After a year of negotiations, the United States government warned the Mexican government that it must take urgent measures to confront the increase in steel and aluminum exports to the US from Mexico, coming from third countries, and recalled that they can reinstate Section 232 tariffs that were applied in 2018. Without mentioning countries, reports say this refers to China's alleged steel triangulation.
On February 16, a virtual meeting between Katherine Tai, United States Trade Representative (USTR) and the head of the Mexican Ministry of Economy, Raquel Buenrostro, was held to discuss shared concerns in the steel and aluminum trade.
“During the meeting, Ambassador Tai stressed the urgent need for Mexico to take immediate and meaningful steps to address the ongoing emergence of Mexican steel and aluminum exports to the United States and the lack of transparency regarding Mexico's steel and aluminum imports from third countries,” USTR reported in a briefing note.
In Mexico, Buenrostro rejected the lack of transparency and said that there is complete willingness to share information to combat the triangulation of steel and aluminum in North America. “It is a problem that affects the industries of Mexico, the United States and Canada equally,” the official said in a press release.
In response to the United States' complaint that negotiations have dragged on for more than a year, “Ambassador Tai emphasized that the 2019 Joint Statement on the Section 232 duties on steel and aluminum allows for the reimposition of Section 232 tariffs.”
The threat occurred despite the fact that in August of last year, Mexico established additional tariffs of 25 percent on steel imports for countries with which it does not have a trade agreement. The tariff is additional to the possible countervailing duties for dumping with countries such as China, India, Russia, South Korea, Turkey, Brazil, Iran, Ukraine, Taiwan, Vietnam, Indonesia, Kazakhstan. This tariff will be in force until July 31, 2025.
The threat refers to the sanction in May 2018, arguing national security issues, the United States imposed tariffs of 25 percent on steel and 10 percent on aluminum imports from the European Union, Canada and Mexico. After Mexico applied mirror retaliation, an agreement was reached in May 2019 to eliminate those levies. Mexico and the United States committed to monitoring trade in these products.
Amid the opacity or lack of transparency argued by the United States, the Mexican government office in charge of national statistics, Inegi has a delay of one year in publishing the volumes of Mexican exports. Despite disseminating a calendar of publications, those referring to international trade in Mexico take up to a week longer to update the information and there is a lack of trade information by product and country of destination. Additionally, it recently removed information on steel and aluminum production volumes, as well as all manufacturing production.
Despite this opacity of Inegi, the National Chamber of the Iron and Steel Industry (Canacero) said that “it is completely false that there is a lack of cooperation and transparency on the part of Mexico and that our country is a bridge for triangulation of iron and steel products. Chinese steel to the United States.”
“It is false that Mexico's steel exports affect the United States, 49 percent of its steel exports are to Mexico. Mexico's steel trade deficit with the United States was $3.2 billion, the largest in history,” Canacero said.
Mexico exports 2.3 million metric tons (mt) of finished steel products to the United States, they export 4.1 million mt to Mexico. Mexican steel exports represent only 2.5 percent of its market and US steel has for many years represented 13.9 percent of domestic consumption.
In that scenario, the USTR said that conversations between both countries will remain ongoing. Meanwhile, Mexico reported that the agenda should include consolidating tariff homologation, cooperation between antidumping agencies to make investigations and resolutions more efficient, and strengthening regional traceability mechanisms.
Data from the World Steel Association from 2023 places China as the largest steel producer in the world with more than 1.0 billion mt, the United States is the fourth largest producer with 80 million mt and Mexico is the fourteenth with 18 million mt.