or copper in the derivative product exceeds 15% by weight, a lower 25% tariff will apply, and it will be assessed based on the full value of the imported goods, not only on the metal content portion. For example, a washing machine or gas stove mainly made of steel will be subject to a uniform 25% ad valorem tariff.

Simplified compliance procedures

Previously, importers faced complex and burdensome compliance requirements when calculating the value of metal content in thousands of derivative products, ranging from tractor parts to stainless steel sinks and railroad equipment. The new rules significantly simplify the process, making the tariff system “more convenient, simpler, and more straightforward.”

Trump administration officials said they had conducted extensive consultations with the industry and received positive feedback. For many products, the tariffs will decrease; for some products, tariffs may increase slightly, but overall they are acceptable and will not cause substantial economic differences.

Economic impact analysis

This adjustment is intended to protect the national security interests of the U.S. steel, aluminum, and copper industries, while also easing the burden on downstream manufacturers and consumers. Officials emphasized that the new rules will effectively prevent undervaluation practices and may increase tariff revenue.

Against the backdrop of heightened global geopolitical tensions and supply-chain uncertainty, this policy adjustment reflects the Trump administration’s more precise use of trade protection tools under an “America First” framework. It maintains high tariff barriers while reducing companies’ compliance costs by simplifying rules.

Editor’s Summary

By lowering the tariff rates on derivative products made from steel, aluminum, and copper, the Trump administration has made targeted optimizations to the Section 232 national security tariffs. Bulk metals will keep a high 50% tariff, while low-metal-content derivative products will be exempted; high-content products will be subject to a uniform 25% tariff, assessed based on actual sales prices.

This adjustment simplifies compliance procedures, effectively closes the undervaluation loophole, lowers some downstream business costs while protecting domestic industries in the U.S., and reflects a balance between national security and economic efficiency.

Analysis of the impact on the U.S. dollar

The impact of this policy on the U.S. dollar, in fact, mirrors the inherent contradiction in current U.S. trade policy: on the one hand, it tries to maintain confidence in the continuity of U.S. policy by constantly “patching” the tariff system; but on the other hand, the frequent adjustments and the high level of uncertainty themselves continue to consume the long-term credibility of the dollar. During the Asian session on Friday, the U.S. Dollar Index traded in a narrow range around 100.00. In the previous trading day, the U.S. dollar index had surged by 0.46%.

In the short term, the predictability of the policy “switching tracks” provides support for the U.S. dollar; but in the long term, the trend toward weaponizing trade will not change, and the dollar’s position as a global safe-haven currency will continue to be eroded.

(Daily chart of the U.S. Dollar Index, source: EasyForex) At 10:01 Beijing time, the U.S. Dollar Index is currently at 100.02.

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Responsible editor: Zhu Hunan