The U.S. Commerce Department has opened a path for Canadian and Mexican metal producers to cut the current 50% Section 232 tariff on steel and aluminum in half, to 25%. But the relief is far from automatic: it is tied to firm U.S. production commitments, and it targets a specific slice of exporters. Here is who qualifies and what the trade-off looks like.
Who Qualifies
Eligibility for the reduced 25% rate is conditional on meeting all of the following:
- Auto-sector supply: The producer must currently supply steel or aluminum, directly or indirectly, to U.S. vehicle manufacturers.
- CUSMA-qualifying exports: Its U.S.-bound exports must qualify under the Canada-United States-Mexico Agreement (CUSMA/USMCA).
- A binding U.S. build commitment: The producer must commit to build or expand facilities that produce primary steel or primary aluminum in the United States.
Two limits sharply narrow the benefit. Merely upgrading existing plants does not qualify – the commitment must be to new primary production capacity. And the reduced rate applies only to volumes matching the new facility’s projected output, not to a producer’s entire export book.
What It Means for Canadian Exporters
This program is most relevant to Canadian metal producers already embedded in the U.S. automotive supply chain. For them, the question is not whether 25% beats 50% – it plainly does – but whether the duty savings justify the capital required.
The relief is effectively a trade of capital expenditure for tariff reduction. Standing up new primary steel or primary aluminum capacity in the United States is a multi-year, capital-intensive undertaking, and the duty discount is capped at the volume that new capacity is projected to produce. Exporters should model the full picture: the cost and timeline of the U.S. facility, the projected output it would unlock at the lower rate, and the extensive certified documentation the program demands – all weighed against simply paying the 50% rate on current shipments.
For producers without an auto-sector relationship or without the appetite to invest in U.S. primary production, this particular door stays closed.
NGB is monitoring the program and will advise affected clients as application procedures and documentation requirements are confirmed.
