In three recent related developments, the landscape of the current tariffs under various statutes changed significantly:
- The tariffs on steel and aluminum products are doubled;
- A federal judge in Washington, D.C. granted the government’s request to pause a decision in a tariff-related case; and
- The United States Trade Representative (USTR) announced a three-month extension of exclusions in the Section 301 investigation of China.
Doubling of the Steel and Aluminum Tariffs
First announced in March of 2018 and then expanded in February 2025, the revised tariffs of 25% on steel and aluminum imports have been in effect since March 12 (for prior coverage, see the trade alert dated February 13, 2025 and the trade alert dated March 17, 2025). President Trump announced the 50% tariff rate hike on May 30, citing the need to protect the U.S. steel and aluminum industries.
President Trump issued a Proclamation on June 3, 2025 ordering that the Section 232 “national security” tariffs on imports of steel and aluminum products be increased from 25% to 50% effective June 4, with one exception: tariffs on steel and aluminum imports from the UK remain at 25%, with possible changes or quotas starting July 9, 2025, depending on the status of the “U.S.-UK Economic Prosperity Deal.” The Proclamation also noted that the increased tariffs will apply only to the steel and aluminum contents of imported products, whereas the non-steel and non-aluminum contents of imported products will be subject to other applicable tariffs, e.g., Normal Trade Relations duties, Section 301 “China tariffs,” and IEEPA tariffs.
Pause on Tariff Decision
The second development relates to the status of the IEEPA tariffs while two separate cases which struck them down as illegal continue on appeal (for prior coverage, see the trade alert dated May 30, 2025). A federal judge in Washington, D.C. granted the government’s motion to stay his preliminary injunction in Learning Resources, Inc. v. Donald J. Trump, et al. ordering the U.S. to stop collecting those duties while the underlying merits of the decision proceed to the U.S. Court of Appeals for the District of Columbia.
This action nearly mirrors that concerning the decision of the U.S. Court of International Trade (CIT) by a three-judge panel which similarly ruled in V.O.S. Selections, Inc. v. United States that the use of IEEPA by the President to impose tariffs was illegal because those tariffs exceeded the authority granted by Congress to the Executive Branch and, with respect to the “fentanyl” tariffs, did not address the declared national emergency. In that case, the CIT issued a permanent injunction, which was preliminarily stayed the same day by the U.S. Court of Appeals for the Federal Circuit (CAFC). A hearing and final decision whether to keep the stay in place pending the conclusion of the appeals process on the merits of the case is expected shortly. Both cases are widely expected to ultimately reach the U.S. Supreme Court.
With these new developments, further confusion concerning the “stacking” of the Section 232 and IEEPA tariffs and exemptions for Canadian and Mexican goods under the United States Mexico Canada Agreement (USMCA) will likely result. In an attempt to clarify the order of application of the various tariffs, U.S. Customs & Border Protection (CBP) released guidance on June 3 as follows:
New Priority Order
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on June 4, 2025, below is the new priority order of the five presidential actions identified in EO 14289, as amended:
- 232 Auto/Auto Parts - Proclamation 10908 of March 26, 2025 (Adjusting Imports of Automobiles and Automobile Parts into the United States), as amended;
- 232 Aluminum - Proclamation 9704 of March 8, 2018 (Adjusting Imports of Aluminum into the United States), as amended;
- 232 Steel - Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel into the United States), as amended;
- International Emergency Economic Powers Act (IEEPA) Canada - Executive Order 14193 of February 1, 2025 (Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border), as amended;
- IEEPA Mexico - Executive Order 14194 of February 1, 2025 (Imposing Duties to Address the Situation at Our Southern Border), as amended.
Applicability
For articles subject to more than one of the five tariff actions addressed in EO 14289, filers will pay duty in accordance with the prioritization below. “Subject to” means that duty more than 0% is owed under the tariff action. Filers should calculate duties in the following order, with the understanding that 232 Steel and 232 Aluminum may apply to the same article.
- First, filers should determine if an article is subject to the 232 Auto/Auto Parts tariff. If so, then the article IS NOT subject to the 232 Aluminum, 232 Steel, IEEPA Canada, or IEEPA Mexico tariffs.
NOTE: Parts of passenger vehicles and light trucks that qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA), ARE NOT subject to the 232 Auto/Auto Parts, the IEEPA Canada, or the IEEPA Mexico tariffs. - Next (if the article is not subject to the 232 Auto/Auto Parts tariff), filers should determine if an article is subject to the 232 Aluminum and/or 232 Steel tariff. For derivative products subject to both the 232 Aluminum and 232 Steel tariffs, duties will be owed on both the value of the aluminum and steel content of that product.
If the article is subject to the 232 Aluminum and/or 232 Steel tariffs, as well as subject to IEEPA Canada or IEEPA Mexico tariffs, then the article IS NOT subject to the IEEPA Canada or IEEPA Mexico tariffs.
NOTE: Aluminum and aluminum derivative products from Russia, and imports of such aluminum products from any country containing aluminum smelt or cast in Russia, ARE subject to the corresponding Section 232 duty rate of 200 percent.
NOTE: Articles that qualify for preferential tariff treatment under USMCA, ARE NOT subject to the IEEPA Canada or IEEPA Mexico tariffs.
An article subject to the tariff actions identified in this guidance is still subject to other applicable duties, taxes, fees, exactions, and charges, such as, but not limited to, those set forth in column 1 or 2 of the Harmonized Tariff Schedule of the United States (HTSUS); duties imposed pursuant to Section 301 of the Trade Act of 1974, as amended; duties imposed pursuant to EO 14195, “Imposing Duties To Address the Synthetic Opioid Supply Chain in the People's Republic of China” (see also CSMS # 65201384), as amended; antidumping and countervailing duties; etc.
Exclusions From Section 301 Tariffs
Finally, USTR extended 178 exclusions from the Section 301 tariffs for certain Chinese-originating merchandise (including 14 for solar manufacturing equipment) (for prior coverage, see the trade alert dated September 24, 2024). Those exclusions (the final exclusions granted under the now lapsed exclusion process) were due to expire on May 31 but have been given an additional 90 days to remain in place. The Federal Register notice indicates that the extended exclusions will expire on August 31. Further extensions may be possible but no new exclusion process is expected for any goods of Chinese origin covered by the Section 301 tariffs.
BDO Insight
To further complicate matters for global companies, reports of new national security tariff investigations of semiconductors and pharmaceuticals under Section 232 of the Trade Expansion Act of 1962 are expected soon. These reports will likely recommend further tariffs on these merchandise categories – which include all downstream/derivative and related products, such as smartphones and active pharmaceutical ingredients.
Nonetheless, importers should pursue existing plans and strategies to mitigate the impact of the Section 232 and IEEPA tariffs. Given the length of time needed for final resolution of these tariffs either via litigation or negotiation (and the lack of “trade deals” to date that were expected with the 57 countries targeted by the IEEPA “reciprocal” tariffs), cost-saving initiatives should proceed apace. Any strategies adopted can still impact Normal Trade Relations duties, Section 301 tariffs, and antidumping/countervailing duties.
It should also be noted that public hearings on the renewal of USMCA mandated in 2026 will begin in October. Because USMCA is a genuine free trade agreement that was ratified by Congress, current law requires that it be voted upon by Congress, either in its current form or as amended. The administration is expected to push for separate levels of U.S. content when performing regional value content calculations to qualify goods as USMCA-originating.
Please visit BDO’s International Tax Services page for more information on how BDO can help.