Background on the Mexican Steel Industry and Key Players
The Mexican steel industry, represented by the National Steel Council (CANACERO) and Tenaris-Tamsa, is advocating for retaliatory measures if the United States does not remove Section 232 tariffs on Mexican steel. This demand is part of the Sectoral Diagnostic Summary included in the Mexico-United States-Canada Agreement (T-MEC) that will be sent to Mexico City’s Mayor, Claudia Sheinbaum.
Section 232 Tariffs and Their Impact
Under Section 232, the United States imposed a 50% tariff on Mexican steel, citing national security concerns. This led to a 50% decrease in Mexican steel exports between April and July 2019, disrupting the free trade under the T-MEC. The tariffs have also resulted in reduced regional content promotion and increased unfair competition from subsidized Asian capacities, particularly China.
Key Concerns and Proposed Solutions
- Insufficient Regional Content Promotion: The current steel rules of origin do not adequately encourage regional content or production within the region.
- Unfair Competition from Asia: Excess capacities, especially from China, create unfair competition and allow for the import of manufactured goods such as cars, appliances, and auto parts.
- Replace “National Security” with “Regional Security”: Strengthen trilateral dialogue and establish regional trade policy measures.
Testimonies from Industry Leaders
During a Senate hearing, Víctor Martínez, CANACERO’s president and ArcelorMittal México’s general director, described the steel industry’s risk scenario. He argued that the US tariffs lack economic justification, given the trade surplus the United States maintains over Mexico in steel.
- Price Discrepancies: According to US specialty media, prices for 13 Mexican references have decreased, while US prices increased during the same period.
- Political and Asian Pressure Factors: Martínez attributed the tariff imposition to political factors in the US and pressure to address overcapacity from Asia. He recommended strengthening Mexican trade policies and collaborating with the US and Canada within a common defense framework.
Jesús Flores, Tenaris-Tamsa’s institutional director and international trade affairs manager, contextualized the issue with China and its state-owned production model that generated excess capacity, distorting industries. He reminded the Senate that Mexico was included in Section 232 in 2018 despite trilateral collaboration, prompting Mexico’s response with retaliatory measures and a WTO lawsuit.
Next Steps
The Senate’s 17 working groups, organized by the United Economy Commission and T-MEC Implementation Follow-up and Review Committee, propose a coordinated effort with the federal government to develop the sector. This includes participating in T-MEC technical tables to define rules of origin, traceability, energy policy, and industrial policy.
