US senator Sherrod Brown
(D-Ohio) sent a letter last week calling on President Joe Biden's government to
press Mexico to halt what he called an "unsustainable surge of Mexican
steel imports into the US market, in violation of the 2019 Joint Agreement on
Steel and Aluminum."
"This matter continues to be a prevalent issue harming the
American steel industry and American steelworkers nationwide. In light of the
recent presidential election in Mexico, I... urge you to address this with your
counterparts in president-elect [Claudia] Sheinbaum’s cabinet," the letter
reads.
Brown is one of the main promoters of a legislative proposal to
impose a 25% tariff on imports of Mexican steel, as its rising sales of the
metal in the US have revived suspicions about alleged triangulation of
subsidized products from China through Mexico and fears of a possible tariff
war in the steel industry with the US, which is the latter's main trade
partner.
Mexico's iron and steel chamber Canacero responded to the letter with a statement,
saying that "the reality is that the Mexican steel surge is simply not
happening, and the US steel industry has consistently maintained a significant
trade surplus in finished products with Mexico. In 2023 alone, this surplus
exceeded US$3 billion."
However, Canacero head Salvador Quesada also warned that the
chamber firmly believes that a steel trade war between Mexico and the US would
result in mutual market closures and undermine the region's competitiveness in
this sector.
"Mexico is working with the United States to try to prevent
this controversy from getting out of control. I don't immediately see an
imminent trade war regarding steel," Kenneth Smith, Mexico's former head
negotiator for the USMCA, told BNamericas, although he warned that "the
pressure is going to continue to rise."
“It is an election year in the United States, and in addition to
the issue of steel triangulation, one of the main concerns of the United States
has to do with the Chinese investments that are coming to Mexico and the
announcements by Chinese companies in the automotive sector that they want to
establish themselves in our country and that, in the opinion of many
politicians, represents a threat to the US,” said Smith, who is now a partner
at consultancy Argon.
“So, this means that the issue of China will be at the forefront
for the next administration in Mexico and for the next administration in the
United States,” he underscored.
The former Mexican chief negotiator of the USMCA free trade
agreement highlighted that both the Mexican government and the local steel
industry have countered, based on official figures, the US position that there
is triangulation from China, and there have also been several meetings between
both governments to address the issue.
"Mexico not only promised to move forward with
strengthening monitoring of imports, but in April of this year it published a
decree in which it increased most favored nation tariffs on more than 500
products, many of them from China," Smith said.
According to information from Canacero, excluding semi-finished
steel, which US steel mills acquire to roll, Mexico's exports have trended
significantly downward over the last 18 months, while US exports to Mexico have
grown enormously.
US
“imports from Mexico for finished steel products declined 28% in 2023 from
2022. Through the first four months of 2024, the declining trend continues
(-12% vs same period in 2023),” the chamber said in its response to the US
complaints.