Commerce Opens Section 232 Cut for Canada, Mexico Steel and Aluminum
Detected: 2026-04-29 — TariffDesk pipeline
The Commerce Department on April 23 published procedures allowing steel and aluminum producers in Canada and Mexico to cut their Section 232 tariff in half — from 50% to 25% — in exchange for binding commitments to build new U.S. primary production capacity. The program creates two new HTS subheadings, 9903.82.18 for steel and 9903.82.19 for aluminum, administered by the International Trade Administration under Proclamation 10984.
What Changed
The April 23, 2026 Federal Register notice (Docket No. 260420-0105, RIN 0625-XC061) implements clause 13 of Proclamation 10984, the October 17, 2025 order on medium- and heavy-duty vehicles. Commerce may reduce duties under Proclamations 9704 (aluminum) and 9705 (steel) "by up to half the otherwise applicable rate" for producers in Canada or Mexico that commit to new U.S. primary capacity supporting U.S. auto, MHDV, and parts manufacturing. The adjusted rate floor is 25%, and the reduction applies only to volumes equal to the newly committed U.S. capacity. Applications go to [email protected] as of the publication date.
Eligibility — Narrow by Design
Four conditions stack:
- Producer operates in Canada or Mexico and supplies — directly or through parts — U.S. producers of automobiles or MHDVs.
- Commitment adds U.S. primary capacity — basic oxygen furnace, electric arc furnace, or other steelmaking furnace for steel; smelter for aluminum. Downstream-only commitments do not qualify.
- Imports are USMCA-qualifying and melted-and-poured (steel) or smelted-and-cast (aluminum) in Canada or Mexico.
- Volume is capped at projected annual new U.S. capacity, for a fixed relief period set by Commerce.
Dollar Impact
For a Qualified Company importing $1,000,000 of USMCA-qualifying primary aluminum per month from a Canadian smelter under HTS 7601.10.30:
- Current Section 232 rate (April 6 onward): 50% → $500,000/month duty
- Adjusted rate under 9903.82.19: 25% → $250,000/month duty
- Savings: $250,000/month, or $3.0M/year on a $12M annual program
A Mexican producer shipping $500,000/month of hot-rolled coil under HTS 7208.51.00 drops from $250,000 to $125,000 per month — $1.5M annually — provided the U.S. capacity commitment is approved and the volume cap is not exceeded.
What This Means for Importers
This is not relief for U.S. importers buying spot from third parties. It is relief for integrated supply chains where a Canadian or Mexican mill commits capital to a U.S. project. Downstream U.S. buyers see the benefit only if their supplier qualifies and elects to pass it through.
- The 25% floor is hard. Approved Qualified Companies still pay 25%. The April 6 hike to 50% is not undone, it is halved for the narrow slice that qualifies.
- Volume is capped at projected new U.S. capacity. A producer announcing 200,000 tons/year of new U.S. capacity gets the reduced rate on up to 200,000 tons of qualifying imports, not its full book.
- USMCA preference is mandatory. Aluminum smelted in a third country and finished in Canada does not qualify. Verify USMCA preference claims and melt-and-pour or smelt-and-cast documentation before claiming the reduced subheadings.
Affected HTS Codes
- 9903.82.18 — Steel articles under approved commitments (25% floor)
- 9903.82.19 — Aluminum articles under approved commitments (25% floor)
Sources
- Federal Register, "Procedures for Submissions by Certain Steel and Aluminum Producers Committing to New U.S. Steel or Aluminum Production to Obtain Tariff Adjustments Under Proclamation 10984," Docket No. 260420-0105, RIN 0625-XC061, April 23, 2026: federalregister.gov/d/2026-07987
- Proclamation 10984, October 17, 2025, 90 FR 48451
- Proclamation 9704 (aluminum), March 8, 2018, 83 FR 11619
- Proclamation 9705 (steel), March 8, 2018, 83 FR 11625
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