Section 301 vs. Section 232 Tariffs: A Procurement Guide
Section 301 and Section 232 tariffs are two of the largest sources of tariff exposure on capital projects. They are authorized under different laws, target different things, and stack on top of regular MFN duty rates — which is why procurement and finance teams need to model them separately.
What are Section 301 tariffs?
Section 301 of the Trade Act of 1974 lets the US Trade Representative impose tariffs in response to unfair foreign trade practices. In practice, the best-known Section 301 actions are the additional duties on a wide range of goods imported from China — covering electrical equipment, processing machinery, instrumentation, fasteners, and many other inputs common to industrial procurement. These duties are country-specific and applied on top of the normal Harmonized Tariff Schedule rate.
What are Section 232 tariffs?
Section 232 of the Trade Expansion Act of 1962 authorizes tariffs on imports that threaten national security. The headline Section 232 actions are the additional duties on steel and aluminum, which apply to most countries of origin. For capital projects that consume large volumes of structural steel, piping, valves, and aluminum, Section 232 duties can move a project budget by millions of dollars depending on sourcing.
Key differences at a glance
| Dimension | Section 301 | Section 232 |
|---|---|---|
| Legal basis | Trade Act of 1974 | Trade Expansion Act of 1962 |
| Trigger | Unfair trade practices | National security |
| Typical targets | China-origin machinery, electronics, components | Steel & aluminum from most origins |
| Scope | Country-specific | Product-specific, broad country coverage |
How to quantify your exposure
Because Section 301 and Section 232 duties stack on top of base MFN rates, an accurate landed-cost model has to combine all three for every line item, by HTS code and country of origin. TariffGuard pulls current MFN rates directly from the USITC Harmonized Tariff Schedule, layers in applicable Section 301 and 232 duties, and matches each high-exposure item to compliant allied-nation suppliers so you can see the cost of switching before you cut the PO.
Worked example: how the duties stack
Stacking matters because each layer applies to the customs value, not to the previous duty. Consider a $1,000,000 order of Chinese-origin electrical switchgear (steel-bodied) that is subject to a base MFN rate, a Section 301 China action, and Section 232 steel duty:
| Duty layer | Rate | Amount |
|---|---|---|
| Base MFN duty | 2.5% | $25,000 |
| Section 301 (China) | +25% | $250,000 |
| Section 232 (steel) | +25% | $250,000 |
| Total landed duty | 52.5% | $525,000 |
The duties are additive against the same customs value, so a single line item can more than double in delivered cost. Modeling each layer separately — by HTS code and country of origin — is the only way to see which sourcing decisions actually move the budget.