Commerce Defines ‘U.S. Content’ for USMCA-Qualifying Mobile Industrial Equipment and Certain Parts

The notice was published in the Federal Register on October 14. It implements clause (2)(d) of Presidential Proclamation 11032 of June 1. That proclamation modified and consolidated the metals tariff regimes established under Proclamations 9704, 9705, and 10962, as amended.  

The newly released guidance matters most to importers of United States-Mexico-Canada Agreement (USMCA)-qualifying Canadian and Mexican goods covered by clause (2) of Proclamation 11032, which covers mobile industrial equipment such as forklifts and their parts; graders, levelers, shovel-loaders, backhoes, bulldozers, similar machinery, and their parts; tractors, mobile cranes, and mobile drilling derricks.  

Why US Content Matters: Clause (2)(d) of Proclamation 11032 

Clause (2) of Proclamation 11032 sets temporary section 232 duty rates for the aluminum and steel derivative articles listed in Annex I-C to that proclamation. These rates apply to goods entered on or after 12:01 AM EDT on June 8, 2026, through 11:59 PM EST on December 31, 2027. The default rate under clause (2)(a) is 25% unless a lower rate applies under clause (2)(b), (2)(c), or (2)(d). Clause 2(b) imposes a cap of 15% for goods of certain listed countries. Clause 2(c) imposes a 10% duty rate for goods made entirely of steel melted and poured, or aluminum smelted and cast in the United States. Clause (2)(d) provides a 25% duty rate only on the non-US content of USMCA qualifying goods. Clause 2(d) establishes a minimum total effective duty rate of 15% for goods taking advantage of this duty reduction.  

In practice, the more US content a qualifying product contains, the smaller the dutiable base for the 25% duty. The total effective duty, however, cannot fall below 15% ad valorem. Clause (3)(b) also provides that if a product is subject to multiple rates under clause (2), the lowest applicable rate applies. The new BIS guidance supplies the definition of “U.S. content” that clause (2)(d) directed the Secretary to provide.  

Definition of US Content 

The notice advises that, for purposes of implementing clause (2)(d), “U.S. content” means two things:  

1. Value of US-origin parts. This is the value of the product attributable to parts wholly obtained, entirely produced, or substantially transformed in the United States.  

2. Value of specified US metal inputs not already counted. To the extent not otherwise accounted for in the first component, this is the value attributable to steel melted and poured in the United States, aluminum smelted and cast in the United States, or copper smelted and cast in the United States.  

The “to the extent not otherwise accounted for” language means value is counted once, not twice. A US part that already qualifies under the first component cannot be counted again for its metal content under the second component.  

While the proclamation language refers to the US content as the “value attributable to parts produced in the United States,” the guidance extends that concept to parts wholly obtained or substantially transformed in the United States, and it separately credits US-melted and US-poured steel and US-smelted and US-cast aluminum and copper. This should benefit importers whose products incorporate US metal that does not take the form of a discrete US-made part. 

How the US Content Relief Works in Practice 

For the clause (2)(d) route, the calculation of the Section 232 tariff can be understood through the formula provided below. Let V equal the article’s total entered value and U equal its qualifying U.S.-content value. The Section 232 calculation can be expressed as: Section 232 Duty = 25% × [V – min (U, 40% × V)] 

Accordingly, it is the greater of 25% × (V − U) or 15% × V, before considering an independently applicable lower-rate route. This follows from Annex IV’s 40% cap on the US-content portion receiving relief.  

For a hypothetical $100,000 article, $20,000 of qualifying US content produces a $20,000 duty: 25% × $80,000. With $40,000 or more in qualifying US content, the clause (2)(d) duty reaches its $15,000 floor: 25% × $60,000. 

CBP’s instructions require two entry lines, using the same underlying Chapter 1–97 classification and country of origin, with USMCA Special Program Indicator “S”: 

• 9903.82.20: The dutiable value, including non-US content and any US content above 40% of total article value, at 25%. 

• 9903.82.21: Qualifying US content up to 40% of total article value, with no additional Section 232 duty. Other applicable duties are addressed separately; this is not a blanket exemption from all import charges.  

Scope and Effective Date 

The guidance applies to USMCA-qualifying products of Canada and Mexico that fall within the HTSUS codes listed in Annex I-C and are therefore subject to clause (2)(d). The guidance is effective for products entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 AM ET on October 14. The temporary clause (2) rates also change beginning January 1, 2028. 

This process is different from the process established to exempt US-content in automobiles and medium- and heavy-duty vehicles (which we covered here). That process requires application to, and approval by, the Department of Commerce on a model-by-model basis.  

A Separate Route for Manufacturing Inputs  

Although not addressed by the BIS notice, Proclamation 11032 also provides reduced rates for certain parts of aluminum, copper, or steel classified in chapters 84, 85, or 87 that will be used exclusively to manufacture agricultural equipment, fixed industrial equipment, or mobile industrial equipment. For eligible parts, the combined general and Section 232 duty is capped at 15%, or at 10% where at least 85% of the relevant metal content was melted and poured or smelted and cast in the United States. This route is available to imports from Canada and Mexico, as well as most other countries, and manufacturers importing qualifying inputs should evaluate it alongside the US-content route to amplify savings. 

Key Takeaways 

• US content is distinct from USMCA origin. USMCA qualification is a threshold requirement for clause (2)(d) treatment, but it does not determine the dutiable base. As a result, US-content valuation may need to be considered separately.  

• Part-level value may require closer analysis. Determining the value attributable to parts wholly obtained, entirely produced, or substantially transformed in the United States may require more detailed cost and sourcing information. 

• Metal supply chains may warrant additional documentation. Information regarding where steel was melted and poured and where aluminum and copper were smelted and cast may be relevant to determining US metal value not captured at the parts level.  

• The 15% floor may affect the applicable duty rate. For products with high US content, the minimum effective duty under clause (2)(d) may set the actual duty rate. The interaction with the other clause (2) rates should also be considered because the lowest applicable rate controls under clause (3)(b). 

• Substantiation will be important. Clause (2)(d) directs CBP to impose penalties, to the extent permitted by law, where an importer engaged in fraud or deliberately misled the government about US content, underscoring the significance of documentation supporting US-content claims. 

• CBP inquiries may require detailed records. Cost breakdowns and origin and processing records may become particularly relevant in responding to CBP inquiries. 

ArentFox Schiff’s International Trade and Customs & Import Compliance teams can help assess US-content positions and model duty exposure under Proclamation 11032. For more information, please contact the authors of this article or your ArentFox Schiff relationship attorney.