A bipartisan group of federal lawmakers has introduced the Stop Mexico’s Steel Surge Act.
In December, Sens. Sherrod Brown (D-Ohio), Tom Cotton (R-Ark.) and a dozen other colleagues sent a letter to the Biden administration’s national security advisor alleging Mexico, in breach of a trade deal it reached with the United States in 2019, was allowing steel imports to surge into the U.S. market well above the agreed-to benchmarks.
Last week, they took it further and introduced legislation to reinstate tariffs on those imports. Cosponsored by Reps. Frank Mrvan (D-Ind.) and Rick Crawford (R-Ark.) in the House, the Stop Mexico’s Steel Surge Act would return tariffs of 25% for no less than one year and give the president the authority to impose additional tariff rate quotas on specific products as needed.
These tariffs were the result of a Section 232 national security investigation concluded by the Trump administration that raised a 25% tariff on all steel imports, and came down as Mexico, Canada and the United States finalized the U.S.-Mexico-Canada Agreement. The agreement allowed that the U.S. could reinstate them, however, if the imports surged.
In their December letter, the senators cited Commerce Department data that showed in 2022, semi-finished steel and long product imports had increased 120%, compared with the 2015-2017 historical average. Steel conduit imports rose 577%, and all Mexican steel imports were up 72%. The data suggests steel is among the flood of goods now coming to Mexico from China in an effort to circumvent U.S. tariffs on directly imported Chinese goods.
U.S. Trade Representative (USTR) Katherine Tai has continued to push Mexican trade diplomats on its obligation to monitor and prevent such surges. As recently as Feb. 16, she met with Mexican Economy Minister Raquel Buenrostro and raised concerns about the import levels.
And Mexico is indeed responding. For example, in the last month it has slapped anti-dumping duties on specific Chinese steel imports, which market analysts attribute to U.S. pressure. Bilateral trade between Mexico and China has boomed in recent years, as tariffs have (relatively) curtailed U.S.-China trade and Mexico has become the passthrough for Chinese goods destined for the U.S. market.
Still, a little over a week after speaking with Ambassador Tai, Mexico’s Buenrostro told reporters the threat of U.S. steel tariffs was motivated by domestic U.S. politics, and the Mexican government would retaliate if they are reinstated.
Mexico had better get its retaliation plans in order, because there are at least some members of Congress eager to escalate the U.S. response to the import surge Mexico is uninterested in addressing.
Will this bill pass? Not likely, according to one Washington-based trade attorney quoted in Fastmarkets. But, it does provide USTR negotiating leverage as it continues to press Mexico City to do something about this. We’ll keep an eye on the import surge and legislation as the story develops.