Publication Date: 22-08-2023
New tariffs imposed by Mexico on steel from economies that do not have a free trade agreement with the country will help address “non-market” overcapacity in the sector, the Office of the U.S. Trade Representative said on Friday.
“The United States welcomes Mexico’s efforts to address global non-market excess capacity in the steel sector,” USTR spokesperson Sam Michel said in a statement.
Mexico earlier this week announced it would impose temporary tariffs of up to 25 percent on steel and certain other products from countries that are not FTA partners.
The U.S. is among Mexico’s numerous FTA partners; China is not.
The tariffs will remain in place until July 31, 2025, according to an Aug. 15 decree issued by Mexican President Andrés Manuel López Obrador. The decree cites concerns about global overcapacity in the steel sector as well as the impacts of the pandemic and other factors, as described in an alert by Mexican law firm Vazquez Tercero & Zepeda.
In a statement on Wednesday, Mexico’s Ministry of Economy said the changes to the country’s tariff schedule were meant to promote Mexico’s national industry, support its internal market and “strengthen the integration of national producers in value chains,” according to an informal translation.
The ministry “assumes the obligation to implement mechanisms that generate stability in the different sectors of the national industry and make it possible to eliminate distortions in trade to safeguard the balance of the global market” while “observing at all times” Mexico’s obligations to international agreements, the statement adds.
USTR recently has pressed Mexico to address what the agency describes as a “surge” in steel imports from the country. In 2019, the two countries agreed to establish processes to monitor their steel and aluminum trade after the Trump administration said it would lift Section 232 tariffs imposed on imports of the metals from Mexico.
Michel said USTR “looks forward to continuing discussions with Mexico to address the recent surge of imports of steel and aluminum products into the United States and to ensure greater transparency with regards to Mexico’s steel and aluminum imports from third countries.”
Antonio Ortiz-Mena, partner at Dentons Global Advisors and former head of economic affairs at the Mexican Embassy in the U.S., told Inside U.S. Trade that Mexican steel producers had long been pressing for measures that could help ensure a “level playing field” and likened the new measures to the Section 232 tariffs.
While Mexico’s tariffs employ a “different policy instrument,” he said, they “would level the playing field with what the U.S. is doing regarding 232 with third parties, while keeping North American trade broadly exempt from tariffs.” -- Margaret Spiegelman (firstname.lastname@example.org)