U.S. Shifts Tariff Method for Steel and Aluminum Derivatives, Auto Industry Costs May Rise

Under a presidential proclamation effective April 6, the United States has revised its tariff rules for imported steel-, aluminum-, and copper-derived products. The new rules stipulate that derivative products primarily made from these metals will now be subject to a uniform 25% tariff based on the total value of the goods, whereas previously tariffs were calculated based only on 50% of the metal content’s value. Goods that are wholly or primarily composed of steel, aluminum, or copper remain subject to the existing 50% tariff rate. Existing exemptions for complete vehicles and their parts remain unchanged. Automakers and other industries had previously complained that the old rules involved cumbersome declaration procedures. While the new rules simplify compliance for businesses, they may lead to higher tariff costs. For example, a product containing $200 worth of steel with a total value of $1,000 would have incurred a $100 tariff under the old system but will now face a $250 tariff. Certain industrial manufacturing equipment—including industrial robots and injection molds—has been temporarily included in a preferential tariff category, subject to a 15% duty on total value through December 31, 2027, to encourage investment in U.S. industry. Other exemptions include: - A 10% tariff rate for derivative products manufactured overseas using U.S.-produced metals; - A 15% tariff rate for relevant products imported from the United Kingdom. The automotive sector, one of the largest consumers of steel and aluminum, relies heavily on imported metals—particularly aluminum, roughly half of which is imported into the U.S., mainly from Canada. Companies are still assessing the precise impact of the new rules on their tariff expenses while simultaneously navigating other recent changes in U.S. tariff policy.