Source: YI CAI

Author: Feng Difan

Yan Guangpu cautioned that the Trump administration still has multiple ongoing Section 232 investigations.

According to reports from CCTV News Client, on June 3rd local time, the White House issued a statement announcing that US President Trump has increased tariffs on imported steel, aluminum, and their derivative products from 25% to 50%. This tariff policy takes effect from 00:01 AM Eastern Time on June 4, 2025.

The White House's "Executive Order on Adjusting Imports of Steel and Aluminum Derivative Articles into the United States" cites national security as the primary reason for this tariff adjustment.

Jian GUAN, a partner at Beijing Grandwin Law Firm, explained to a China Business News reporter that the previous Section 232 investigation on steel and aluminum products only determined that imports of these products posed a national security risk. The specific measures to be taken and the tariff rates were left to the US President's discretion. Regarding this increase from 25% to 50%, Jian GUAN stated that Trump could simply find any reason, "such as claiming the current measures are insufficient to protect national security and need modification," to make the adjustment.

Yan Guangpu, a anti-dumping financial expert at Daoyue Legal Consulting, cautioned that the Trump administration still has multiple ongoing Section 232 investigations. Close observation is needed to see if they face the same fate. Compared to so-called "reciprocal tariffs," Section 301 and Section 232 investigations are more worrisome for most foreign trade enterprises.

Once Again, "National Security"

The aforementioned executive order signed by Trump states: "After considering factors including recent information provided by the Secretary (of Commerce), I determine that it is necessary to increase the tariffs on the steel and aluminum derivative articles described above to adjust imports of steel and aluminum derivative articles so that such imports will not threaten to impair national security."

"Although the prior tariffs on steel and aluminum articles have helped provide critical price support for the United States market, they have not yet enabled these industries to develop and sustain capacity utilization rates needed for the health of these industries and for defense requirements," the executive order states. "I determine that increasing the prior tariffs will provide greater support to these industries and reduce or eliminate the threat to national security posed by imports of steel and aluminum derivative articles."

However, the executive order mentions an exception: it is necessary and appropriate to permit implementation of the "U.S.-U.K. Economic Prosperity Deal" of May 8, 2025, and accordingly grant differential treatment to imports of steel and aluminum derivative articles from the United Kingdom.

This means US tariffs on steel and aluminum imports from the UK will remain at 25%, sparing the UK from the tariff increase and allowing both countries to negotiate new tariffs or quotas by the July 9th deadline as part of the framework for reducing steel trade barriers.

However, although one of the key elements of the US-UK EPD is striving to reduce steel trade barriers, the two sides have yet to agree on the extent of concessions for British steel, and the agreement has not yet taken effect.

Beyond this, Yan Guangpu explained that US Customs has successively issued three guidance documents concerning import tariffs on steel and steel derivatives, and aluminum and aluminum derivatives, with detailed content involving certain exemptions under the USMCA.

"Future Section 232 and 301 Investigations More Worrisome"

It is worth noting that a series of tariff measures currently introduced by the Trump administration through executive orders are facing legal challenges. Recently, both the U.S. Court of International Trade (CIT) and the U.S. District Court for the District of Columbia (USDC-DC) ruled that the US President exceeded his authority by using the International Emergency Economic Powers Act (IEEPA) to impose tariff measures. However, tariffs imposed under Section 232 and Section 301 investigations have not been affected by these court rulings.

According to a China Business News reporter's review, industries including semiconductors, pharmaceuticals, lumber, copper, heavy trucks, and critical minerals are currently subject to US Section 232 investigations.

Yan Guangpu told the reporter that future Section 232 and Section 301 investigations targeting specific industries—that is, investigations initiated against a particular sector or industry—are more worrisome, and it now appears they can also break through the 25% tariff rate limit.

Deborah Elms, Head of Trade Policy Analysis at the Hinrich Foundation, argued in a recent article that the US has so far been unwilling to reduce its overall so-called "reciprocal tariff" rates below 10%, which may become the new baseline for US import tariffs. She believes that even if "reciprocal tariff" rates ultimately decrease or are capped at 10%, an increasing number of bilateral trade flows could still face high tariffs in the coming months and years.

"While the first two rounds of Section 232 tariffs were set at 25%, there is no reason to assume this rate will apply to other industries. Products like laptops, mobile phones, pharmaceuticals, and plywood could face tariffs significantly higher or lower than 25% in the future. Uncertainty will continue," she wrote. "Last December, the average US tariff on goods was just 2%. For many companies, a 10% tariff is enough to wipe out all their profit margins. The sharp rise and subsequent fall in tariff levels over the past few weeks might superficially suggest trade conditions have returned to square one, but that's not the case. Instead, it serves as a reminder that trade patterns are entering a period of sustained high uncertainty, and future trade costs will be higher."

"Sudden policy shifts have already caused and will continue to cause significant economic damage," Elms believes.

Ma Hong, Professor and Deputy Chair of the Economics Department at Tsinghua University's School of Economics and Management, also recently told a Yicai Global reporter that imposing steel and aluminum tariffs would instead reduce the competitiveness of US exporters.

He stated: "Currently, US manufacturing relies heavily on imported industrial intermediate goods. Imposing tariffs will drive up domestic production costs in the US, harming rather than enhancing its international market competitiveness. For example, the US imposed tariffs on steel and aluminum imports under Section 232, ostensibly protecting domestic production, but it raised costs for downstream machinery and automotive companies, leading to market contraction."

On the 3rd, the OECD released a report stating that due to factors including Trump's tariff policies, the US economy is losing momentum, and its growth forecast for this year has been revised down from 2.2% to 1.6%.