US seen as the big loser in steel trade dispute with Mexico

Mexico's government and industry see the US as the biggest loser if Washington were to reimpose tariffs on steel imports under section 232 and face retaliation.

The tariffs were eliminated under a bilateral steel and aluminum agreement in 2019.

Mexico has been under pressure from Washington since December, when 14 senators asked the Joe Biden administration to curb the growth of Mexican steel imports and the US Trade Representative (USTR) to take action and start monitoring exports.

In February, US trade representative Katherine Tai told Mexico's economy minister Raquel Buenrostro during a videoconference that Mexico had an “urgent need” to act against “the increase in Mexican exports of steel and aluminum to the United States and the lack of transparency regarding Mexico's steel and aluminum imports from third countries.”

“If the negotiations are not successful, the worst scenario is for the United States because they have a surplus and we have a deficit compared to them. They have more to lose,” Buenrostro told reporters on Thursday, after her participation in steel industry association Canacero's 2024 congress in Mexico City.

At the end of last month, Buenrostro told the press that the government would retaliate if Washington imposed tariffs on steel imports, highlighting that US claims in that area have been politically motivated and are bad for business.

The US legislators alleged in a letter sent to national security adviser Jake Sullivan that annual purchases of iron and steel from Mexico in 2022 grew 73% compared to the pre-section 232 benchmark, or between 2015 and 2017.

During the same period, imports of semi-finished steel and long products have increased 120% and imports of steel conduits 577%, they maintain.

Despite these increases, Canacero argued that during 2023, 49% of US steel exports were sent to Mexico. In addition, it highlights that steel exports from the US to Mexico increased, while those from Mexico to the US fell 30%.

"In terms of volumes and exports, the US has a surplus. We have a deficit and they export more finished products than we do: the US exported 4.1Mt to Mexico, and we exported 2.3Mt of finished products," Canacero's incoming president, Víctor Cairo, told a press conference at the congress.

Citing official data, Canacero estimates that Mexico's steel trade deficit with the US was a record US$3.2bn.

“The trade balance that we have in the steel industry with the United States is positive for Americans,” outgoing Canacero president David Gutiérrez said.

“They have almost double the volume of what we export there. In proportion to the market share that they have, we have 2.5% of the... market in the United States and they have 14% of the market in Mexico. In jobs generated, by having more exports than they import, Mexico generates more jobs in the United States than we generate through exports,” he added.

The industry and the economy ministry insisted repeatedly that neither is engaged in triangulation involving China or any other country, and that the mirror tariff measures that have been taken against imports of steel and other products are proof.

“The reality is that entering a scheme where they put a 25% [tariff] again, and Mexico puts 25% on them, affects them more. In other words, they are more harmed. I would say that the two industries are affected at a given moment, but they are more affected than us from the point of view of the surplus they already have,” Canacero vice president Guillermo Vogel said.

“I think there is a good basis, if there is good communication [in the negotiations with the USTR], and if there is a desire from the industry to comply,” added Vogel.