The U.S. Commerce Department has opened a process for certain steel and aluminum producers in Canada and Mexico to request lower Section 232 tariffs if they commit to adding production capacity in the United States.
Under the process, an approved applicant could see the current 50% tariff reduced to 25% for eligible imports. The adjustment is not automatic. Companies must show that they already supply steel or aluminum, directly or indirectly, to U.S. manufacturers of automobiles or medium- and heavy-duty vehicles, and their U.S.-bound exports must qualify for preferential treatment under the U.S.-Mexico-Canada Agreement.
The offer is aimed at companies willing to make a binding investment commitment in new U.S. production. For buyers in automotive, heavy truck, parts and related manufacturing, the practical question is whether a supplier can qualify without disrupting cost, sourcing and capacity plans already tied to North American trade rules.
Who Can Apply for the Lower Tariff
Commerce is limiting eligibility to Canada and Mexico steel and aluminum producers that support U.S. vehicle production. The agency’s notice covers suppliers to U.S. producers of automobiles, automobile parts, medium- and heavy-duty vehicles, and related parts.
Eligible imports must also meet origin and trade-treatment requirements. Steel must be melted and poured in Canada or Mexico, while aluminum must be smelted and cast in Canada or Mexico. The products must also qualify for preferential tariff treatment under USMCA.
The tariff adjustment would apply only to qualifying import quantities tied to the projected annual output of the new U.S. capacity. Commerce will also set a fixed period for the adjustment, based on factors such as the size of the commitment, the national security benefit, the resources committed and the commercially reasonable time needed to complete the project.
| Requirement | What Commerce is looking for |
|---|---|
| Current supply relationship | The producer supplies steel or aluminum directly or indirectly to U.S. auto or medium- and heavy-duty vehicle manufacturers. |
| USMCA eligibility | The imports qualify for preferential treatment under the trade agreement. |
| North American production origin | Steel is melted and poured, or aluminum is smelted and cast, in Canada or Mexico. |
| U.S. investment commitment | The producer commits to new U.S. primary steel or primary aluminum capacity. |
What Counts as a Qualifying Commitment
The lower tariff is tied to new U.S. production capacity, not routine plant work. Commerce said applicants must commit to building or expanding facilities that produce primary steel or primary aluminum for key vehicle-related products. Reconfiguring or upgrading existing plants would not be enough on its own.
That distinction matters for suppliers weighing whether the potential tariff savings justify a capital project. The agency is asking for a defined project, a location, production details, expected capacity and milestones that can be tracked over time.
Applicants must submit a written package certified by a senior corporate officer, such as a chief financial officer, general counsel or equivalent executive. The submission must explain why the company qualifies, identify its Canada or Mexico production locations, describe product types and volumes, and provide information about U.S. customers.
Commerce is also asking for details on the proposed U.S. facility, including the project location, objectives, progress to date, expected employment and plans for workforce expansion. Companies must describe major raw material needs, known or expected suppliers, equipment suppliers and construction contractors.
Milestones Will Shape Ongoing Eligibility
The process is structured around project milestones, not just an initial promise. Applicants must commit to targets that show the investment is moving from proposal to production.
Required milestones include:
- Purchase of land
- Completion of facility design
- Hiring of the construction team or contractors
- Start of construction
- Purchase of equipment
- Delivery and installation of equipment
- Completion of construction and first production heat
Companies may also provide optional milestones, such as permitting, financing, major engineering contracts and equipment certification. Commerce said approved companies must provide quarterly progress reports, including updates on milestones, project management and costs incurred.
If a company falls materially behind or fails to provide requested information, Commerce may pause or terminate tariff adjustment eligibility. The agency also warned that companies could be required to pay duties that would otherwise have been owed on prior entries if they fail to substantially meet their commitments.
For purchasing and supply chain teams, the new process creates a potential cost path for qualified North American suppliers, but it also adds a compliance checkpoint. Any supplier claiming future tariff relief will need to show not only that it qualifies today, but that its U.S. capacity project is funded, documented and moving on a schedule Commerce is willing to accept.