US extruders warn of consequences from Mexico's aluminum tariff reversal

The Aluminum Extruders Council May 13 warned that Mexico's recent revocation of tariffs on unwrought aluminum imports could have negative consequences on the US aluminum extrusion industry, even though Mexico's direct tariffs on extruded products remain in place.

"While the tariffs announced in April are still in place for the entire continuum of extruded profiles which protect Mexican extruders from products entering Mexico for consumption in Mexico, the cancellation of the tariffs on alloyed and unalloyed aluminum ensure the continuation of Chinese and Russian aluminum entering the US and Canadian markets via Mexico as extrusions," the AEC said in a statement.

The AEC represents many US-based aluminum extrusion manufacturers.

In April, the Mexican government announced tariffs on over 500 product categories encompassing multiple industries. Several aluminum products were included in the tariff package with duties ranging from 20% to 35%.

The initial tariff on aluminum was seemingly implemented in response to pressure on the Mexican government from US trade officials and various North American aluminum industry trade groups to address the alleged influx of Chinese metal into Mexico and subsequent impacts to the US market. Mexico's blanket tariff on all aluminum imports from non-free trade countries exceeded this scope and caught many market participants by surprise, with some worried that the move would hurt the country's aluminum-consuming manufacturers, such as automotive parts makers, and cause inflation across the North American aluminum market.

In response to industry concerns, Mexico moved to revoke the tariffs specifically on unwrought aluminum May 8, less than three weeks after the tariffs were implemented. However, extruded aluminum products still included in Mexico's tariffs include bars, rods, profiles, tubes, pipes and frames.

While Mexico's tariffs may still protect against extrusion imports, they will no longer target unwrought aluminum, which can now flow freely into Mexico and potentially be converted into extrusions products ultimately destined for the US market.

US extrusion imports from Mexico are currently targeted in a larger ongoing 14-country duty investigation.

Mixed trade trends

Total US aluminum imports from Mexico have increased in recent years, averaging about 100,000 mt/year from 2021 to 2023 compared with historical levels below 80,000 mt/year, according to US Commerce Department data. However, 2023 volumes of about 105,000 mt still accounted for only about 2% of total imports.

Still, changes in volumes for certain product groups have been more pronounced. US imports of aluminum bars, rods and profiles from Mexico reached about 53,000 mt in 2022 and 44,000 mt in 2023, up from historical levels that generally remained below 30,000 mt/year. Volumes in 2023 accounted for a 14% share of total imports.

Amid these increases, North American industry groups and participants have continually flagged a potential influx of unfairly traded aluminum into Mexico from sources such as China and Russia to the detriment of the larger North American market.

Mexican imports of unwrought aluminum from China jumped to almost 20,000 mt in 2023 from about 7,000 mt in 2022, according to data from S&P Global's Global Trade Analytics Suite derived from bill of lading data collected from third-party sources. Annual volumes in 2023 were the third highest over the last 10 years.

In contrast, the GTAS data shows that Mexico's unwrought aluminum imports from Russia have fallen in recent years to about 84,000 mt in 2023, the lowest point since 2014.