Forty Percent or Bust: Commerce Defines ‘US Content’ for USMCA Metals-Derivative Equipment, and the Definition Matters Less Than the Cap

Key Points

• On October 14, 2026, BIS published guidance defining “U.S. content” under clause (2)(d) of Proclamation 11032 to include U.S. parts and, to the extent not otherwise accounted for, U.S.-melted-and-poured steel, U.S.-smelted-and-cast aluminum, and U.S.-smelted-and-cast copper.
• Under new U.S. Note 16(j), heading 9903.82.20 imposes a 25% duty on non-U.S. content and on U.S. content above 40% of an article’s value, while heading 9903.82.21 imposes no additional duty on U.S. content up to 40%.
• Because a 25% duty on the 60% non-U.S. remainder equals a 15% effective rate at exactly 40% U.S. content, matching the 15% floor in clause (2)(d) of Proclamation 11032, the broader definition helps only importers below 40% U.S. content.
• Importers must report the amount of U.S. content in each article, and Proclamation 11032 directs CBP to impose penalties where an importer engaged in fraud or deliberately misled the government about U.S. content.
• CBP is expected to raise at verification the questions the October 14, 2026, BIS guidance leaves open, including how to value U.S.-origin metal embedded in non-U.S. parts and how to avoid double counting under the “not otherwise accounted for” language.

On October 14, 2026, the U.S. Department of Commerce’s (Commerce) Bureau of Industry and Security (BIS) published guidance to U.S. Customs and Border Protection (CBP), defining “U.S. content” under clause (2)(d) of Proclamation 11032 (the Proclamation). The guidance applies to Canadian and Mexican goods that qualify for USMCA preferential treatment, and it covers entries made on or after 12:01 a.m. ET on October 14, 2026. BIS defines U.S. content in two parts. The first is the value attributable to parts wholly obtained, entirely produced, or substantially transformed in the U.S. The second is, to the extent not already counted in the first, the value attributable to steel melted and poured, aluminum smelted and cast, and copper smelted and cast in the U.S. Until now, the Proclamation and CBP’s June 5 filing instructions (CSMS #68855869) referred only to “parts produced in the United States.”

The second prong is the more significant change, because metal poured in Ohio can now count toward U.S. content even if the part it went into was made elsewhere.

The definition is only half the story, and the 40% cap is the real rule. Under Annex IV and new U.S. Note 16(j), qualifying mobile industrial equipment is entered on two lines. Heading 9903.82.20 covers the non-U.S. content plus any U.S. content above 40% of the article’s value, and it bears the 25% duty. Heading 9903.82.21 covers U.S. content up to 40% of value, and it bears no additional duty. At exactly 40% U.S. content, a 25% duty on the remaining 60% works out to 15%, which matches the 15% floor in clause (2)(d). The broader definition therefore helps only importers who fall below 40%. Beyond that point, additional U.S. content earns no further relief.

The practical exposure is documentation. Importers must report the amount of U.S. content in each article, and the Proclamation directs CBP to impose penalties where an importer has engaged in fraud or deliberately misled the government about U.S. content. Metal-origin claims now carry direct duty consequences, so mill certificates and supplier attestations should be audit-ready, and contracts with Canadian and Mexican suppliers should be reviewed for U.S.-content representations, audit rights, and indemnities. The notice also leaves open how to value U.S.-origin metal embedded in non-U.S. parts and how to avoid double counting under the “not otherwise accounted for” language. We expect CBP to raise these questions at verification, and importers with significant volume may wish to consider seeking a ruling. The temporary regime ends December 31, 2027, after which the 25% rate applies to full value.

The same Federal Register issue also carried Commerce’s notice continuing the antidumping and countervailing duty orders on boltless steel shelving from China. That matters because the Proclamation brought steel racks (HTSUS 9403.20.0082) into the Section 232 derivative framework, and boltless shelving (9403.20.0075) appears in Annex I-B. Importers of shelving and racks should check whether Section 232 and antidumping and countervailing duties are stacking on their entries.

Several other developments deserve attention. Section 232 duties of 10% to 100% on unmanned aircraft systems under Proclamation 11055 took effect September 3, with a 25% tier on certain components starting February 9, 2027. Section 232 measures on specified pharmaceuticals took effect September 29 for additional companies, while generics remain outside them for now. CBP pushed the mandatory compliance date for the new mail-entry process from October 22 to January 20, 2027. On IEEPA refunds, court filings show CBP has certified roughly $126 billion of about $166 billion collected as of October 2, so importers who have not yet pursued refunds should act. Finally, CBP’s Merchandise Processing Fee minimum and maximum rose on October 1 to $34.58 and $670.86, with the 0.3464% rate unchanged.

We recommend that affected importers identify their Annex I-C USMCA entries and recompute U.S. content under the new definition, confirm that two-line reporting caps U.S. content at 40%, gather metal-origin documentation from suppliers, and review stacked-duty exposure on shelving and racks.

For questions about U.S. content under Proclamation 11032, or to discuss how these developments affect your imports, contact Daniel N. Anziska, Ryan Last, or another member of Troutman Pepper Locke’s Tariff + Trade Task Force.