Mexican exports endure Trump’s steel and aluminum tariffs

According to data from the Bank of Mexico (Banxico), exports belonging to tariff fractions 72, 73 and 76 – which include iron, steel, aluminum and its manufactures – added 16,078 million dollars that same year.

Of this amount, around 13,666 million dollars, equivalent to 85% of the total, the United States had as its destination. Although the percentage seems considerable, its relative weight in all Mexican exports suggests that the impact will not be devastating for the country’s economy.

Despite the attempts of the Mexican government to stop this measure, the negotiation did not come to fruition. Headed by the Secretary of Economy, Marcelo Ebrard, the Mexican delegation held conversations with United States commercial authorities for two days.

Mexico decided to adopt a cautious position and President Claudia Shienbaum said will wait until after April 2 deadline established for the generalized imposition of 25%tariffs, which was already postponed twice, before deciding whether it will retaliate against these measures to steel and aluminum.

Brazil, on the other hand, also chose to keep calm and look for a negotiated exit. In contrast, Canada and the European Union They reacted immediately with commercial tariff offenses in retaliation that amount to more than 20,000 million dollars and 28,000 million, respectively.

The expected impact

Financial institutions and risk rating agents agree that the impact of 25% tariffs on steel and aluminum imposed by Donald Trump will be limited to Mexico.

Being a global tariff that applies without distinction to all countries, the country’s relative competitiveness in front of other nations will not be compromised, according to the BBVA analysis.

Last experience reinforces this forecast. When Trump implemented similar tariffs in June 2018, which remained in force until May 2019, Mexican exports of these products were barely contracted 1%, from 11,964 million dollars in 2018 to 11,447 million in 2019, according to Banxico figures.

In the case of the United States, Standard & Poor’s warns that the impact may be greater if more countries decide to respond with retaliation measures. Although the increase of 11,000 million dollars in import costs seems insignificant in an economy valued in 29 billion dollars, the rating stress that the negative effects would not be limited to imported steel and aluminum prices.

The national industries of these metals could benefit in the short term, but the real cost will fall on the end users: car manufacturers, machinery, cans, containers, appliances and construction projects.

What do the industries say?

The announcement of tariffs arrives at a complicated time for the American industry, whose production and capacity are at low levels. According to official data, in 2023 the steel industry operated at 75.3% of its capacity, while the aluminum industry barely reached 55%.

From the White House, Trump points to commercial exceptions with Mexico, Canada, Australia, Argentina, Brazil and South Korea as the cause of low national production.

Canada, Mexico and Brazil are the main suppliers of these materials to the United States, with a joint participation that exceeds 50% of the market.

The pressure not only comes from the Government, but also from influential groups such as the American Iron and Steel Institute (AISI), the Association of Steel Manufacturers (SMA), the Specialized Steel Industry of North America (SSINA), the American Institute for Steel Construction (AISC) and the Association of Octg manufacturers of the United States (USOMA). These organizations fully support the protectionist measure and demand their strict application.

On the other hand, the Mexican industry and the Ministry of Economy consider unjustified the imposition of tariffs, with the argument that Mexico buys more steel and aluminum from the United States than it sells. The National Chamber of the Iron and Steel Industry (Canacero) points out that the commercial balance at the end of 2024 shows a surplus of 2.3 million tons in favor of the United States.

Since Trump signed the executive order on February 10, Mexican businessmen asked the Sheinbaum government to, if an agreement is not reached, reprisals are imposed on US steel products.

The suspicion of Chinese steel

In the midst of this commercial conflict, the United States has expressed concern about the alleged Chinese steel triangulation that enters its territory through Mexico. From the administration of Joe Biden, immediate and significant measures were demanded from Mexico to stop the increase of its steel and aluminum exports, as well as greater transparency in its imports from third countries.

However, the Ministry of Economy and the Mexican business sector firmly reject this accusation. According to official data, Mexico imports most of its United States steel (45%), followed by China (17.3%) and Germany (10.3%).

The authorities say that the numbers show that Mexico is not the platform that China uses to access the US market.

As tensions continue, Mexico faces a dilemma: keep calm and continue negotiating or, finally, responding with tariffs that would unleash a higher -scale commercial conflict.

The United States government libra its commercial battle without considering the cost, while Wall Street faces days of high volatility. Recent days show a complicated panorama: two days of pronounced falls followed by a shy recovery thanks to a positive fact about inflation.

The Secretary of Commerce, Howard Lutnick, minimized financial uncertainty and firmly defended the strategy of President Donald Trump. According to him, market fluctuations represent an inevitable side effect in a necessary and postponed negotiation process.

“The markets are going to learn: let the negotiator make their treatment. The media and the Democrats are promoting a chaos narrative, but in reality, this is a negotiating teacher working for the US people. President Trump is facing foreign countries and companies that have been cheating for years.”