U.S. tariffs on steel and other metals: impact on companies and on the supply chain

The U.S. tariffs on steel and other metals have once again become relevant to corporate strategy, amid the intensification of trade measures adopted by the Trump administration. More than a question of customs compliance, current steel tariffs influence purchasing costs, margins, sourcing decisions, and supply chain configurations.

These measures are based primarily on Section 232 of the Trade Expansion Act of 1962, which authorizes investigations into whether certain imports pose a threat to U.S. national security. It was following an investigation under Section 232 that additional tariffs were imposed on steel and aluminum imports in 2018. Since then, the regime has been amended successively, with rate increases, expansion of the products covered, and new rules applicable to steel, aluminum, and their derivative products. In 2025, the same instrument was also used to cover semi-finished copper products and derivative products that make intensive use of this metal, which are now integrated into the same regime.

For companies, the impact goes far beyond payment of a Section 232 tariff at the border. Greater trade policy uncertainty can cause price changes, shifts in import flows, supply risks, and additional inventory and working capital needs. The response therefore requires a structured approach that combines compliance, cost visibility, supplier risk management, and supply chain optimization.

In this article, we examine how customs tariffs work, which main steel tariffs are currently in effect in the United States, and how companies can assess their exposure, reduce the financial impact, and strengthen supply chain resilience.

What are customs tariffs and how do they work?

Customs tariffs are taxes applied to the import of goods. Governments use them to increase public revenue, protect sectors considered strategic, respond to trade practices considered unfair, or influence international trade flows.

In practice, a tariff increases the cost of a product entering a given market. This increase can alter supplier competitiveness, purchasing location, prevailing prices, and manufacturing decisions. For this reason, tariffs do not affect only the customs area. They can impact the entire supply chain, from sourcing and inventory planning to pricing and profitability management.

Definition of a customs tariff

A customs tariff is a duty charged on imported goods. Its application usually depends on the product’s tariff classification, its customs value, the declared origin, and the trade rules in effect at the time of import.

One of the most common forms is the ad valorem duty, calculated as a percentage of the goods’ customs value. For example, if a product with a customs value of $100,000 is subject to a 25% tariff, the duty will be $25,000.

Specific duties may also exist, calculated per unit, weight, or volume, or combined regimes that pair a percentage of value with a fixed amount.

To correctly determine the applicable tariff, companies must ensure a rigorous tariff classification, confirm the rules of origin, and maintain the data necessary for import compliance. Errors in HTSUS classification (Harmonized Tariff Schedule of the United States), country of origin, or value declaration can result in incorrect payments, delays, penalties, and additional compliance risks.

Who pays the customs tariff?

The customs tariff is generally paid by the registered importer when the goods enter the destination country. In the case of the United States, it is the importer, not the foreign exporter directly, who bears responsibility to the customs authorities for payment of the applicable duties.

However, who bears the cost of tariffs depends on each party’s ability to absorb or pass it on. The importer may accept a lower margin, negotiate lower prices with the supplier, raise the sale price to the customer, or combine several of these options.

Thus, although payment is made at the border by the importer, the economic impact can be distributed across the entire value chain. Suppliers, manufacturers, distributors, business customers, and end consumers may ultimately bear part of the cost. The answer to the question “do tariffs increase prices?” is therefore not automatic, but in most cases, there is pressure for at least part of the additional cost to be reflected in prices.

What are Trump’s current tariffs on steel and other metals?

The current U.S. tariffs on steel result from several measures adopted under Section 232 and successively amended since 2018. Although they are often associated with the U.S.-China trade war, these tariffs do not apply only to Chinese products. They are sectoral measures justified on national security grounds and can cover imports from different countries.

This regime became significantly more demanding and more complex in 2025 and 2026. In addition to the rate increases, several tariff exemptions and quotas were eliminated, new categories of derivative products were added, and different rates were established based on the type of product and its composition. On the other hand, the April 2026 reorganization removed hundreds of steel products from the scope of the tariffs and established that, outside of the tariff chapters specifically dedicated to the metals in question, the tariff does not apply when the combined weight of those metals represents less than 15% of the total weight of the article. For this reason, there is no single rate applicable to all steel imports.

