Omar Nashashibi
Founder

The Tariff Feedback Loop

During the first six months of the second Trump administration, importers rushed orders of equipment, machinery and metals to avoid higher tariffs. Meanwhile, often those same manufacturers told customers to shift orders to their U.S. businesses to avoid similarly high tariffs. This paradox shows how tariffs have become their own positive feedback loop, ever expanding and growing stronger with each new round.

Recently, the tariff landscape facing U.S. manufacturers evolved into a more complex sectoral system, rather than the simpler reciprocal tariffs on nearly all goods from virtually every country. For CEOs in the metal forming industry, the question no longer is whether tariffs matter, but how far the reach will extend; where do opportunities exist; and how can companies prepare as the Trump administration expands the list of imports subject to tariffs. 

The president faces numerous legal challenges to his tariffs imposed on all countries under the International Emergency Economic Powers Act of 1977 (IEEPA). Many legal scholars question the administration’s authority under this law to impose tariffs, an action not taken in its nearly 50-yr. history. As country-specific tariffs face scrutiny in the courts, the president is expanding his use of a law that the U.S. Supreme Court held he may use for imposing tariffs—Section 232 of the Trade Expansion Act of 1962. During the first Trump administration, the president used these Section 232 national security tariffs to impose a 25% rate on steel imports and 10% on aluminum. Today, each of those materials faces a 50% tariff with no country exemptions, as do imports of copper and copper alloys. However, unlike his previous term, in this round President Trump is expanding the tariffs to cover goods containing steel, aluminum and copper. 

Known as the derivatives-inclusion process, the U.S. Department of Commerce three times annually permits businesses to request that the government expand the 50% tariff to cover the value of the steel or aluminum, and eventually copper, in the imported product. The intention is to establish a process that targets downstream products where the administration believes that importers are circumventing tariffs on raw materials by bringing in finished or semi-finished goods. In August, the Trump administration added more than 400 such imports made of steel or aluminum to the tariff-eligibility list, with less than 72-hr. notice.  

Under Section 232, Commerce has the authority to designate additional products if it determines that they are being imported in a way that undermines the effectiveness of the tariffs on primary metals. A real-world example now facing a tariff on steel content: As of August 18, 2025, at 12:01 a.m. EDT, imported dies for stamping and drawing (HTS 8207.30.60) now are on the 232 steel-tariff derivative list with a 50% tariff on the value of the steel.

A U.S. manufacturer importing dies from Italy or Japan now must pay a 50% tariff on the value of the steel in that product. Metal formers should look closely at the lists taking effect on August 18, and future lists, to identify whether any of the equipment or machinery imported faces a tariff on the value of the steel or aluminum content. They should further prepare for an expanded round of tariffs on additional derivatives later in the fall. 

Calculating the value of the steel or aluminum in these imports is almost an insurmountable burden for many small businesses. Upon importation of a product listed as a derivative on one of the Section 232 national security tariff lists, an importer must report the total value of the steel or aluminum in the derivative, the remaining value of the import, and the quantity of the steel or aluminum in kilograms. The non-metal value in the product faces the country-specific tariff of 10 to 41%, requiring that the importer also identify the country of origin in which the product was manufactured or substantially transformed. One business recently reported that U.S. Customs assessed the 50% tariff to the entire value of a component due to the importer not properly identifying the steel content.