US Imposes Tariffs on Chinese Steel Exported via Mexico

The U.S. government has taken steps to block other countries, including China, from circumventing tariffs by exporting steel and aluminum products duty-free through Mexico.

On the 10th (local time), President Joe Biden announced in a proclamation that "steel materials and products exported from Mexico to the United States will be subject to tariffs under Section 232 of the Trade Expansion Act if they have not been melted and poured in Mexico, Canada, or the United States." The purpose is to prevent steel materials made in third countries from being further processed in Mexico and then exported to the U.S. duty-free.

This measure is widely seen as targeting China. An official from the Biden administration stated that this action is being implemented preemptively to block the Chinese steel industry, which is struggling due to the real estate market downturn, from flooding the U.S. market with its products. However, South Korea may also be affected as it exports some steel products to the U.S. through Mexico.

Previously, in 2018, the U.S. imposed tariffs of 25% on steel and 10% on aluminum using Section 232 of the Trade Expansion Act, which grants the president authority to restrict imports deemed a threat to national security. However, Canada and Mexico, which have free trade agreements (FTAs) with the U.S., were exempt. As a result, third countries have increased their steel and aluminum exports to the U.S. by routing them through Mexico. According to the U.S. Department of Commerce, in 2023, the U.S. imported approximately 3.8 million tons of steel and about 105,000 tons of aluminum from Mexico, of which roughly 13% and 6%, respectively, originated from third countries.

White House National Economic Council Director Brian Deese said, "This measure addresses a major loophole that the previous administration failed to handle," adding, "Steel and aluminum will remain the backbone of our economy as we build the future of manufacturing in the United States."

Bloomberg News, citing a Biden administration official, reported that the U.S. has long made clear to China that steel is a very important domestic industry and that China will not be surprised by the new tariff imposition.