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Tuesday, July 9th 2019

United States Applies Tariffs to Mexican Steel

Written by

Rafael Bracho

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United States Applies Tariffs to Mexican Steel

New US tariffs placed on Mexican steel

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United States Applies Tariffs to Mexican Steel

On Monday, July 8th, the United States publicly announced that it would be slapping new tariffs on steel goods being imported from Mexico and China. This is not without its controversy for some, however. 

This action came after US steel producers lodged a grievance in February stating that Mexico and China were benefiting unfairly. A preliminary report found issued by the Commerce Department found that exporters of Mexican and Chinese fabricated structural steel were reaping the benefits from their home countries with subsidies ranging from 30.3% – 177.43%. Together, Chinese and Mexican steel accounted for $1.5B USD worth of revenue in 2018. 

Canada was also benefitting from subsidies, however, these benefits were very negligible. Therefore, Canadian steel imports will not be charged with any retaliatory duties to which Prime Minister Trudeau seemed quite pleased. 

*Click here to see the video of the Trudeau/Trump meeting.

This comes on the same day that the Mexican Finance Minister Carlos Urzua resigns with a scathing letter about the Mexican administration. Click here to learn more.

The United States released in a statement that these tariffs will go into effect immediately based on the subsidy rates being offered by either China or Mexico. However, they may be refunded if officials from the Independent US International Trade Commission block the Commerce Department’s tariffs if they determine that American firms were not affected by the subsidies. 

This move toward tariffs comes after the three north American countries of Canada, United States, and Mexico renegotiated and revised their free trade pact agreement called “USMCA”. 

On May 20th, during the negotiations for this free trade pact agreement, President Donald Trump agreed to lift his global tariffs—of 25% on steel and 10% for aluminum—from Mexico and Canada. However, the Mexican Economy Ministry released a statement however, saying that these new tariffs are unrelated to the tariffs lifted in May. 

Furthermore, these tariffs come right after Mexico’s new National Guard has been diverted from fighting crime in Mexico to preventing illegal immigration to the United States. Mexico has agreed to help police the northern border or risk tariffs placed on Mexican goods coming into the United States. Mexican President Lopez Obrador has been hoping to keep American tariffs at bay, yet these recent tariffs seem to counter AMLO’s approach.

American President Donald Trump has hailed these tariffs as a victory for America’s struggling metals industry. However, the US steel industry has shown little recovery. 

It is unclear how these new retaliatory duties will affect industry in parts of Mexico that depend on steel manufacture to the United States. One thing is certain, these areas could see an economic downturn if tariffs impact industry negatively.

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