US Steel Buyers Turn to Asia as Mexican Shipments Contract

US steel imports rose 0.82% YoY in July 2026 to 2.05 million metric tons, but sourcing is shifting toward South Korea and Indonesia while Mexico, Canada and Brazil post the steepest year-to-date declines. COMCE data show the value of US purchases of Mexican steel fell 41.7% in 1H26 as Mexico's imports of US steel rose 16.6%, strengthening Mexico's case against Section 232 tariffs in the USMCA review. The trend pressures Mexican steelmakers, automotive suppliers and manufacturers embedded in North American supply chains.

The United States has not stopped buying foreign steel under its Section 232 tariff regime, but it is increasingly sourcing it from outside North America. The latest figures from the US Department of Commerce show import volumes holding broadly stable, while suppliers such as South Korea and Indonesia gain ground and Mexico, Canada and Brazil lose it.

In July, US imports of steel products, including slabs and wire rod, totaled 2,050,914 metric tons, a 0.82% increase compared with the same month of 2025. According to the department's monthly report, the largest gains that month came from South Korea, Indonesia and Russia, while the sharpest pullbacks involved Argentina, Japan and Australia.

The year-to-date picture is less favorable for Mexico. Cumulative figures place Canada, Brazil and Mexico among the countries with the steepest declines, while South Korea, Argentina and Indonesia posted the strongest increases, confirming that the drop in Mexican shipments reflects a sustained trend rather than a single weak month.

Data compiled by the Mexican Business Council for Foreign Trade, Investment and Technology (COMCE) point in the same direction. Between January and June, the value of US imports of Mexican steel fell 41.7% year over year, while volumes dropped 37%. Over the same period, Mexico's purchases of US steel rose 16.6%. For Comce, the numbers counter the argument that Mexican steel poses a threat to US producers, revealing instead a deeply integrated value chain in which bilateral trade keeps expanding and the United States retains a surplus in key metals.

A Prolonged Decline

The latest numbers extend a contraction that deepened after Washington raised metal tariffs to 50% in 2025. Banxico data show the value of Mexican steel exports to the United States fell 12% between January and October 2025 compared with the same period of 2024. According to the American Iron and Steel Institute, Mexican shipments dropped 60% under the tariff regime, a far steeper fall than Canada's 13% or Brazil's 30%. In 2024, Mexico had supplied US$3.53 billion in steel, equal to 11% of total US imports. 

The erosion also extends to downstream products. USITC data show Mexico's share of US imports of iron and steel articles, such as pipes, fasteners and structural components, slipped to roughly 9% in 2025 from about 11% a year earlier, while Canada's share fell from 21% to 18%, leaving room for exporters from other regions.

At home, the Mexican industry has been running at about 55% of installed capacity, according to Minister of Economy Marcelo Ebrard, who reported a 55% decline in US-bound exports over a six-month period. Officials have estimated that as many as 350,000 jobs could be at risk by the end of 2026, with the automotive sector, which accounts for about one-third of Mexico's manufacturing employment, among the most exposed. 

Shifting Tariff Rules

Washington has repeatedly redrawn its metals framework in 2026. In April, it introduced a tiered structure applying 50% duties to steel, aluminum and copper, 25% to derivatives and 15% to certain industrial equipment through 2027. Mexico responded by making permanent tariffs of 10% to 35% on steel from countries without trade agreements and tightening oversight of IMMEX and other special import programs. A June adjustment reduced the North American steel-content threshold required for preferential treatment from 95% to 85%. 

The June proclamation also created blended rates for several trade agreement partners, including South Korea, Japan and Argentina, under which combined duties are capped at 15% for many products, according to consultancy Prodensa, a structure that may help explain why some of these suppliers are gaining share in the US market. 

Relief for Mexican producers remains conditional. Under a mechanism published on April 23, steel and aluminum producers operating in Mexico or Canada can request lower duties if they commit to new US primary production capacity linked to automotive and heavy-vehicle supply chains, although the adjusted rate cannot drop below 25%.

Steel on the USMCA Table

Metal tariffs have become one of Mexico's top priorities in the USMCA joint review. During the first negotiating round in May, Ebrard described the duties as unsustainable and sought their reduction or removal for goods that comply with rules of origin. Mexico has also proposed a UK-style arrangement that would grant tariff-free access subject to strict melt-and-pour verification, aimed at preventing the transshipment of steel from outside the region. 

COMCE's emphasis on rising Mexican purchases of US steel also aligns with the government's broader negotiating stance. President Claudia Sheinbaum said Mexico is evaluating buying more US goods to narrow a bilateral surplus that reached US$102.6 billion in 1H26, a period in which imports from the United States climbed 16.6% to US$195.6 billion. 

For now, the data suggest that Section 232 has not reduced US reliance on imported steel so much as redirected it, moving orders away from North American partners and toward Asian suppliers. Mexican negotiators are likely to present that outcome as evidence that the tariffs undermine the regional integration the USMCA was designed to strengthen.