Section 232 Tariffs: In-Depth Analysis of US Steel and Aluminum Import Restrictions
The 25% tariff on steel and 10% tariff on aluminum imposed under Section 232 of the US Trade Expansion Act have been forcing structural changes in Korean steel and aluminum exports since first taking effect in March 2018. Korea negotiated a separate arrangement with the United States, opting for a quota system (2.63 million tons per year) instead of the 25% tariff — but the risk of the full 25% rate applying immediately upon quota exhaustion remains. As of the first half of 2025, Korean steel exports to the United States stand at approximately USD 3 billion per year. Tariff Response 119 FAQ Part 4-1 compiles answers from customs brokers and trade law specialists to the 20 most frequently asked practical questions from corporate practitioners.
25%
Steel Tariff Rate
Section 232 base rate
10%
Aluminum Tariff Rate
Section 232 base rate
2.63M tons
Korea Steel Quota
Annual duty-free limit
$3B+
Steel Exports to US
Annual volume
90 days
Exclusion Review Period
Average processing time
20
FAQ Items
Practical Q&A guide
100,000+
Direct Employment
Korean steel sector
72–76
Applicable HS Chapters
Steel and aluminum
FAQ Part 1: Section 232 Tariff Fundamentals (Q1–Q8)
This section covers fundamental questions on the legal basis and structure of Section 232 tariffs, the scope of application to Korean-origin goods, and how the quota system operates. Practitioners who are new to this issue are recommended to start with this section.
Section 232 Tariff Fundamentals FAQ (Q1–Q8)
| Question | Key Answer | Practical Note |
|---|---|---|
| Q1. What is the legal basis for Section 232? | Section 232 of the Trade Expansion Act of 1962 — grants authority to restrict imports that threaten national security | Enacted and amended by presidential executive order |
| Q2. What products are covered? | Steel: all of HS Chapters 72–73 / Aluminum: all of HS Chapter 76 | Must verify specific HTS codes |
| Q3. Is Korea subject to a quota or a tariff? | 2018 Korea-US consultation: Korea chose a quota (2.63M tons/year) instead of the 25% tariff | Shipments exceeding quota are immediately subject to 25% |
| Q4. How is the quota allocated by quarter? | Annual quota divided equally across 4 quarters (657,500 tons per quarter) | No carryover between quarters; timing adjustment is essential |
| Q5. Is there a quota for aluminum from Korea? | No quota for aluminum — the 10% tariff applies directly (Korea was not included in aluminum consultations) | The 10% rate applies in full |
| Q6. Are derivative steel products included? | Some derivative products such as bolts and nuts are partially subject to expanded Section 232 (since 2020) | Re-verify your own HTS codes |
| Q7. Can Section 232 coexist with FTA benefits? | Section 232 tariffs are imposed separately, displacing the zero-tariff benefits under KORUS FTA | FTA zero-tariff treatment does not apply |
| Q8. Are refunds available? | A portion of import duties may be refunded via the drawback program; export documentation is required | Application deadline: 5 years from import date |
FAQ Part 2: Corporate Impact and Quota Management (Q9–Q14)
Practice-focused Q&A on quota exhaustion risk and monitoring methods, exclusion request procedures, and the legal risks of origin circumvention. This is the area most frequently asked about by Korean companies exporting steel to the United States.
01
Q9. What is the immediate response when the Korean steel quota is exhausted?
A: Once the quarterly quota is exhausted, the 25% tariff is immediately applied to any additional exports. Companies should use KOTRA Washington's real-time quota balance monitoring service (kotra.or.kr) to adjust quarterly export volumes in advance. When quota exhaustion is anticipated, deferring shipments to the next quarter or negotiating unit price increases with buyers is the realistic approach.
02
Q10. What is the exclusion application process and what is the approval rate?
A: Submit a product-specific Exclusion Request online to the US Department of Commerce (Bureau of Industry and Security, BIS). The application must include: ① the reason the product cannot be substituted by US domestic production, ② a purchase plan from the end customer, and ③ evidence of import necessity. Average review period is 90 days; if approved, tariff-free treatment is granted for one year (renewable). Approval rates vary by product and timing, but specialty steels and high-grade steels that are difficult to produce domestically in the US tend to have relatively higher success rates.
03
Q11. What are the legal risks of circumvention through third countries?
A: US Customs and Border Protection (CBP) has significantly intensified origin verification. Circumvention routing that fails to meet the Substantial Transformation standard can be penalized as origin fraud. Civil fines of up to four times the tariff amount and import prohibition measures may be imposed. Even when routing through Bangladesh, local processing must simultaneously satisfy both an HS 6-digit tariff classification change and the creation of 35% or more in added value.
04
Q12. Is legal origin change using a Bangladeshi factory possible?
A: If Korean steel semi-finished products are imported into Bangladesh and processed into metal goods (HS Chapter 73 → Chapters 82–84), the origin may shift to Bangladesh. As an LDC, Bangladesh benefits from GSP treatment, making it possible to export such products to the United States at lower tariff rates. However, it is essential to obtain advance legal verification through a CBP Ruling Request before proceeding.
