How BIS Defines “U.S. Content” for USMCA Machinery Under Section 232, and What Importers Should Do About It

On October 14, 2026, the Bureau of Industry and Security (BIS) published a Federal Register notice, FRN 2026-20938, giving CBP guidance on how to assess “U.S. content” for products of Canada and Mexico that qualify for USMCA treatment under Proclamation 11032. The notice applies to goods entered, or withdrawn from warehouse, for consumption on or after 12:01 a.m. Eastern on October 14.

This post covers how the rate works, what the notice defines, what it leaves open, and what to prepare.

Where this comes from

Proclamation 11032, signed June 1, 2026, adjusted the April Section 232 regime for aluminum, steel, and copper. Among other changes, it created a reduced path for mobile industrial equipment and machinery listed in Annex I-C, such as forklifts, bulldozers, backhoes, tractors, and mobile cranes. The reductions run through December 31, 2027. For USMCA-qualifying goods from Canada and Mexico, the proclamation ties the duty to U.S. content and directs the Secretary of Commerce to issue guidance on how CBP should measure it. The October 14 notice is that guidance.

How the rate works

Some summaries describe this as a drop from 25% to 15% if at least 40% of the equipment’s value is U.S. content. That is true as far as it goes, and it hides how the scale works below 40%. Under the proclamation and CBP’s June 5 instructions (CSMS #68855869), the 25% duty applies to the non-U.S. content. U.S. content counts at 0% only up to 40% of the entered value, and the total effective duty cannot be less than 15%.

In practice, importers report two lines. The first, under 9903.82.20, carries the non-U.S. content plus any U.S. content above 40% of value, at 25%. The second, under 9903.82.21, carries the U.S. content up to 40% of value, at 0%. CBP told importers not to report more than 40% of the value on that second line.

As an illustration, take a machine entered at $100,000. At 50% U.S. content, $40,000 goes on the zero-duty line and $60,000 pays 25%, which is $15,000, or 15%. At 25% U.S. content, $25,000 goes on the zero-duty line and $75,000 pays 25%, which is $18,750, or 18.75%. Confirm the mechanics for your own entries with your broker before relying on these numbers.

What the notice defines

BIS says “U.S. content” means two things. The first is the value of the product attributable to parts wholly obtained, entirely produced, or substantially transformed in the United States. The second, to the extent not already counted in the first, is the value attributable to steel melted and poured in the United States, aluminum smelted and cast in the United States, and copper smelted and cast in the United States.

The proclamation’s own wording defined non-U.S. content as total value minus the value of parts produced in the United States. The BIS definition is more specific. It names three ways a part can count and adds the U.S. metals as a separate category.

What it leaves open

The notice is short. It does not say how U.S. content is to be valued, what documents prove it, or how substantial transformation is determined for a given part. It tells readers to direct questions about a specific product to CBP. It also says nothing about entries made before October 14. We have not yet seen a CBP message updating its June filing instructions for the new definition, so confirm with your broker how it will be applied at filing.

The documentation question is not academic. CBP has warned that deliberate misstatement of U.S. content will be penalized, and the proclamation directs penalties for it.

What to prepare

Start by checking whether your machinery’s HTS subheading is listed in Annex I-C and whether it qualifies under USMCA. Goods from other trade-deal countries follow a separate 15% path that does not depend on U.S. content.

If it does, ask your supplier for a bill of materials that shows the origin and value of each part. Ask for melt-and-pour records for steel and smelt-and-cast records for aluminum and copper, since CBP already requires reporting of those countries. And ask whether the supplier has done a substantial transformation analysis for parts it claims were transformed in the U.S., because that is the category most open to challenge.

Then agree with your broker how the claim will be filed, and do not change your process until CBP’s instructions confirm the new definition.

We are working with clients importing Canadian and Mexican machinery on this documentation. If you would like a review, reach out to your ShipTech account manager.