Section 232 tariffs on steel

Section 232 of the Trade Expansion Act of 1962 allows the U.S. Department of Commerce to investigate whether the quantity or circumstances under which certain products are imported threaten to compromise national security.

The Trump administration introduced additional tariffs on steel and aluminum in March 2018. The measure sought to reduce external dependence and protect U.S. manufacturing capacity in sectors considered essential to national defense, infrastructure, and industry.

The Section 232 tariff is in addition to the customs duties normally applicable to the product. Depending on the case, it may also coexist with other duties, such as anti-dumping or countervailing measures. It should not be confused with Section 301 tariffs, which target mainly trade practices considered unfair and are particularly associated with trade relations between the United States and China.

In February 2025, the United States ended the alternative arrangements that allowed certain countries to benefit from exemptions, quotas, or tariff-rate quotas, depending on the applicable agreement. Previously approved exclusions remained in effect only until the end of their validity period or until the authorized volume was used. Since then, the Department of Commerce has stopped accepting new individual exclusion requests and has favored the process for adding new derivative products to the scope of the tariffs. That inclusion process was, in turn, closed in April 2026, and the inclusion of new products now depends on the administration’s discretion.

Rates and products covered

The regime currently in effect does not set a single rate for all products containing steel. Rates depend on the HTSUS classification assigned to the goods and on the list or annex in which the product is included.

In general terms, and always depending on the HTSUS classification and applicable annexes, the changes introduced in April 2026 established three main tiers:

• An ad valorem tariff of 50% on the total value of certain metal products included in the respective annex.
• A tariff of 25% on certain derivative products predominantly made of these metals.
• A temporarily reduced tariff treatment, applicable through December 31st, 2027, that generally caps the total tariff burden at 15% for certain industrial equipment with intensive metal use and for electrical grid equipment.

In June 2026, this reduced tariff treatment was extended to certain agricultural equipment and to certain climate-control systems and components intended predominantly for the residential market. For mobile industrial equipment, the reduced rate applies only to imports from countries with a trade agreement with the United States, with the 25% rate remaining in place in all other cases. The metal-content threshold required for certain covered derivative products to benefit from the reduced 10% rate — applicable when the steel was melted and poured, or the aluminum was melted and cast in the United States — was also lowered from 95% to 85%.

The products covered go far beyond raw materials and traditional steel products. In August 2025, for example, the Department of Commerce added 407 categories of derivative products to the tariffs on aluminum and steel. As a result, a company may import a product that is not usually described as a steel product and still be subject to a tariff on the total value or on the metal content, depending on the applicable tariff classification.

Changes introduced in 2025 and 2026

During 2025 and 2026, the regime was amended in several significant stages:

• February 2025: the tariffs on steel and aluminum were strengthened, several national exemptions were eliminated, and the process for new individual exclusion requests was discontinued. A mechanism was also created to include additional categories of derivative products.
• June 2025: the additional rate applicable to many steel and aluminum products increased from 25% to 50%. The new rate took effect on June 4, 2025. For covered products originating in the United Kingdom, a specific rate of 25% remained in place under the bilateral economic agreement. Since April 2026, British products have benefited from reduced rates of 25% or 15%, depending on the category, provided at least 95% of the metal was melted and poured or melted and cast in the United Kingdom.
• August 2025: 407 categories of derivative products were added. At that stage, the steel and aluminum content of these products became subject to a 50% tariff.
• April 2026: the regime applicable to steel, aluminum, and copper was reorganized. Different rates now apply to metal products, derivative products, and certain industrial equipment. The tariff is no longer based solely on the value of the metal content but is now applied to the total customs value of the covered products. The rate for derivative products has been reduced from 50% to 25%, while the rate for metal products remains at 50%, in accordance with the lists and conditions set forth in the proclamation.
• June 2026: some categories of equipment covered by the reduced rate were adjusted, and the threshold required for certain products to be considered made of U.S. metal was lowered from 95% to 85%.
• July 2026: an incentive program was created for investment in U.S. primary aluminum production. Companies with approved investment plans can benefit from a reduced rate on certain quantities of imported primary aluminum, based on the projected production capacity of the new projects.

