On January 5, 2024, U.S. Customs and Border Protection (CBP) issued guidance via its Cargo Systems Messaging Service announcing new thresholds for deactivating Section 232 steel and aluminum product exclusions prior to reaching 100% of the allocated quantity under any granted exclusion. CBP has announced that effective February 15, 2024, for certain types of Section 232 exclusions, it will deactivate Section 232 exclusions on a weekly basis “when the imported quantity for each exclusion is greater than or equal to 95 percent of the allocated quantity.”
This is a change from the current practice of deactivating Section 232 exclusions when the imported quantity of each exclusion reaches or exceeds 100% of the allocated quantity and is due, in part, to a recent Government Accountability Office (GAO) report indicating that an estimated $32 million in unpaid duties resulted from invalid exclusion use as of November 2021. The GAO report notes that CBP has to manually deactivate exclusions in the Automated Commercial Environment (ACE) system and that the lag time in doing so “allows importers to overclaim exclusions and not pay duties on the overage.” CBP announced that the following Section 232 exclusions will be deactivated at the 95% threshold:
- Exclusions for non-quota countries (i.e., those subject to Section 232 duties);
- Exclusions for European Union (EU) countries that are subject to Section 232 steel tariff rate quotas (TRQs); and
- Exclusions valid for multiple countries subject to both Section 232 duties and any quotas.
When such Section 232 exclusions are deactivated at the 95% threshold in ACE, importers will no longer be able to use the Section 232 exclusions on new entry summaries and will have to deposit the appropriate Section 232 duties on any new entry summaries. However, these importers will be able to file Post Summary Corrections (PSC) to claim the remaining exclusion amounts up to 100% and request a refund of any Section 232 duties paid.
Section 232 tariffs on steel and aluminum were imposed in 2018 by former President Donald Trump under the Trade Expansion Act of 1962 after investigations into the impact of steel and aluminum imports on U.S. national security. Since then, the Department of Commerce’s Bureau of Industry and Security (BIS) has been responsible for administering the product exclusion process that allows U.S. businesses to request exemptions for specific steel and aluminum imports from the 25% tariff. CBP is the agency that monitors imports, the Section 232 exclusions, and the collection of tariffs.