Why Section 232 behaves like a supply‑chain regulation
To avoid punitive tariffs, derivative product producers need to trace their supply chain carefully - and soon.
The United States has turned its national‑security tariffs on steel and aluminum into a evidence‑driven border check. Exporters do not pay on the whole product if they can prove the value of the metal inside—but if that value or the metal’s origin is unknown, the law defaults to punitive rates. Think of it as an economic‑security measure with CBAM‑style traceability demands.
Last week, Washington expanded the Section 232 “derivative products” list by 407 tariff lines—announced on a Friday afternoon and live by Monday morning (18 August). Because Section 232 now charges tariffs only on the value of the metal content, your cost exposure hinges on how that content is valued and what its origin is. Another expansion round is slated to start in September with a fresh call for comments.
Why this feels CBAM-like. Section 232 is not a corporate due-diligence law, but the mechanics now force upstream data in a way that will feel familiar to anyone who has dealt with the EU’s CBAM: the tariff at the U.S. border depends on traceability (where the metal was smelted/cast or melted/poured) and on a defensible number for the metal share of value. In both regimes, documentation is destiny: good data narrows the charge; missing data triggers worst-case defaults.
Where the analogy ends. Unlike CBAM’s phased roll-out and emissions pricing, Section 232 is a national-security tariff that can be re-scoped overnight. That is precisely what happened with last week’s derivative expansion—and it is why getting the valuation logic and the origin declarations right is now a strategic necessity, not just a customs detail.
Global Trade Alert is not a customs brokerage and this post is not intended as legal advice. GTA merely seeks to bring clarity on how the policy works and what it means for business choices. A downloadable one-page flow chart on this page complements this explainer.
1) Determining the metal value
What counts. CBP ties the metal-content value to the standard customs valuation law, 19 U.S.C. § 1401a, i.e. “the total price paid or payable” for the steel/aluminum input—“normally … based on the invoice” for that input (exclusive of international freight/insurance). See the CBP 232 FAQ and statute: FAQ • 19 U.S.C. § 1401a.
Ways to evidence the metal-content value (use in this order):
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Supplier invoice (transaction value). The upstream metal supplier’s invoice to the buyer of the input—CBP’s “normal” basis under § 1401a; quote: “price paid or payable … normally … based on the invoice” (FAQ).
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Identical/Similar transaction value. A sale of identical or similar metal at the same commercial level and in substantially the same quantity, with adjustments on “sufficient information” (19 CFR 152.104).
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Deductive value. Net-back from the “unit price … in the greatest aggregate quantity” in the U.S., less listed deductions (profit & G&A, inland transport, duties/taxes) (19 CFR 152.105).
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Computed value. Cost of materials + fabrication + profit & G&A usual for that class/kind, from producer records (19 CFR 152.106).
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Fallback. A value “derived from” the prior methods with reasonable adjustments, avoiding prohibited bases (e.g., “higher of two,” local list prices) (19 CFR 152.107–.108).
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Formula pricing is allowed. Customs expressly permits prices “arrived at by the application of a formula,” e.g., exchange price on a given date × contained kg—if documented and tied to your BOM (19 CFR 152.103(a)(1)).
If the value is unknown at entry. CBP is blunt: “If the value of the [metal] content … is unknown, the duty must be reported … based on the entire entered value” (one line). See CSMS 3 Jun 2025 for steel and aluminum: Aluminum • Steel.
Determining the applicable rate
Baseline rates and scope (effective 4 Jun 2025). A White House Proclamation lifted Section 232 to 50% for most countries; United Kingdom 25%. For Chapter 73 (steel) and Chapter 76 (aluminum) articles, the Proclamation confirms the ad-valorem duty “apply[ies] only to the steel content” or “only to the aluminum content.” Proclamation, 3 Jun 2025.
Derivatives and split-line reporting. For derivative products outside Chapters 73/76, CBP applies the same metal-content principle (value per § 1401a) and requires two lines when content value is below the entered value:
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Line 1 (non-metal portion). Base HTS duty (Column 1 General) + any reciprocal (IEEPA) tariffs/AD-CVD.
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Line 2 (metal portion). Same HTS with qty 0, plus the 9903 Chapter 99 code; report kg and assess 232 on the metal value. See CSMS 3 Jun 2025: Aluminum • Steel.
Aluminum “unknown” trap. If the country of smelt and/or cast is unknown, CBP instructs you to report “UN/unknown”—and “the 200 percent Section 232 duties … will be assessed on the entry summary line.” That default is intentional: traceability or pay 200%. See CSMS 13 Jun 2025.
U.S.-metal carve-outs. Derivative goods made exclusively from U.S.-melted & poured steel or U.S.-smelted & cast aluminum are not subject to 232 (document it; HTS 9903.81.92 steel / 9903.85.09 aluminum). See CBP FAQ and CSMS above.