Mexico steel group welcomes exclusion from US tariffs, but fears trade redirection

The Mexican national steel association, Canacero, has welcomed the decision by the United States government to temporarily exclude Mexico-origin steel from its new Section 232 import tariffs, but has voiced concerns about the growth of redirected import flows.

“The decision [not to apply duties on steel imports from Mexico] will strengthen and increase the competitiveness of the production chain in the North American region,” the group said on Friday March 9.

“This exclusion reinforces Mexico’s role as a partner of the US in terms of trade and national security,” it added.

On Thursday, US President Donald Trump confirmed his previously announced tariffs of 25% on steel and 10% on aluminium imports.

But the tariffs will exclude North American Free Trade Agreement (Nafta) members Canada and Mexico – at least temporarily, while renegotiations of the Nafta treaty continue, Trump said.

Meanwhile, Canacero urged the Mexican government to prevent the local market from being used as a “trade triangulation” environment by exporters intent on redirecting steel volumes previously destined for the US, as well as to defend the national industry from unfair steel imports.

Following the announcement of the US import tariffs, the Mexican government recalled that, more than two years ago, in light of the global steel overcapacity, it took “timely” and “effective” measures to defend its industrial sector, raising import tariffs.

“Thanks to these actions, we reoriented our imports of steel to North America, showing that it is possible to address this problem and to comply with our international commitments within the framework of the World Trade Organization [WTO],” the government said.

In October 2017, Mexico extended, for the fourth time, a 15% tariff imposed on imports of slab, hot-rolled coil (HRC), heavy plate, cold-rolled coil (CRC) and wire rod to protect the domestic steel sector. The 15% duty was first set for a six-month period in October 2015.

The Mexican government also said that the renegotiation process for the modernization of the Nafta deal is following a normal course, based on the instructions to its ministers at the end of the seventh round of negotiations, recently held in Mexico City.