These changes show that current steel tariffs are not a static regime. The scope of products, rates, and conditions can be modified through new proclamations, annexes, and tariff-classification updates.

Factors that determine the applicable tariff

The tariff applicable to an import cannot be determined solely by the product’s commercial description. Several elements must be analyzed together:

• HTSUS classification: the code assigned to the product in the Harmonized Tariff Schedule of the United States determines whether it is included in one of the lists subject to Section 232 tariffs.
• Product type: rules may differ for steel articles, derivative products, machinery, components, or equipment included in the temporarily benefited categories.
• Customs value: in some cases, the tariff is calculated on the total value of the goods. In other regimes or classifications, the value associated with the covered metal content may be relevant.
• Metal content and origin: data may be required on the quantity, weight, value, and origin of the metal incorporated in the product. For certain treatments introduced in 2026, it may also be necessary to confirm whether the steel was melted and poured, or the aluminum was melted and cast in the United States.
• Country of origin and applicable agreements: rules on country of origin, any specific treatments, and compliance with the USMCA can influence other components of the customs treatment. However, preferential origin under a trade agreement does not automatically eliminate the application of a Section 232 tariff.
• Date of entry: the applicable rate is generally the one in effect when the goods enter for consumption or are withdrawn from a warehouse for consumption.

An incorrect tariff classification, an incomplete declaration of metal content, or improper application of an exception can result in additional payments, penalties, and customs compliance risks. Companies should therefore maintain reliable technical information on their products and validate the applicable classification and treatment before importing.

How do steel and aluminum tariffs affect companies?

Steel and aluminum tariffs can affect the entire value chain, even when a company does not directly import these metals. The impact may stem from components, equipment, packaging, machinery, or derivative products purchased from suppliers who factor the additional cost into their prices.

The size of the effect depends on each company’s exposure to the imports covered, the availability of alternative suppliers, the weight of the metal in the product’s cost, and the ability to pass increases on to customers. In sectors with thin margins, long contracting cycles, or heavy dependence on imported materials, a tariff change can have significant consequences for profitability and operational planning.

Higher costs and margin pressure

The most immediate impact of tariffs is the increase in the total cost of importing. Beyond the purchase price, companies must factor in customs duties, transportation, insurance, customs clearance fees, administrative costs, and inventory financing.

When a product is subject to a high tariff, the supplier that offered the lowest unit price may no longer be the most competitive option. For this reason, sourcing decisions should be based on total cost of ownership, not just on the purchase price.

Cost increases can also occur indirectly. A manufacturer that buys steel from a domestic distributor may not pay the tariff at the border but may still absorb that cost through higher prices. The same happens when suppliers of components, machinery, or derivative products pass the impact of the tariffs on to their customers.

When a company is unable to fully pass on increases in selling prices, the difference is absorbed by the margin. This pressure can be especially strong in fixed-price contracts, highly competitive businesses, or sectors where customers have substitute alternatives available.

Impact on prices and demand

Tariffs increase prices when part of the additional cost is passed on to customers. The extent of that increase depends on the parties’ bargaining power, demand elasticity, the intensity of competition, and the availability of alternative products.

A company with a strong market position may be able to pass on a significant share of the cost. Conversely, a supplier operating in a highly competitive market may have to absorb the increase to avoid losing customers.

Higher prices can reduce demand, delay investment decisions, or encourage the substitution of products and materials. A customer may opt for a specification with lower metal content, look for a local supplier, or replace one piece of equipment with another less exposed to tariffs.

Uncertainty also influences customer behavior. Faced with the possibility of further trade-policy changes, some companies bring forward purchases, while others delay orders until there is greater clarity. These variations make demand harder to forecast and can create significant swings in operational load.

Supply risk and supplier dependence

Tariffs can quickly change the relative competitiveness of suppliers and countries of origin. A supply source that was once economically attractive can become significantly more expensive, forcing the company to look for alternatives with little time to complete the technical, commercial, and operational qualification process.

Replacing a supplier is not always immediate. It can require quality testing, material validation, customer approval, engineering changes, audits, or investment in new tooling and equipment. In regulated sectors, this process can be especially long.