05
Q13. Does Section 232 apply to steel imported into Korea for domestic use?
A: Section 232 applies only to imports entering the United States. Steel that Korea imports from the US is not affected, and the measure applies only to Korean-origin steel exported to the United States. If Korea imports steel from a third country (e.g., China), processes it, and then exports it to the United States, whether Section 232 applies is determined by the rules-of-origin criteria.
06
Q14. Can Section 232 tariffs and anti-dumping (AD) duties apply simultaneously?
A: For some Korean steel pipe and plate products, Section 232 tariffs and anti-dumping duties are imposed concurrently. Anti-dumping and countervailing duties (ADD/CVD) are accumulated separately on top of Section 232, and total tariff burdens reaching 30–50% are not uncommon. Practitioners handling affected products must review the International Trade Commission (ITC) determination history.
Corporate Response Strategies — Tailored by Size and Sector
The corporate response to Section 232 tariffs should be approached in three phases: short-term, medium-term, and long-term. Leveraging Asian production bases including Bangladesh is emerging as a core element of medium-term strategy.
Short-Term Response (Immediate ~ 3 Months)
Exclusion RequestsSpecialty & high-grade steel
Quota MonitoringQuarterly export adjustment
Price NegotiationTariff burden sharing
DrawbackClaim refunds on past imports
Medium-to-Long-Term Response (6 Months ~ 2 Years)
Production BaseBD / Mexico / Canada
Higher-Value MixSpecialty & stainless steel
M&AAcquire US production entity
Market DiversificationExpand to EU and ASEAN
Key Korean Steel Export Items to the US and Section 232 Impact (2025 Estimate)
| Product | HS Code | Annual Export Value | Section 232 Rate | Quota Coverage |
|---|---|---|---|---|
| Hot-rolled coil | 7208 | $800M | 0% within quota | Included in 2.63M tons/yr |
| Cold-rolled coil | 7209 | $500M | 0% within quota | Included in 2.63M tons/yr |
| Steel pipe & tube | 7306 | $400M | 0% or 25% | Some overlap with ADD |
| Stainless steel | 7219 | $300M | Many exclusions filed | High exclusion approval rate |
| Aluminum rolled products | 7606 | $200M | 10% fixed | No quota — taxed in full |
Impact Assessment
Verify HTS codes; review Section 232 and ADD overlap
→↓
Exclusion Request
Submit Exclusion Request to BIS (specialty steel first)
→↓
Quota Monitoring
Check quarterly quota balance; optimize export timing
→↓
Medium-Term Strategy
Assess BD processing, US investment, and market diversification
→↓
Long-Term Positioning
Shift to high-value-added products; move away from commodity steel
FAQ Part 3: Advanced Practical Topics (Q15–Q20)
Q&A on advanced issues that arise frequently in practice — including FTZ utilization, customs valuation, and importer recordkeeping. Especially useful for legal and customs compliance teams.
01
Q15. Can Section 232 tariffs be reduced by using a US Foreign Trade Zone (FTZ)?
A: Within an FTZ, the tariff on raw materials (steel or aluminum) can be substituted with the finished goods tariff rate. For example, if aluminum window frames (tariff rate 0%) are manufactured in an FTZ using aluminum raw materials (tariff rate 10%), the inverted tariff benefit reduces the effective rate to 0%. However, the actual manufacturing process must take place within the FTZ, and prior approval procedures are required.
02
Q16. What is the origin of goods after tolling or processing and re-export?
A: If Korean steel material is temporarily exported to the United States for processing and then re-imported (Temporary Importation), the origin after processing may shift to the processing country (the United States). Conversely, if US-origin steel is processed in Korea and then re-exported to the United States, whether the product is classified as Korean-origin depends on whether substantial transformation has occurred.
03
Q17. What is the basis for customs valuation under Section 232?
A: Section 232 tariffs are assessed on an FOB (Free on Board) basis, not on a CIF (cost, insurance, and freight) basis. The taxable value may vary depending on the transaction price, currency fluctuations, and whether royalties and fees are included. Importers of Record must retain all relevant documentation for five years in accordance with CBP regulations.
04
Q18. What is the scope of downstream aluminum products?
A: Since 2020, the United States has added certain aluminum alloy products to the scope of Section 232. Secondary processed goods including aluminum cans, extruded products, and castings may also be covered under HS Chapter 76. Whether a specific product falls within scope can be officially confirmed by submitting a Product Scope inquiry to the US Department of Commerce.
Tariff Response 119 FAQ Part 4-2Automobile 25% tariff Q&A — detailed guide to response strategies for finished vehicles and auto parts
Tariff Response 119 FAQ Part 5Comprehensive guide to government support programs — KOTRA, KSURE, KExim Bank, and KOSME
Tariff Response 119 Webinar VideoExpert lecture key summary — download guide for the 254MB video
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