SECTION 232 STEEL AND ALUMINUM TARIFFS: CBP’S VALUATION METHODOLOGY FOR DERIVATIVE PRODUCTS NOW CHALLENGED IN U.S. COURT OF INTERNATIONAL TRADE

U.S. tariff policy continues to pose substantial challenges for importers, with increased rates, frequent changes, and evolving interpretations of applicable rules.

This is particularly evident for Section 232 duties on steel and aluminum derivative products under the Trade Expansion Act of 1962.  Following the June 2025 Presidential Proclamation increasing these tariffs to 50% (with duties applicable only to the value of the steel or aluminum content), importers relied on CBP’s public guidance, including CSMS #65236374, “UPDATED GUIDANCE: Import Duties on Imports of Steel and Steel Derivative Products” (dated June 3, 2025), to calculate duties based on the value of the metal content (often the acquisition cost of the steel or aluminum).

However, in December 2025, CBP’s Base Metals Center of Excellence and Expertise (CEE) issued informal guidance, reportedly via an unpublished memorandum, that shifted the interpretation and valuation methodology:

• For products consisting entirely of steel or aluminum, Section 232 duties apply to the full entered value of the article (including manufacturing, labor, overhead, profit, and other costs).
• For mixed-material derivative products (containing both subject metal and non-subject components), duties are assessed on the full entered value minus only the cost of non-metal materials/components. No deductions are permitted for processing, fabrication, machining, labor, surface treatments (e.g., galvanizing, anodizing, coating), factory overhead, or similar costs, even if these add value beyond the raw metal.
• If the metal content value cannot be substantiated, duties may apply to the full entered value.

This approach contrasts with earlier interpretations (and most importer practices) that allowed broader deductions based on the foreign manufacturer’s invoice cost (or some proxy therefore) for the raw metal content.  The CEE memorandum has been communicated to importers via requests for information (e.g., CBP Form 28/29) and notices of action, often resulting in higher assessed duties and demands for retroactive additional payments on prior entries.

The change, implemented through unpublished guidance rather than formal notice-and-comment rulemaking or published ruling modifications, has raised substantial legal concerns regarding procedural validity, consistency with presidential proclamations (which limit duties to metal content), and compliance with valuation statutes (19 U.S.C. § 1401a) and the Paperwork Reduction Act.

These issues prompted litigation.  On January 27, 2026, Express Fasteners Ltd., an Illinois-based importer, filed a complaint in the U.S. Court of International Trade (Case No. 26-00853, Express Fasteners Ltd. v. United States).  The plaintiff seeks reliquidation of entries and refunds of excess duties, asserting four primary claims against the CEE memorandum and CBP’s application of it:

• The memorandum is invalid and without legal effect because it was issued without required notice-and-comment rulemaking procedures.
• It fails to follow proper procedures for modifying or revoking prior rulings.
• It employs prohibited bases for appraisement of merchandise under U.S. valuation law.
• It violates the Paperwork Reduction Act.

We are actively monitoring this case, as its outcome could significantly affect importers of steel and aluminum derivative products facing similar CBP demands.  Many companies may need to file protective protests (within statutory deadlines) to preserve refund rights if the court rules against CBP’s position, or to evaluate other compliance strategies.

Our offices in Milan and New York are available to provide clarification, review specific entry scenarios, or assist with related inquiries.