Flat 25% is a myth, US tariffs can go upto 50% (read 225%) for global businesses!

Okay, first things first to be straightened out — the US aluminium and steel tariff implemented is not the only tariff that businesses have to pay while exporting commodities to the nation’s backyard. If a country was paying a 10 per cent tariff to export aluminium goods to the US, they are now not paying 25 per cent but a 35 (10+25) per cent tariff for the good. All of the secrets lie in the word 'additional'!

Image for representational purposes only

In February 2025, the US administration reinstated and broadened Section 232 tariffs, imposing a flat 25 per cent ad valorem duty on all steel and aluminium imports, effective from March 12, 2025. The tariffs were imposed through Presidential Proclamations 10895 and 10896, signed on February 10, 2025. 

The updated tariffs now encompass both primary steel articles and a broader category of downstream ‘derivative’ items. These derivatives include manufactured steel goods such as structural components, fasteners, and other hardware. Similarly, primary aluminium articles and certain aluminium derivatives are also subject to the additional 25 per cent duty.

According to President Trump, “Tariff is the most beautiful word in the dictionary.” Throughout his presidential campaign, Trump promised to use tariffs as a central part of his foreign policy strategy. His America First Trade Policy memorandum also directs the administration to review various tariff- and tariff-adjacent levers the United States could use to further its new trade policy.

The policy change significantly affects US neighbours Canada and Mexico, as all prior benefits under agreements like the USMCA have been terminated. The new proclamations set the tariff rates for these countries at 25 per cent, with the potential for these tariffs to layer with pre-existing measures, resulting in an effective rate of upto 50 per cent for certain products.

The administration has also signalled an intention to implement a reciprocal tariff scheme. This means that if trading partners impose tariffs or other trade barriers on US goods, the United States will respond with equivalent duties on their imports. While this could protect domestic production by levelling the playing field, it may also introduce supply chain challenges and cost pressures as manufacturers adjust to higher input prices and potential retaliatory measures.

As of the latest updates, along with aluminium and steel, copper has become part of an investigation to determine the necessity of imposing tariffs. The probe targets raw and processed copper imports, with countries like Chile, Canada, and Mexico being significant suppliers. The policy framework aims to reduce China’s dominance in the sector, even though the examination includes derivative copper goods.

Comparison of steel and aluminium tariff impositions: 2018 vs 2025

The tariff landscape for steel and aluminium has evolved significantly from the 2018 Section 232 tariffs to the newly imposed 2025 regulations. The classification of products affected by tariffs has expanded, indicating a broader scope of trade restrictions.