At the same time, a broad increase in demand for suppliers not covered by the tariffs can cause capacity shortages, price increases, and longer lead times. Geographic diversification alone does not eliminate the risk either, especially when several suppliers depend on the same raw materials, logistics routes, or manufacturing sources.

Supplier risk management should therefore include an analysis of material origin, purchasing volume concentration, available capacity, and the time required to activate an alternative. This visibility enables identification of critical dependencies before a tariff change causes disruption.

Impact on inventory, lead times, and working capital

The uncertainty associated with tariffs can lead companies to increase inventory to protect supply continuity or to get ahead of new rates taking effect. Although this decision can reduce the risk of short-term disruption, it also increases tied-up capital, storage costs, and the risk of obsolescence.

The search for new suppliers can likewise increase lead times. More distant supply sources, additional customs compliance processes, and congestion caused by changes in trade flows can extend the time between ordering and receipt.

Longer lead times require higher levels of safety stock and reduce the ability to respond to demand changes. When a company pays additional tariffs at the time of import, there is also a direct impact on working capital, since the cash outlay occurs before the product is sold and the value is recovered from the customer.

On the other hand, an excessive attempt to cut inventory to limit invested capital can increase the risk of stockouts. The challenge is to find the right balance between availability, cost, and risk, using appropriate material segmentation, scenario planning, and greater supply chain agility.

How to assess tariff risk in the supply chain?

An effective response to tariffs begins with understanding where the exposure lies and what its impact might be. The goal is to turn a diffuse risk into a structured view by product, supplier, origin, imported value, and financial impact. This foundation makes it possible to focus resources on the most critical points and avoid blanket decisions that can raise costs without significantly reducing risk.

Mapping products, suppliers, and countries of origin

The first step in supply chain risk management is identifying the products potentially exposed, the suppliers involved, and their respective countries of origin. The mapping should include both imports made directly by the company and materials and components purchased from distributors or intermediate suppliers.

For each product, it is important to gather information such as:

• Internal code and description.
• Supplier and manufacturing location.
• Country of origin.
• Country where the steel was melted and poured or the aluminum was melted and cast.
• Annual purchase value and volume.
• Lead time.
• Availability of alternative suppliers.
• Importance of the product to operational continuity.

The analysis should also identify suppliers that, although located in a country not covered by a given measure, depend on raw materials from exposed geographies. Knowing only the direct supplier’s location may not be enough to assess the real risk.

Confirming the tariff classification and metal content

The tariff classification determines whether the product is included in the covered categories and what customs treatment applies. A generic commercial description is not enough, since similar products can have different HTSUS codes and be subject to different rules.

Companies should therefore validate:

• The applicable HTSUS code.
• The corresponding legal description.
• The customs value.
• The percentage and value of the metal content.
• The rules of origin.
• Data on the location where the steel was melted and poured or the aluminum was melted and cast.
• Any potential accumulation with other customs duties.

This validation requires collaboration among the customs, purchasing, engineering, and data management functions. Suppliers must provide reliable technical information, including declarations of origin, material composition, and documentation supporting the classification. Compliance risk management should therefore be part of the overall assessment of tariff exposure.

Calculating the total cost of importing

After identifying the products covered, it is necessary to calculate the total cost of importing. The tariff should not be analyzed in isolation, since changing the supplier or the country of origin can affect several cost components.

The calculation should consider:

• Purchase price.
• Customs duties.
• Transportation and insurance.
• Customs clearance costs.
• Warehousing.
• Safety stock.
• Financial cost of inventory.
• Quality control.
• Risk of delay or disruption.
• Transition costs to a new supplier.

For example, a local supply source may show a higher unit price but become more competitive once duties, logistics costs, working capital, and supply risk are factored in. The total import cost, also known as the landed cost, should be calculated for different scenarios of rate, volume, price, lead time, and demand. This allows the company to assess not only the current situation but also its sensitivity to future trade-policy changes.

Prioritizing the most exposed products and suppliers

Not all products require the same level of attention. Prioritization should combine the size of the financial impact with operational criticality and the difficulty of substitution.

