Mexico Accepts US Steel Deal


Earlier this month, Mexico lawmakers announced that the country would accept a U.S. demand regarding greater regional content on steel in the deal between the U.S., Mexico and Canada if the measure was implemented after the trade pact was ratified. In a more recent update, Mexico turned down such a request for aluminum, as the country does not produce aluminum.

The United States-Mexico-Canada Agreement would replace the North American Free Trade Agreement.

Previous Deals in Steel

In March 2018, Trump imposed tariffs on steel and aluminum imports from other countries. The assigned duties were 25% on steel products and 10% on aluminum.

Companies that felt they needed to use steel or aluminum from another country—because that particular product wasn’t made in the U.S., for example—had the opportunity to apply for an exemption.

By June, the U.S. allowed the tariffs to go into effect for Canada, Mexico and the European Union, after months of discussion of possible exemptions. The U.S. Department of Commerce also announced the first round of exemptions, while noting that it would be investigating whether some companies in the market were taking advantage of the duties and raising prices unduly.

As Trump continued work on updating the United States-Mexico-Canada Agreement, Steel Dynamics CEO Mark Millett went on the record to say he believed a quota system would replace the current tariffs that the steel and aluminum industry were subjected to.

However, some in the aluminum industry were reportedly against the quotas, in fear that they would raise prices on aluminum-dependent goods. In May, Trump announced that the U.S. would lift its steel and aluminum tariffs imposed on Canada and Mexico in exchange for a new monitoring and enforcement system that will prevent import surges into the U.S. As a part of the agreement, Mexico and Canada would also lift its retaliatory tariffs on American products.

In July, Trump signed an order that would see the expansion of the use of American-made iron and steel in federal projects. The “Buy American” platform aims to push the domestic content threshold from 50% to 95%.

Most recently, on Tuesday (Dec. 10), officials from Canada, Mexico and the United States signed the deal once again. Trump has been striving to revamp the 1994 agreement. Though the revised version was signed more than a year ago, Democrats, who controlled the House of Representatives, held out for significant changes to labor rights.

Recent Developments

Foreign Relations Secretary Marcelo Ebrard also added that Mexico would be refusing to accept requests on behalf of U.S. inspectors to come into Mexico factories in order to ensure that country labor laws are being enforced.

Earlier this month, U.S. Trade Representative Robert Lighthizer demanded that there be a restriction on what would define North American steel and aluminum under automotive rule of origin. This would mean that metals would only be melted and poured in North America.

Mexico would allow the rule for steel to be put into action after at least five years, according to Reuters. Dispute resolution panels will be used to examine compliance with labor laws. Previously, low wages enabled Mexico to draw a significant number of auto jobs away from the U.S.

“We would like to congratulate the governments of Canada, the United States and Mexico on their efforts on the CUSMA (Canada-United States-Mexico Agreement),” said Catherine Cobden, President of the Canadian Steel Producers Association.

“The CUSMA is an important agreement for the North American steel industry and its customers in steel-consuming industries. It will benefit Canadian steel producers by further strengthening manufacturing supply chains in North America and by improving on the terms of NAFTA.”

Both the U.S. United Steelworkers union and the AFL-CIO labor voiced their approval of the deal.


Tagged categories: Aluminum; Government; NA; North America; President Trump; Program/Project Management; Steel

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