By David Lawder
WASHINGTON (Reuters) – The U.S. and Mexico announced new steps on Wednesday to combat the circumvention of U.S. tariffs on steel and aluminum by China and other countries that ship products through Mexico, adopting a North American ‘melted and cast’ standard implement for steel.
The White House said that under a new policy from President Joe Biden, imports of steel products from Mexico will be subject to 25% US ‘Section 232’ tariffs unless the steel is documented to have been melted and cast in Mexico, the US or Canada . .
Similarly, to avoid the 10% Section 232 tariffs, imports of aluminum products from Mexico cannot contain primary aluminum smelted or cast in China, Russia, Belarus or Iran.
Importers of the products into the U.S. will be required to provide a certificate of analysis to U.S. Customs and Border Protection showing the country of origin of the metals, Biden administration officials said.
Mexico has agreed to require importers of steel products across its borders to provide more information about the country of origin of these products, Biden and Mexican President Andres Manuel Lopez Obrador said in a joint statement.
“Both countries will implement policies to jointly prevent tariff evasion on steel and aluminum and strengthen North American steel and aluminum supply chains,” the presidents said in the White House statement.
Biden courted the votes of union members, particularly the United Steelworkers, in his bid for re-election in November, opposing a takeover by Japan’s Nippon Steel of Pittsburgh-based US Steel.
BACK DOOR
The new import requirements come amid growing concerns about China’s excess industrial capacity flooding global markets with exports while domestic demand is weak. It comes after Biden in May raised tariffs on a wide range of strategic goods from China, including steel and aluminum, electric vehicles, batteries, semiconductors and critical minerals.
But U.S. officials are increasingly concerned that Mexico could become a backdoor for China into the U.S. market, taking advantage of Mexico’s duty-free access through the North American trade deal.
Reuters reported in April that U.S. officials warned their Mexican counterparts against offering incentives to Chinese electric vehicle makers who were exploring potential factory sites in Mexico.
U.S. Trade Representative Katherine Tai described Wednesday’s action as “closing a loophole” left by the Trump administration, which imposed the Section 232 tariffs in 2018.
Metal found to be of Chinese origin would also be subject to Section 301 tariffs of 25%, a rate that Biden increased in May.
Mexico’s steel import volumes from elsewhere in 2023 were small, accounting for only about 13% of the 3.8 million tons of steel imported from Mexico, according to U.S. Census Bureau data. But a Biden administration official said the new requirements were “forward-looking,” aimed at countering an expected surge in imports as China’s steel-consuming sectors such as real estate struggle.
The American Iron and Steel Institute, an industry group, applauded the move to cut off Chinese steel’s access to the U.S. market but said its effectiveness depended on Mexico providing accurate information about the metals the country uses. imports.
“We urge the U.S. government to continue to push for additional action to address steel traders’ many schemes to circumvent and circumvent U.S. trade laws, and to ensure that this new regime is vigorously and fully enforced ,” the group said.
Biden and Lopez Obrador in their statement pledged greater cooperation between the US and Mexico in the coming weeks and months “to protect North American steel and aluminum markets from unfair trade practices.”
Lopez Obrador’s successor, President-elect Claudia Sheinbaum, will take office on October 1, but has started naming her Cabinet.
