![United States and Mexico United States and Mexico](https://cdn-www.bnamericas.com/img/flags/ALL.jpg)
Mexico gives in to US pressure on steel and risks for exports grow
![Mexico gives in to US pressure on steel and risks for exports grow](https://cdnimg.bnamericas.com/dWlaYXidgHyStsSbgiAylEeXOLrzyMFdCeABSdQNLIFgoHjAjeINjMuifGXzQZTN.jpg)
Mexico gave in to the pressures that resurfaced in the United States since the end of last year due to possible triangulation with China of steel and aluminum exports.
The Mexican government agreed with the Joe Biden administration to impose tariffs on steel and aluminum sent from Mexico but partly produced in other countries, putting exports at risk.
Lael Brainard, director of the White House National Economic Council, told reporters that the tariffs announced Wednesday, which took effect immediately, will be applied as part of an agreement with Mexico through section 232 of the Trade Expansion Act, which applies to imports that could threaten the national security of the United States.
Mexico, the largest trading partner of the US, was among the countries that in 2019 obtained an exemption from tariffs under section 232. Now, the country will only be exempt under certain conditions.
From now on there will be a 25% tariff on US imports of steel not melted and poured in Mexico or Canada. For its part, aluminum imported from Mexico that is smelted or cast in China, Belarus, Iran or Russia will have a 10% tariff.
Although President Andrés Manuel López Obrador – who signed the joint White House statement – justified the measures in his daily press conference on Thursday and assured that his government imposed some terms, foreign trade experts warn that the measures carry potential risks for exports of the metals and may, in the long run, increase trade restrictions.
López Obrador said, for example, that special treatment was achieved for imports from Mexico that contain steel, aluminum or components from Brazil, with whom he said he had “a very good relationship.”
Mexico’s economy ministry has not officially commented on the measures and when consulted by BNamericas a spokesperson for the ministry suggested referring to the statements from the president.
ANALYSIS
“It is clear that the government of Mexico is responding to pressure from the United States, which argues that steel and aluminum products from China are being triangulated through Mexico,” Kenneth Smith, former chief negotiator for Mexico of the USMCA treaty between Mexico, the United States and Canada, told BNamericas.
The Agon partner consultant recalled that Mexico had previously indicated that it would be strengthening its import monitoring mechanism.
The new measures will also require Mexican exporters to provide more information about the origin of their products.
Likewise, the United States will continue to monitor whether there is an increase in imports of steel products from Mexico and, if necessary, US Customs and Border Protection will be instructed to eliminate the tariff exemption on imports of these items from Mexico.
Although the decision does not come entirely by surprise, Smith warned that “it will be important for the government of Mexico to explain how it will implement this mechanism and ensure that this does not generate additional costs for Mexican steel and aluminum exporters.”
The former USMCA negotiator added: “Likewise, we will have to monitor how the United States implements these new restrictions and take care that they do not become technical obstacles to trade in products that are essential inputs for the competitiveness of the North American manufacturing industry.”
Gabriela Siller, director of economic analysis at Grupo Financiero Base, agreed in a communication to her clients that “the White House statement represents... a risk for Mexican exports, since it is not ruled out that all steel exports could lose the tariff exemption in the scenario that there is no adequate supervision of the origin of the products and that these exports to the United States continue to increase.”
“These tariffs that the United States put in place specifically to try to prevent metals that come from China from entering their country represent a risk for Mexican exports, because part of the exports are produced in China and not in Mexico, and in the short term it is very unlikely that Mexico will be able to change that so those commodities are produced here,” Ana Azuara, commodity markets specialist at Grupo Financiero Base, told BNamericas.
According to US officials, about 13% of steel imports and 6% of aluminum imports from Mexico were produced outside of North America.
“It also represents a risk because going forward we don’t know if more of the steel produced in Mexico may not be exempt from tariffs. That would be quite delicate… and we could see a bigger drop in exports from Mexico to the United States,” Azuara added.
INDUSTRY REACTION
BNamericas consulted Mexico’s iron and steel chamber Canacero about the possible impacts and measures to be taken by the industry regarding the new measures, and its head Salvador Quesada responded in writing that “it is undoubtedly a very important issue for the sector,” which the group continues to analyze, and promised to offer a position on the matter when there is one.
According to Canacero data, while Mexico exports 2.3Mt/y of finished steel products to the US, its northern neighbor exports 4.1Mt/y of steel goods to Mexico. Mexico’s trade deficit in steel with the US was US$3.2 billion in 2023, “the largest in history,” the chamber says.
Mexico’s aluminum industry chamber Canalum, meanwhile, said in a statement there is no official confirmation by the economy ministry of the measures on aluminum that have been reported in international media.
