U.S. President Donald Trump issued Presidential Proclamation on Adjusting Imports of Steel into the United States on 10 February 2025. This Proclamation reinstated 25% tariffs on steel imports under Section 232 of the Trade Expansion Act of 1962, terminating exemptions previously granted to key trading parties such as Canada, Mexico, the European Union (EU), Japan, South Korea, and others, due to what the U.S. administration called “persistent national security risks” and increased imports from exempted countries since the original tariffs were imposed in 2018.

The proclamation also expands the scope of the original 232 tariffs to cover derivative products.

These tariffs are set to take effect on 12 March 2025, but Canada and Mexico secured temporary suspensions following bilateral agreements.

Here is an explanation of the key elements and implications of this proclamation:

Background

1. Original Section 232 tariffs: In March 2018, President Trump imposed a 25% tariff on steel imports from most countries, citing threats to U.S. national security due to over-reliance on foreign steel and global overcapacity, particularly driven by China.
2. Exemptions and alternative agreements: Over time, exemptions were granted to countries like Canada, Mexico, the European Union (EU), Japan, South Korea, and others based on negotiated agreements or specific conditions.

Proclamation on Adjusting Imports of Steel into the United States

1. Termination of exemptions: The proclamation terminates previous exemptions and alternative agreements for steel imports from Argentina, Australia, Brazil, Canada, Mexico, South Korea, Japan, the EU, the United Kingdom (UK), and Ukraine. As of 12 March 2025, steel imports from these countries will again be subject to the original 25% tariff.
2. Rationale for termination:
   • Increased Imports: Imports from exempted countries have surged significantly since their exclusions were granted.
   • Global overcapacity: Excess global steel production—driven by non-market economies like China—continues to distort trade and harm U.S. producers.
   • National security concerns: The Secretary of Commerce determined that these increased imports undermine domestic steel production and capacity utilization rates necessary for national security.

1. Expansion to derivative products: The proclamation extends tariffs to additional derivative steel products (e.g., fabricated structural steel) that were not previously covered but are seen as undermining domestic producers.
2. Elimination of product exclusion process: The process allowing U.S. companies to request exclusions for specific steel products not produced domestically in sufficient quantity or quality has been terminated due to its perceived abuse and administrative burden.

Key points:

• Derivative products: The proclamation also extends the tariffs to additional derivative steel products (e.g., fabricated structural steel), which were not previously covered.
• Termination of exemptions: All prior exemptions, alternative agreements, or tariff-rate quotas for these countries have been revoked as of 12 March 2025.
• Product exclusion erocess: The product exclusion process allowing relief for certain products not produced domestically has been terminated, effective immediately.
• Proclamations referenced: The tariffs are implemented pursuant to the original Section 232 measures under Proclamation 9705 (steel) and Proclamation 9980 (derivative steel). These proclamations are reactivated by this February 2025 proclamation.
• Monitoring and enforcement: U.S. Customs and Border Protection (CBP) is tasked with strict enforcement, including penalties for misclassification or evasion of tariffs.

Implications

1. Domestic steel industry support: By reinstating tariffs broadly and eliminating exemptions, the proclamation aims to bolster U.S. steel producers by reducing foreign competition and encouraging domestic production.
2. Impact on trade partners: Countries previously benefiting from exemptions or alternative agreements may face economic challenges in exporting steel to the U.S., potentially straining diplomatic relations.
3. Global trade tensions: The move could escalate trade disputes with key allies like Canada, Mexico, the EU, and Japan while intensifying scrutiny on China's role in global overcapacity.
4. Economic effects in the U.S.: While supporting domestic producers, higher tariffs may increase costs for industries reliant on imported steel (e.g., construction, automotive) and potentially lead to higher consumer prices.

WTO panel report under appeal had confirmed that the original 232 tariffs were WTO-inconsistent

President Trump's 10 February 2025 proclamation reinstated the original Section 232 tariffs of 25% on steel, which were first imposed in 2018 to address national security concerns and subsequently deemed as WTO-inconsistent by the WTO panel in US – Steel and Aluminium Products. Below is a summary of the panel's findings in that case:

Key findings of the panel

Violations of GATT 1994 commitments:

• The panel found that the U.S. tariffs on steel and aluminum exceeded the bound tariff rates in the United States' WTO Schedule of Concessions, violating Article II:1 of the GATT 1994.
• The exemptions granted to certain countries (e.g., Canada, Mexico, and others) from these duties were inconsistent with the most-favored-nation (MFN) principle under Article I:1 of the GATT 1994.
• The quotas imposed on steel and aluminum imports from specific countries contravened Article XI:1 of the GATT 1994, which prohibits quantitative restrictions on imports.

