Section 232 tariffs, which primarily affect imported metals and derivative products, were originally implemented during President Trump’s first term. According to the Administration, the tariffs are intended to support domestic industries and address national security concerns related to imports.

The new Proclamation makes the following adjustments to the tariffs, effective June 8 through the end of 2027:

• A temporary tariff reduction from 25% to 15% on certain types of ag, construction and mobile industrial equipment identified in Annex I-C when imported from qualifying trade-deal countries. (See full list of equipment below.)
• A lower threshold for products to qualify as being made “entirely” from U.S. steel, from 95% to 85%.
• 10% lower tariffs on products made in another country with at least 85% U.S. metals, measured by weight.
• Special provisions for USMCA products, including a 25% duty on only the non-U.S. content of the product.

The White House said the modifications are intended to address national security concerns while encouraging investment and domestic production in sectors including agriculture, housing and manufacturing.

In the Proclamation, President Trump stated that the temporary modifications take into account the role these products play in U.S. economic activity while maintaining the broader tariff framework established under previous Section 232 actions.

The changes could reduce tariff costs for some equipment manufacturers that source components globally or manufacture products outside the United States. The relief comes as OEMs continue to report mixed financial results, with many citing tariffs among the factors affecting their businesses.

Recent reports from OEMs highlight the ongoing impact:

Caterpillar: Consolidated operating profit rose 20% to $3.1 billion in the first quarter, driven by a $940 million positive sales volume impact but offset in part by an additional $710 million in manufacturing costs, including higher tariff-related expenses. The company estimated its full-year 2026 tariff costs between $2.2 billion and $2.4 billion. CFO Kyle Epley said during the earnings call that the estimate does “not currently include any IEPA-related refunds as the result of the Supreme Court’s decision.”

CNH Industrial (parent company of Case and New Holland): Global net sales in CNH’s construction equipment segment were down 3% year-over-year to $574 million. In the first quarter, the construction business posted a $28 million loss in adjusted earnings before interest and taxes. Contributing factors included lower sales volumes in North and South America, higher tariffs, higher trade show marketing costs and labor cost inflation, partially offset by improved equipment pricing.

Komatsu: While the Japanese manufacturer finished its 2025 fiscal year with global and North American construction, mining and utility equipment sales up year-over-year, operating income declined. Global construction, mining and utility equipment net sales increased 0.2% to $24.1 billion, while operating income for the segment fell 18% to $3.1 billion.

Kubota: Consolidated revenue for the first quarter increased 13.7% to $5.1 billion, and operating profit rose 59.1% year-over-year to $616.4 million. The company cited higher sales volumes and pricing adjustments in North America as key drivers, while noting approximately $150 million in additional costs related to U.S. tariffs.

Volvo CE: Volvo CE is shuttering its Rokbak articulated hauler business, citing rising operational and supply chain costs and global trade challenges, including U.S. tariffs. The company said these factors have significantly affected financial performance.

In response to the Proclamation, the Association of Equipment Manufacturers (AEM) issued a statement supporting the changes, stating that the tariff reductions could help lower input costs and ease supply chain pressures for equipment manufacturers and farmers. AEM also said the action reflects the challenges manufacturers face when expanding domestic production capacity while remaining globally competitive.

Source:

For shortline farm equipment manufacturers, this means you’ll need to determine whether any of your imported products are affected and accurately report the steel and aluminum content value when submitting entry documents to U.S. Customs and Border Protection.

While there’s no one-size-fits-all solution, here’s a summary of what could help you, along with strategies and tips from Marc Schneider, a business advisor at the Center for Industrial Research and Service (CIRAS) at Iowa State University:

Mitigation Strategies

These approaches can help reduce the financial impact if your products are subject to the 50% tariff:

• Steel Valuation vs. Total Price
  The 50% tariff applies only to the steel content value within an imported product—not the total price. This may include the cost of steel components but exclude non-steel parts, processing, and overhead.
  • Work with suppliers to break out steel vs. non-steel costs on your invoices.
  • Request a certificate of steel content from suppliers if your products include mixed materials (e.g., 50% plastic, 50% steel).
• Duty Deferment
  To assist with cash flow management, consider using a bonded warehouse. Your goods remain legally “in transit” until they’re used, which can delay payment of the tariff — though it will still apply eventually.
• First Sale Pricing
  If you buy steel through a wholesaler, you may be able to declare the import value based on the original producer’s price rather than the reseller’s price. However, this requires transparency from middlemen, which can be challenging.

Avoidance Strategies

These options focus on reducing or avoiding the 50% tariff altogether:

• Source from Countries with Lower Tariffs
  Some countries currently face reduced rates:
  • United Kingdom: 25%
  • South Korea: Possibly 15% (not yet finalized)
  • European Union: Reduced rates are under negotiation
  • Canada & Mexico: Potential lower rates under USMCA rules
    Also consider the “melt and pour” requirement, which determines tariff eligibility based on where the steel was melted and poured, not just where it was finished.
• Source Domestically (0% tariff)
  Domestic steel may be more expensive upfront but could be cost-effective overall once tariffs, freight, and import fees are factored in. CIRAS offers a Total Cost of Ownership (TCO) model to help evaluate options.
• Re-Engineering Products
  In some cases, redesigning equipment to use less steel or alternative materials could help reduce exposure to tariffs, though feasibility depends on the application.

Industry Trends: The “Wait-and-See” Approach

Many manufacturers are holding off on major changes while waiting for:

• Trade negotiations with specific countries to conclude
• Ongoing court cases that could affect the federal government’s tariff authority (courts have upheld Section 232 tariffs, but challenges remain around measures based on the International Emergency Economic Powers Act (IEEPA)
• Adjustments in global production locations and trade flows

Key Recommendation

Because the rules are complex and the stakes are high, we strongly recommend working with a formal import expert:

• Licensed customs broker
• Freight forwarder
• International trade attorney

These experts can help you calculate the correct steel and aluminum values for your shipments and ensure compliance.

Disclaimer

CIRAS’s mission is to summarize what we are seeing in the industry, share best practices, and to help manufacturers navigate their way through some of these changes. We are NOT legal experts, international customs agents or political advisors so the members of FEMA should always seek professional legal or customs advice where needed.

FEMA Member Legal Benefits

This article was prepared with guidance from John Turlais, partner at Foley & Lardner LLP, who provided insight into the legal considerations surrounding Section 232 and IEEPA-based tariffs.

As part of your membership, FEMA members are eligible for a free, 60-minute confidential legal consultation with attorneys at Foley & Lardner LLP who specialize in dealer contract law. To schedule a consultation, contact Foley & Lardner at (414) 319-7303.