en.Wedoany.com Reported - The US Department of Commerce has set strict conditions for steel and aluminum producers in Canada and Mexico to reduce Section 232 tariffs, including submitting detailed capacity expansion reports and investment confirmation documents, international trade experts have warned.

In May this year, the US Department of Commerce launched a mechanism allowing suppliers of metals to the US automotive industry to reduce the current 50% tariff to 25%. Companies must commit to building or expanding crude steel and primary aluminum production capacity in North America, primarily in the United States, to qualify for this preferential rate.

Producers applying for tariff relief must submit a detailed capacity expansion plan, accompanied by financial, contractual, and production documents as supporting evidence. Companies are also required to regularly report on project progress and confirm that the metals they supply are directly linked to the approved investment plan.

Lawyers noted that the US Department of Commerce pays particular attention to the execution of key project milestones, including land acquisition, construction commencement, equipment installation, and production launch. Failure to meet these requirements could result in the cancellation of tariff preferences and require companies to pay back taxes at the full tariff rate.

Another mandatory condition is that the metal source must be fully traceable. Producers must provide documentation proving that the entire production cycle is completed within North America, specifically covering the melting and continuous casting processes for steel, as well as the smelting and casting processes for aluminum.

Experts emphasized that customs, production, and accounting documents must be strictly recorded and maintain data consistency. Any discrepancies in information could trigger scrutiny from US customs authorities, thereby jeopardizing a company's eligibility for the low tariff rate.

According to expert assessments, companies with integrated supply chains in the United States, Canada, and Mexico are most likely to leverage this new mechanism to reduce their tariff burden.

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