U.S. Mexico Near Deal to Eliminate 50% Steel Tariff

The United States and Mexico are on the verge of finalizing an agreement to eliminate the 50% tariff on steel imports below a certain threshold, a measure imposed during the Trump administration. The negotiations, led by U.S. Commerce Secretary Lutenick, aim to establish a quota system that would allow a specified volume of Mexican steel to enter the U.S. duty-free, provided that total shipments remain below levels based on historical trade volumes. This new cap is expected to be higher than the limit set during Trump’s first term, which was based on average import levels from 2015 to 2017.

Under the current terms of the agreement, U.S. buyers would be able to import Mexican steel without paying tariffs as long as the total shipments do not exceed the agreed quota. This arrangement is designed to prevent the transshipment of steel products from third countries, such as China, via Mexico to the United States. The quota system is seen as a way to manage import surges from Mexico more effectively, addressing concerns about national security and unfair trade practices.

Mexico is currently the third-largest source of U.S. steel imports, with 3.52 million net tons in 2024, a 16% decrease from 4.18 million in 2024. The proposed deal is expected to bring stability to the steel industry by providing a clear framework for trade between the two countries. The Mexican government has indicated that it would announce countermeasures if no agreement is reached with the United States on steel and aluminum tariffs. The potential deal is seen as a way to address the U.S.'s trade surplus with Mexico in steel and aluminum, which has been a point of contention between the two countries.

The negotiations come at a time when the U.S. has historically sought to control import surges from Mexico. The proposed quota system is seen as a way to manage these flows more effectively, while also addressing concerns about national security and unfair trade practices. The agreement would likely include a quota arrangement, similar to the measures previously in place for Brazil. This arrangement would help curb the transshipment of steel products from third countries, such as China, via Mexico to the United States.