WASHINGTON—The Trump administration is preparing to reshape its steel and aluminum tariff regime, altering duties on finished products to help simplify compliance. The net effect of the changes could effectively raise costs for many imports.
What’s changing:
Under an expected presidential proclamation, which could be issued as soon as this week, finished products made with imported steel and aluminum would be tariffed at 25%, according to people with knowledge of the plans.
The 25% tariff would apply to the entire value of a finished product—known derivative products—containing steel and aluminum, the people said. That would replace the current 50% duty, which only applies to the value of steel or aluminum used in a product.
The 50% tariff will remain in place for commodity-grade steel and aluminum products—goods that are almost entirely made of the metals, the people said. Some goods could be reclassified as commodity products if they are made almost entirely of the metals.
Kush Desai, a White House spokesman, said that the administration has “always been clear about implementing a nuanced, nimble, and multifaceted strategy to reshore critical manufacturing back to the United States,” adding that “any reporting about potential executive actions that haven’t been officially announced by the administration should, however, be considered unsubstantiated speculation.”
The impact:
The consequences of the tariff changes will vary widely depending on the product. Even though the tariff rate will be lower for many goods, the change likely means the cost of the tariffs assessed on many products will be higher. That’s because of duties being charged on the full value of imported products rather than just their steel or aluminum content.
The move could also mean the U.S. government will take in more money under the steel and aluminum tariffs, which are imposed under Section 232 of the Trade Expansion Act of 1962. That could help partially offset the lower tariff revenues that the government has collected since the Supreme Court invalidated many of Trump’s other levies in February.
The expected changes are meant to make compliance easier for companies that have struggled to measure the value of the steel and aluminum content in complex manufactured products.
“This action will help ensure these tariffs function as intended to support domestic production and American workers,” said Jon Toomey, president of the Coalition for a Prosperous America, a protectionist group that represents many domestic U.S. steel and aluminum companies and has worked with the administration on the tariff changes.
The back story:
In 2018, Trump imposed a 25% tariff on imported steel and 10% tariff on imported aluminum, but only on commodity-grade metal. Manufacturers argued that those tariffs increased their metal costs—and allowed imported finished products made with steel and aluminum to enter the country without tariffs.
When Trump returned to office, he increased the aluminum tariff to 25% and expanded the metal tariffs to hundreds of imported finished goods, including screws, furniture and auto parts that were previously not subject to levies. Last June, he doubled those levies to 50%.
The expected tariff changes would come after months of deliberations inside the administration over how to rewrite steel and aluminum tariffs to simplify compliance. Earlier this year, the administration weighed a plan to create three tiers of different tariff levels, but ultimately decided on an even simpler proposal.
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