US Trade Representative asks Mexico to address increased steel, aluminum imports

United States Trade Representative Katherine Tai and Mexican Secretary of Economy Raquel Buenrostro have discussed the importance of Mexico addressing the "recent surge" in imports of steel and aluminum products coming to the US, according to a readout of their meeting from the USTR's office.

Tai stressed the importance of Mexico enhancing its monitoring of steel and aluminum exports to the US during the meeting July 6, in accordance with a 2019 agreement in which the US dropped the Section 232 tariffs on steel and aluminum imports from the country, the USTR's office said.

As part of the agreement, Mexico was to ensure greater transparency regarding steel and aluminum imports from third countries.

The trade representatives agreed to have their teams "intensify their engagement" on the matter, Tai's office said.

Lawmakers raise alarm on steel imports

In May, Steel Caucus Chairman Rick Crawford, Republican-Arkansas, and Vice Chairman Frank Mrvan, Democrat-Indiana, sent a letter to President Joe Biden's administration requesting immediate consultations to address the recent uptick in Mexican steel imports.

US imports of steel from Mexico were up 72% in 2022 compared with the 2015-2017 historical average, according to Commerce Department data.

In its letter, the Steel Caucus leaders noted increased volumes across product lines, including rebar, hot-rolled coil, galvanized sheet, wire rod, semi-finished steel, and pipe and tube, among other products. Rebar imports in particular have seen a sharp increase, up by more than 3,000% in 2022 compared with the 2015-2017 average, the caucus noted.

Steel Caucus leadership also alleged the Mexican steel industry "appears to be taking advantage of its status" under the agreement by exporting steel to the US that was produced in countries that remain subject to Section 232 tariffs, including Brazil, South Korea and Russia, allowing this steel to enter the US through Mexico duty free.

Aluminum imports also see rise

US imports of aluminum from Mexico, including both unwrought and wrought products, increased 86% in 2022 compared with the 2015-2017 historical average, according to Commerce Department data.

US imports of Mexican unwrought aluminum rose 40% in 2022 compared with the 2015-2017 historical average. Among wrought aluminum products, US imports of plates, sheets and strips from Mexico jumped 451% in 2022 compared with the 2015-2017 average, while imports of bars, rods and profiles saw an increase of 77% by the same comparison.

"We are grateful that Ambassador Tai raised critical trade issues for the aluminum industry in her meeting with Secretary Buenrostro this week," Charles Johnson, CEO of the Aluminum Association, said in a statement sent to S&P Global Commodity Insights. "The significant gaps in Mexican trade data reporting introduced last year have exacerbated Mexico's failure to honor USMCA commitments to implement an aluminum import monitoring system. We agree with Ambassador Tai that Mexico can assure the US industry that it is a favored trading partner by addressing these data gaps and by implementing an Aluminum Import Monitoring system. Mexico has been an important trading partner with the US aluminum industry, and we look forward to seeing these monitoring and reporting issues resolved."

Reimposition of tariffs on table

As part of the agreement struck between the US and Mexico to remove the 25% import tariff on steel and 10% tariff on aluminum, it was stated that if imports "surge meaningfully beyond historic volumes of trade over a period of time," with consideration of market share, the importing country may request consultations. Following consultations, the US could reimpose duties on individual products where the surge took place, according to the agreement.

If such action is taken by the US to reimpose the tariffs, under the agreement, Mexico could retaliate only in the affected sector, meaning it could place its own import duties on US steel or aluminum.