IN Brief:
- The US Commerce Department has set procedures for tariff adjustments under Proclamation 10984.
- Eligible Canadian and Mexican steel and aluminium producers can seek reductions tied to new US production capacity.
- The adjustment is limited to qualifying USMCA imports supporting automotive and medium/heavy-duty vehicle supply chains.
The US Department of Commerce has established procedures for certain Canadian and Mexican steel and aluminium producers to seek adjusted tariffs if they commit to new US production capacity.
The process applies under Proclamation 10984 and is tied to steel and aluminium used in automobile, medium-duty vehicle, heavy-duty vehicle, and related parts supply chains. Eligible producers may apply for tariff reductions based on newly committed US production capacity, with the adjusted tariff rate no lower than 25%.
Steel and aluminium producers operating facilities in Canada or Mexico can submit documentation to the Department of Commerce. Qualifying imports must be eligible for preferential treatment under the US-Mexico-Canada Agreement. Steel must be melted and poured in Canada or Mexico, while aluminium must be smelted and cast in Canada or Mexico.
The measure is designed to support US production capacity for key products by encouraging North American producers to build or expand primary steel and primary aluminium capacity in the United States. Primary steel refers to steel produced in a basic oxygen furnace, electric arc furnace, or other steelmaking furnace in the US. Primary aluminium refers to aluminium produced in a US smelter.
Eligibility is narrower than a general tariff relief process. Applicants must produce steel or aluminium in Canada or Mexico and supply, directly or indirectly, US producers of automobiles or medium- and heavy-duty vehicles. The qualifying commitment must expand US capacity for primary steel or primary aluminium supporting automobiles, automobile parts, medium- and heavy-duty vehicles, or their parts.
Approved tariff adjustments will be limited to quantities equal to the projected annual new production capacity accepted by the Department of Commerce. The adjustment will also run for a fixed period determined by the department, taking account of the scale of the commitment, national security benefits, project timing, and other relevant factors.
Applicants must provide detailed documentation certified by a senior officer such as a chief financial officer or general counsel. Submissions must include the applicant’s production locations, volumes, product types, US customers, proposed project location, production details, annual capacity, equipment suppliers, construction contractors, raw material requirements, hiring plans, and milestone commitments.
Required milestones include land purchase, facility design completion, construction-team appointment, construction start, equipment purchase, equipment delivery and installation, construction completion, and first production heat. The level of detail turns the process into an investment-led industrial programme rather than a conventional tariff exclusion route.
The change arrives during a period of unstable trade compliance planning for US-linked supply chains. Importers are already assessing legal options over Trump tariff litigation, with tariff exposure feeding directly into landed cost, supplier negotiations, customs entries, and refund risk.
The metals adjustment route adds a different pressure point. Instead of rewarding compliant origin alone, it links tariff relief to future US production. Industrial capacity, automotive supply security, and trade policy are now part of the same commercial calculation. Canadian and Mexican producers seeking lower tariff exposure will need to demonstrate investment commitments that create new US capacity, not simply reconfigure existing plants.
For North American automotive and heavy-vehicle supply chains, the procedure could reshape supplier negotiations. Steel and aluminium inputs sit deep inside vehicle structures, frames, body panels, trailers, and components. Even when the tariff is charged at the metal or semi-finished product level, the cost can move through several tiers of suppliers before reaching original equipment manufacturers.
The adjustment also reinforces the strategic role of USMCA compliance. Preferential treatment under the agreement is not enough on its own, but it is a precondition for qualifying imports. That places renewed emphasis on origin documentation, supplier declarations, product classification, casting or melting evidence, and traceability through the North American metals supply chain.
Uptake may be limited by the scale of investment required. Building or expanding primary metals capacity is capital-intensive, energy-intensive, and subject to permitting, labour, raw material, equipment, and financing constraints. Smaller producers may struggle to justify the investment purely for tariff adjustment, while larger groups will have to weigh the value of relief against the cost and timing of new US production.
Tariff policy is increasingly being used to direct supply-chain geography. North American metals producers now face a choice between absorbing high tariff exposure, changing customer and lane strategies, or making production commitments that align with US industrial policy. Market access is being linked more tightly to regional capacity, and procurement teams will need to follow those capacity decisions as closely as the duty rates themselves.