Criteria can include:

• Annual value of customs duties.
• Impact of the tariff on the margin.
• Concentration on purchases in a single supplier or country.
• Time required to qualify for an alternative.
• Impact of a disruption on manufacturing or the customer.
• Volatility of price and lead time.
• Stock availability.
• Risk of non-compliance.

Based on these criteria, products and suppliers can be ranked at risk level. Situations with high impact and few alternatives should be addressed as a priority, while less critical items can be tracked with simpler monitoring measures.

How to reduce the impact of customs tariffs?

After quantifying and prioritizing the exposure, the company should evaluate different response options. The goal is to find the best combination of cost, availability, quality, risk, and responsiveness.

Measures should be analyzed on a case-by-case basis. A decision that reduces the tariff can increase logistics costs, extend lead times, or introduce new quality risks. For this reason, mitigation should be based on an integrated supply chain perspective.

Reviewing sourcing decisions based on total cost

Strategic sourcing should consider total cost of ownership rather than just the price quoted by the supplier. This analysis makes it possible to compare alternatives with different cost and risk structures.

For each sourcing option, the following should be evaluated:

• Unit price.
• Duties and other charges.
• Transportation.
• Lead time.
• Stock requirements.
• Quality and reliability.
• Available capacity.
• Volume flexibility.
• Qualification and transition costs.
• Exposure to new tariff changes.

The review may show that the supplier that appears to be the most expensive actually has the lowest total cost. It may also reveal opportunities to renegotiate prices, change commercial terms, consolidate volumes, or bring supply closer to consumption markets.

Relocating manufacturing or sourcing may make sense in some cases, but it should not be treated as an automatic response. The decision should consider available industrial capacity, investment costs, the skills required, and medium- and long-term economic sustainability.

Diversifying suppliers and geographies

Diversification reduces dependence on a single source and increases the ability to respond to tariff changes, trade restrictions, or logistics disruptions. However, diversifying does not simply mean increasing the number of suppliers.

An effective strategy should look for sources with genuinely distinct risk profiles. Two suppliers located in different countries may depend on the same steel origin, the same port infrastructure, or the same subcontractor.

Companies can take different approaches:

• Establish a second qualified source.
• Distribute volumes among suppliers in different regions.
• Combine global and regional supply.
• Reserve additional capacity with key suppliers.
• Develop local alternatives for strategic products.
• Establish contracts with greater volume flexibility.

Supplier risk management should include a regular assessment of each partner’s capacity, financial stability, material origin, tariff exposure, and continuity plans.

Evaluating alternative materials and specifications

Product engineering can create opportunities to reduce metal content, substitute materials, or simplify specifications without compromising function, safety, or quality.

Options can include:

• Using alternative materials.
• Reducing weight or thickness.
• Redesigning parts.
• Reviewing excessive tolerances or requirements.
• Using recycled content or materials from different sources.

These changes should result from a structured technical and economic analysis. They should not be made solely to obtain a more favorable tariff classification without corresponding to the product’s actual nature. Tariff engineering must fully comply with customs rules and be based on legitimate changes in design, composition, or process.

Collaborating with suppliers from the early stages can accelerate the identification of alternatives and reduce the time required for testing, validation, and industrialization.

Improving inventory and scenario planning

Indiscriminate increases in inventory may protect operations in the short term, but they strain working capital and increase the risk of obsolescence. The solution should be based on segmenting materials according to their criticality, replenishment lead time, demand variability, and the availability of alternatives.

For each segment, different policies can be defined regarding:

Figure 1 – Different policies by segment

Scenario planning makes it possible to test the impact of different rates, delays, changes in origin, demand fluctuations, and supplier changes. These scenarios should include predefined response levels, preventing every tariff change from triggering improvised decisions.

The combination of visibility, segmentation, and planning strengthens supply chain agility and helps better balance cost against the risk of disruption.

How to strengthen supply chain resilience?

Reducing the immediate impact of tariffs is important, but it is not enough. Companies must develop the ability to anticipate changes, adapt their supply network, and implement responses quickly and in a coordinated way.

Supply chain resilience depends on clear decision-making processes, reliable information, and collaboration across different functions. It should also be integrated into business continuity planning and the organization’s operational strategy.