“If the measures are confirmed for our sector... we can anticipate that this tax would only affect companies that currently import aluminum from those countries that transform and produce for export to the United States, which would lead these companies to look for a different source "to supply these materials,” the statement signed by Canalum president Julio Martínez Rivas said.
“The measure could affect competitiveness and it would be important to analyze which are the relevant accreditation documents of origin. It is important to emphasize that our position is in favor of maintaining and supporting the good relationship with our main trading partner, as well as the integration of the productive chains of our USMCA region,” added Martínez.
CHINA RESPONSE
“The China ‘overcapacity’ theory is in essence a political tool used by the US to discredit and suppress the Chinese economy,” Liu Pengyu, a spokesperson for the Chinese embassy in Washington, told VOA.
“What is behind it is deglobalization and trade protectionism, which will hinder global trade and undermine the common interests of all countries.”
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Mexico)
![The energy transition opportunities and challenges for Latin America](https://cdn-www.bnamericas.com/img/sectors/politicalriskmacro_1.jpg)
The energy transition opportunities and challenges for Latin America
Eduardo Takahashi, the head of Brazilian operations at Willis Towers Watson, speaks with BNamericas about the energy transition landscape in the re...
![Morena and the dangers of absolute power in Mexico](https://cdn-www.bnamericas.com/img/sectors/politicalriskmacro_2.jpg)
Morena and the dangers of absolute power in Mexico
The ruling party not only secured the presidency for another six-year term with a landslide victory by the uncharismatic Claudia Sheinbaum, but is ...
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Integral Hydric System of the Chancay Valley - Lambayeque
- Current stage:
- Updated:
1 day ago
- Project: La Florida Airport in La Serena (Third concession)
- Current stage:
- Updated:
1 day ago
- Project: Colón new prison complex
- Current stage:
- Updated:
1 day ago
- Project: Lo Ruiz tunnel (Renca tunnel)
- Current stage:
- Updated:
1 day ago
- Project: Andrea Jusayu wind farm (ex Cerrito wind farm)
- Current stage:
- Updated:
1 day ago
- Project: Comahue Mining Project
- Current stage:
- Updated:
5 hours ago
- Project: Repowering Service Project for Generators 1, 2 and 3 of the Ing. Carlos Ramírez Ulloa "El Caracol" Hydroelectric Plant
- Current stage:
- Updated:
1 day ago
- Project: Ecuador - Perú transmission line
- Current stage:
- Updated:
1 day ago
- Project: Expansion of supply capacity of the Ica electrical system (ITC Project)
- Current stage:
- Updated:
1 day ago
- Project: Porto Norte Fluminense Thermoelectric Park
- Current stage:
- Updated:
1 day ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Echoenergia Participações S.A  (Echoenergia)
-
Echoenergia e Participações SA (Echoenergia) is a Brazilian company dedicated to the development of generation projects from renewable sources. Echoenergia is directly owned by ...
- Company: Concesión Vial de los Llanos S.A.S.  (Concesión Vial de los Llanos)
-
Concesión Vial de los Llanos S.A.S., a Colombian consortium made up of Organización de Ingeniería Internacional S.A., Construcciones El Cóndor S.A., Sarugo y Cia. SCS and Murcia...
- Company: Consejo Nacional de Vialidad  (CONAVI)
-
Consejo Nacional de Vialidad (CONAVI) is an organization of the Costa Rican government responsible for overseeing the planning, administration, financing, control, and maintenan...
- Company: Constructora Hernán Solis S.R. Ltda  (H Solís)
-
Constructora Hernán Solís S.R. Ltda. (H Solís), based in San José de Costa Rica, is a firm founded in 1963 by the Greek entrepreneur Hernán Solís, which is aimed at the construc...
- Company: Autopista del Norte, S.A.C.  (Autopista del Norte)
-
Autopista del Norte S.A.C., a subsidiary of Spanish construction group OHL, is the concessionaire in charge of the construction, operation and maintenance of the Pativilca-Truji...
- Company: Minera Titán S.A. de C.V.  (Minera Titan)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: Ventos de São Vitor 08 Energias Renováveis S.A.  (Ventos de São Vitor 08 Energias Renováveis)
-
The description included in this profile was taken directly from an AI source and has not been edited or modified by BNamericas researchers. However, it may have been automatica...
- Company: Ventos de São Vitor 12 Energias Renováveis S.A.  (Ventos de São Vitor 12 Energias Renováveis)
-
The description included in this profile was taken directly from an AI source and has not been edited or modified by BNamericas researchers. However, it may have been automatica...