USMCA negotiations are the key to the success of the Mexican steel sector
Trade negotiations in North America could prove critical for the Mexican steel sector, which has weakened over the past year, partly due to tough new U.
S. trade policies and 50% Section 232 import duties.
As bilateral negotiations between the United States and Mexico on the US-Mexico-Canada Agreement (USMCA) are set to take effect on March 16, MEPs have examined the impact of higher U.
S. tariffs on Mexico's steel industry.
According to the current USMCA, a joint review must be conducted by the three member countries before July 1. Potential topics for discussion include stricter rules for determining the origin of goods, current U.
S. tariffs, ongoing trade disputes, and increased Chinese investment in the region.
Laura Hodges, steel market analyst at the European Parliament, said: "The possibility of making changes to the agreement poses a risk to the North American steel markets and the region's economy as a whole."
The United States and Mexico are each other's largest trading partners, although Mexico is more dependent on the U.
S. market. Almost 80% of all Mexican exports are shipped to the United States. In contrast, less than 20% of American exports go to Mexico. The United States is also Mexico's largest steel export destination, although these volumes have declined significantly over the past year.
Strained trade relations between the United States and Mexico
Steel production in Mexico decreased by 5.7% last year, dropping to 13.5 million tons, the lowest in more than two decades. Steel production in Mexico peaked in 2018 at 20.2 million tons.
U.
S. tariffs on steel imports from Mexico have increased since the beginning of Trump's second term. Shortly after taking office, President Trump announced the imposition of 25 percent tariffs on imports from Mexico, citing concerns about fentanyl trafficking and border security. During the month, this measure was limited and applied only to imports that do not comply with the USMCA rules of origin. Over the past month, this tariff has been reduced to 10% due to a recent Supreme Court ruling that invalidated the IEEPA tariffs.
More importantly for the steel sector, the US has imposed additional tariffs on steel and car imports. In March last year, US tariffs on Mexican steel imports were increased from 0% to 25%, and then, in June, they were increased to 50%. Tariffs on cars were also raised to 25% in April, but were later adjusted to 15% if at least 40% of the car's contents are produced in the United States. Earlier import