Integrating purchasing, operations, finance, and engineering

Tariffs are not just an issue for the purchasing or customs compliance team. They simultaneously affect cost, product design, manufacturing capacity, inventory, pricing, and customer relationships.

An effective response requires the involvement of:

• Purchase, in supplier management and negotiation.
• Operations, in assessing the impact on manufacturing.
• Finance, in quantifying costs, margins, and working capital.
• Engineering, in analyzing materials and specifications.
• Logistics and international trade, in classification and compliance.
• Sales, in managing pricing, contracts, and customer communication.

Creating cross-functional teams makes it possible to assess the implications of each decision before implementation. For example, replacing a supplier may appear financially attractive but require technical changes or a qualification period incompatible with the urgency of the situation.

Developing contingency plans for critical risks

Products and suppliers classified as critical should have specific contingency plans. These plans should define the actions to be taken, the people responsible, the deadlines, and the criteria that justify activation.

Measures can include:

• Activating an alternative supplier.
• Temporarily increasing safety stock.
• Using a different logistics route.
• Renegotiating commercial terms.
• Temporarily substituting materials.
• Transferring product manufacturing.
• Prioritizing customers or products.
• Reviewing delivery commitments.

Plans should be realistic and tested. Having a supplier listed in a database does not mean that supplier is ready to deliver the required volume, meet the specifications, or begin shipments quickly.

Operational resilience comes from having viable alternatives that have been evaluated in advance and are ready to be activated.

Creating mechanisms for monitoring and governance

Trade-policy uncertainty requires regular monitoring of legal changes, rates, codes covered, and retaliatory measures adopted by other countries.

Governance must define:

• Official sources to monitor.
• Frequency of reviews.
• Owners responsible for interpreting changes.
• Products and suppliers affected.
• Process for updating systems.
• Criteria for escalating a decision.
• Risk and performance indicators.

This information should be reviewed regularly by a cross-functional team with the authority to make decisions. Monitoring without a clear response process creates information, but not necessarily the capacity to act.

Implementing and monitoring mitigation measures

Selected measures should be turned into an implementation plan with owners, deadlines, resources, and expected benefits. Each action should clearly state the risk it aims to reduce and its impact on cost, service, and working capital.

Monitoring can include indicators such as:

• Reduction in duties paid.
• Reduction in total cost.
• Percentage of purchases from alternative sources.
• Number of products with validated ratings.
• Time required to activate alternative suppliers.
• Reduction in geographic concentration.
• Impact on inventory and delivery times.

Results should be compared against the initial scenario to confirm whether the measures are actually reducing risk. Whenever the expected benefits do not materialize, or new tariff changes arise, the plan should be revised.

This discipline turns tariff management from a one-off reaction into a permanent capability for supply chain adaptation and improvement.

From tariffs to supply chain resilience

Steel and aluminum tariffs affect far more than customs costs. They can squeeze margins, change sourcing decisions, increase inventory, and create risks for operational continuity.

To respond, companies should assess their exposure, calculate the total cost, diversify suppliers, and prepare alternative scenarios. With an integrated approach and continuous monitoring, tariff risk management can help build a supply chain that is more resilient, agile, and competitive.

At Kaizen Institute, we help companies structure their sourcing and procurement functions to respond to highly uncertain contexts, such as the current tariffs on steel and other metals. Our approach combines exposure analysis, total cost of ownership, supplier diversification, and scenario planning, with the goal of reducing costs, mitigating risks, and strengthening supply chain resilience.

Still have questions about customs tariffs?

Are U.S. steel tariffs still in effect?

Yes. Section 232 steel tariffs remain in effect and were strengthened and adjusted in 2025 and 2026, with changes to rates, covered products, and applicable conditions.

Are all steel products subject to the same tariff?

No. The rate depends mainly on the tariff classification and the category the product falls under, and it can also vary depending on the metal’s content and origin, the country of origin, and any specific treatments that apply.

Do customs tariffs increase prices?

They can. The importer may absorb the cost, negotiate it with the supplier, or pass it on, fully or partially, to customers, depending on margins and market conditions.

How can a company reduce its exposure to tariffs?

It should map exposed products and suppliers, validate the tariff classification, calculate the total cost of importing, diversify supply sources, and prepare scenarios and contingency plans.