Mexico will be reinstating a temporary 15 percent import tariff in 228 steel items starting June 2022 and is expected to gradually removed them by August 2024. This measure was fueled by the necessity of boosting the Mexican steel industry in a post-COVID economy.
“To establish a favorable environment that would allow the steel industry to adjust to the international economic context, stimulate the domestic market and define a medium and long-term tariff policy, a temporary import tariff of 15 percent was established for 228 tariff items with a tariff reduction schedule that would end on August 22, 2024,” reads the decree published in the Official Gazette (DOF).
The decree argues that the measure to initially amend the Tariff of the General Import and Export Tax Law, was mainly due because the US imposed 25 percent tariff established in “Section 232” arguing for national security tariffs on steel and aluminum imports back in 2018 during Donald Trump’s administration.
However, next year’s reinstatement of the amendment has been argued necessary by the local steel industry, as it “requires a period of adjustment that allows it to resort to the necessary legal instruments against unfair trade practices,” establishing a provisional increase of the import tariff in products derived for the steel industry, such as cold-rolled sheet, plate in coil and plate in sheet.
Backing the DOF’s statement, it was argued that this measure could limit unfair imports with the countries that Mexico has trade agreements, especially since the country is the 15th largest producer of steel, according to a spokesman from the National Chamber of the Iron and Steel Industry (CANACERO).
The spokesman mentioned that Mexico reached 18.4 million tons of steel production in 2019 with Coahuila considered the national leader in liquid steel production with 5.5 million tons produced every year followed by Michoacán, Nuevo León, Veracruz and Guanajuato. The industry creates more than 672,000 direct and indirect jobs.
The Gazette also mentions one of Mexico’s strategies in its 2019-2024 National Development Plan, which concerns the national economy and the federal government’s commitment to “boost the economic reactivation, the national market and employment.”
Therefore, the corresponding publication brings forward the COVID-19 scenario, arguing that due to last year’s 3.2 percent decrease in the world’s economy, the tariff imposition becomes “necessary to reinstate the temporary measure of a 15 percent tariff on June 29, 2022, and continue with the medium-term tariff reduction scheme outlined in the Decree of December 24, 2020."