Mexico | US imposes tariffs on steel, aluminum, and derivatives

Summary

On February 10, President Trump signed an executive order imposing a 25% tax on all steel and aluminum imports regardless of their country of origin, which will take effect on March 12.

Key points

• Key points:
• The amount of steel and aluminum exports from Chapters 72, 73, and 76 by 2024 is equivalent to only 1.0% of Mexico's total exports and 0.26% of GDP so that the impact will be limited.
• Furthermore, since it is a tariff that will apply to all countries, Mexico's relative competitiveness compared to third countries will not be affected.
• The measures will take effect on March 12, leaving open the possibility of negotiation. Therefore, the tariffs might not take effect, will be of a smaller magnitude, or will not apply to all countries.
• The measure's argument focuses on the US trade deficit in this sector and the growth of installed capacity in other countries. In the case of Mexico, this justification does not apply since the balance is in surplus in favor of the USA.
• The leading steel and aluminum supplier countries for the USA in 2024 were, in order of importance, Canada, Mexico, South Korea, Brazil, and China, representing 58.7%, while the major importing states are Texas, Illinois, California, and Michigan, with a share of 42% in 2024.

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