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Mexico and the EU signed the Modernized Global Agreement (MGA) and interim Trade Agreement (ITA) on May 22 to “strengthen political dialogue and cooperation,” according to a statement released by the EU. Mexico and the EU’s trade relationship currently totals €100 billion ($117 billion) in trade annually, the statement said.
“The modernization and signing of the EU-Mexico trade agreement is a positive development overall for the Mexican industrial and manufacturing sectors,” a Mexican producer source told Fastmarkets. “[Having] broader trade access and diversification opportunities is generally beneficial for long-term industrial growth.”
While the trade deal will open other avenues for Mexican steel, “[logistics], freight costs, lead times and existing regional integration within North America will continue to favor the United States-Mexico-Canada (USMCA) market for many steel products,” the producer said.
Mexico has exported 451.55 tonnes of steel to the EU since the start of 2026, according to Mexico’s Steel Trade Monitor. Mexico mostly exports oil country tubular goods (OCTG) to the EU, sending 379.23 tonnes to the bloc this year, the trade data shows.
Mexico exported 160,000 tonnes to the US so far in 2026.
Meanwhile, Mexico has imported 95,200 tonnes of steel from the EU, consisting mostly of cold-rolled coil and galvanized sheet. Mexico has imported more than three times that amount from the US in 2026, according to the trade log.
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“For the Mexican steel industry, having additional commercial alternatives and stronger trade relationships outside of North America can provide more flexibility and stability,” the producer said, “particularly during periods of market uncertainty or trade tension.”
The Mexican steel market has faced a wave of uncertainty and volatility since the reintroduction of Section 232 tariffs on steel, which US President Donald Trump reimplemented last year. Currently, Mexico is subject to a 50% levy on steel and a 25% levy on automobiles and auto parts. The tariffs led to a significant decrease in exports to the US, Mexico’s largest trading partner.
Despite the recently inked trade deal, “the US will remain Mexico’s most important steel and manufacturing partner by far due to the highly integrated supply chains between both countries,” the producer said. “The integration between Mexico and the US manufacturing sectors is extremely strong and difficult to replace.”
However, the EU is more “aggressive” compared with the US in finding alternative supply chains that avoid China, Jorge Guajardo, former Mexican ambassador to China, told Fastmarkets on Thursday May 28. The EU deal with Mexico will enhance the Mexican-based steel supply chain “at a time when the EU is facing increased energy prices making it difficult to de-risk globally,” Guajardo said.
The US has averaged 34,304 tonnes of imported Chinese steel since the Section 232 tariffs went back into place on March 12, 2025, data from the US International Trade Administration (ITA) shows, representing a 16.3% decline in imports from China from the year before. Between March 12, 2024 and March 12, 2025, imports of Chinese steel averaged 40,987 tonnes.
Mexico has curbed its steel imports from China significantly since the country introduced a series of tariff measures against countries it lacks trade agreements with. Imports of Chinese steel totaled 909,000 tonnes in 2025, averaging 75,750 tonnes per month. Since the start of 2026, Mexico has imported 70,900 tonnes of Chinese steel, according to Mexico’s Steel Trade Monitor.
The Mexico-EU trade deal comes amid the renegotiation of the United States-Mexico-Canada (USMCA) trade agreement, which some steel industry members anticipate will result in multiple treaties between the countries.
Market participants also say that the tariff-free environment will not return between the three trading partners.
“Free trade — forget it; there will be tariffs,” Oscar del Cueto, American Chamber of Commerce Mexico (AmCham Mexico) and Canadian Pacific Kansas City Mexico president, said during a May 5 conference.
The Mexico-EU trade deal should not threaten ongoing USMCA discussions, Guajardo said.
“I don’t think it affects the USMCA negotiations,” Guajardo said, “but it gives a first step in Mexico’s long journey into diversifying from the US market.”
The producer source agreed with the sentiment, stating that the deal does not amend Mexico’s position toward the US.
“I would not necessarily characterize this agreement as a move against the US,” the producer told Fastmarkets, “but rather as part of Mexico’s broader strategy to diversify trade relationships and strengthen global competitiveness.”
The deal will still allow Mexico to maintain “a very close economic relationship with the United States,” the producer said.
Fastmarkets’ latest calculation of the weekly steel hot-rolled coil index, delivered Monterrey, Mexico was 15,763.29 Mexican pesos ($910) per tonne on May 28, while the corresponding steel hot-rolled coil index, delivered Bajio, Mexico was 15,642.39 pesos per tonne.
Fastmarkets’ price assessment for steel reinforcing bar (rebar), delivered Monterrey, Mexico was 16,200-16,900 pesos per tonne on Thursday. The corresponding assessment for steel reinforcing bar (rebar), delivered Bajio, Mexico was 16,300-17,000 pesos per tonne on the same day.
Nina Gattis in São Paulo contributed to this article.
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