Mexico’s Steel Exports Tumble 60% Amid Escalating Tariffs

Following a sharp 60% drop in steel exports to the United States in April, Mexico has urgently appealed to Washington to reconsider the newly imposed 50% tariff. President Claudia Sheinbaum calls the tariff unjustified and harmful to bilateral trade.

Experts note that the initial 25% tariff had already left a negative impact on the sector. The recent increase to 50% is expected to deepen the damage. Compared to other exporters, Mexico's decline is particularly severe. While Canada, the leading supplier, recorded a 13% drop in exports, and Brazil, the second-largest, saw a 30% decline, Mexico’s exports plummeted by 60%. These figures, provided by the American Iron and Steel Institute, highlight the disparity in the effects of the tariff.

Mexico’s steel industry plays a crucial role in the national economy, contributing 1.4% to GDP and 8.7%  to manufacturing output. The outlook is growing increasingly uncertain. Fitch Ratings warns that the new tariff could reshape the supplier structure in the US market by sidelining higher-cost producers and favoring the most competitive steelmakers.

In response to these developments, President Sheinbaum reiterates her opposition to the measure. She argues that Mexico imports more steel than it exports, meaning the country runs a trade deficit, making the tariff both unjustified and legally unfounded. She also emphasizes the existence of a trade agreement and the close bilateral cooperation on security and other strategic matters.

Sheinbaum adds that steel, like auto parts, often crosses the border multiple times during the production process. Imposing a 50% tariff under these circumstances disrupts not only Mexican exports but also US manufacturing supply chains.

The Mexican government is working closely with national steel and aluminum industry chambers to address this problem. Minister of Economy Marcelo Ebrard is leading negotiations with his US counterparts, Howard Lutnick and Jamieson Geer. The goal is to secure Mexico’s exemption from the tariff and protect jobs and industrial activity.

“Our priority is clear. We will defend employment, support our industry, and demand fair conditions for trade. We seek a broad agreement with the United States that resolves current tensions and ensures long-term stability,” states Sheinbaum. She also warns that, should negotiations fail, Mexico would implement countermeasures to protect its strategic sectors.

Beyond the immediate economic impact, the new tariff is closely tied to broader political dynamics. In late May, Donald Trump approved the acquisition of US Steel by Japan’s Nippon Steel in a US$14 billion deal. The 50% tariff is part of the agreement, aimed at ensuring the venture’s future profitability. 

In 2018, Trump introduced a 25% steel tariff under Section 232 of the Trade Expansion Act of 1962, citing national security. The Peterson Institute for International Economics (PIIE) later analyzed that policy and found that while it generated US$270,000 in additional profits per steel job saved, it also raised annual costs by US$650,000 for steel-consuming industries. US steel production remained stable at around 80Mt per year, and employment figures stayed between 80,000 and 90,000.

The PIIE now warns that the new tariff could produce similar outcomes: increased profits for large firms such as US Steel, Nucor, Steel Dynamics, and ArcelorMittal, but elevated costs for manufacturers and negligible improvements in long-term competitiveness. “The 50% tariff will almost certainly boost profits for major steel companies. However, the resulting job losses and higher prices will impose a heavy burden on American manufacturers and households,” says the institute.