Applicability of safeguards rules:

• The panel examined whether these measures fell under Article XIX of the GATT 1994 or were subject to the Agreement on Safeguards. It concluded that they did not, as they were implemented "pursuant to" Article XXI (Security Exceptions) rather than Article XIX. Consequently, the Agreement on Safeguards was deemed inapplicable.

Interpretation of Article XXI ("Security Exceptions"):

• The United States invoked Article XXI(b) of the GATT 1994, claiming that its tariffs were necessary to protect "essential security interests" during a "time of war or other emergency in international relations" as per subparagraph (iii).
• The panel clarified that it had the authority to review whether the invocation of Article XXI met objective criteria under WTO rules.
• It determined that an "emergency in international relations" must involve grave or critical international tensions affecting relations between states.
• After assessing evidence, the panel concluded that the U.S. measures were not taken during a "time of war or other emergency in international relations" as defined by Article XXI(b)(iii). Therefore, these measures could not be justified under the security exceptions.

Implications of the decision

The panel's rulings in US – Steel and Aluminium Products reaffirmed that WTO members cannot unilaterally invoke Article XXI without meeting its objective criteria. While recognizing members' right to safeguard essential security interests, it emphasized that such measures must align with multilateral trade rules.

Mexico and Canada's bilateral agreements

The tariffs for Mexico and Canada will not apply starting March 12, as both countries reached special arrangements with the U.S. These agreements come as part of broader bilateral negotiations on border security and trade cooperation.

1. Key Terms of the Agreements:

   • Military deployment on borders: Both Canada and Mexico agreed to increase military presence along their respective borders with the U.S. to address key security priorities, including immigration control and restricting fentanyl trafficking.

   • Steel trade quotas: Both countries agreed to implement tariff-rate quotas for certain steel exports, ensuring volumes remain consistent with historical trade flows between 2022 and 2024. Any volumes exceeding quota limits will be subject to the 25% tariff.

   • Monitoring commitments: Canada and Mexico agreed to enhanced tracking of steel shipments to prevent transshipment of goods originating from non-market economies, such as China, through their territories.

Global reactions

1. European Union: The EU strongly opposes the reinstated tariffs and has announced plans to impose retaliatory tariffs on $7.5 billion worth of U.S. goods, including iconic American products such as whiskey and motorcycles. Concurrently, the EU is taking steps to revive its WTO challenge against U.S. Section 232 measures, despite the continued paralysis of the WTO Appellate Body.

2. Japan and South Korea: Japan is negotiating a potential quota-based solution to avoid the tariffs, while South Korea has publicly criticized the move, citing disruption to its steel sector.

3. China: While Chinese steel exports to the U.S. remain negligible due to existing anti-dumping duties, China has strongly condemned the tariffs as “protectionist unilateralism.” The Ministry of Commerce has called for compliance with WTO rules, though no formal dispute has yet been filed. State-owned media emphasized that the U.S. tariffs unfairly target allies rather than addressing global overcapacity driven by China.

4. Switzerland: Swiss officials expressed concerns over the broader destabilizing effect of U.S. tariffs on global trade. While Switzerland noted that its direct steel exports to the U.S. are minimal, it is expected to coordinate any retaliatory measures with the EU.

Legal and trade Implications

1. For affected countries: The reinstatement of Section 232 tariffs puts significant pressure on exempted countries to negotiate bilateral arrangements, as seen with Canada and Mexico. However, the termination of country exemptions and quotas for others exposes them to both economic and diplomatic risks.

2. For U.S. domestic policy: The expansion of tariffs to derivative products and the elimination of exclusions aim to strengthen U.S. steel producers. However, this may increase costs for downstream industries such as construction, automotive manufacturing, and energy.

3. WTO enforcement challenges: The WTO US – Steel and Aluminium Products panel found Section 232 tariffs inconsistent with U.S. trade obligations, but with the Appellate Body non-operational since 2019, enforcement avenues remain limited. This lack of accountability continues to erode confidence in the multilateral trade system.

Conclusion

The reinstatement of Section 232 steel tariffs reaffirms the U.S.'s reliance on national security justifications for trade protectionism, despite persistent legal and diplomatic challenges. The bilateral agreements with Canada and Mexico highlight the importance of strategic cooperation in addressing broader security and economic priorities in North America.

As global reactions unfold, businesses and policymakers must prepare for an increasingly fragmented trade landscape, characterized by tariff volatility and reliance on bilateral negotiations over multilateral solutions. Stakeholders should closely monitor the evolving regulatory environment and assess how these measures impact global supply chains. As these debates continue, they will shape not only U.S. trade policy but also the broader framework of international economic law.

De Minimis Law has substantial experience advising clients on WTO and USMCA rules and related trade policies, including those pertaining to national security. For further updates or assistance in navigating these complex trade issues, please contact our office.