The US and Mexico will exempt Brazilian steel imported from Mexico from adjustments made to the US' section 232 tariffs.
Steel imported from Brazil that is processed in Mexico then exported into the US will not be subject to tariffs, the Mexican external relations ministry said today, adding that "the melting and pouring requirements will not apply to products that come from [Brazil]."
The US and Mexico jointly announced on Wednesday new import restrictions that will reinstate the 25pc and 10pc section 232 tariffs on some steel and aluminum imported from Mexico, requiring imported steel to be melted and poured in the US-Mexico-Canada free trade agreement (USMCA) region, while aluminum should not contain primary aluminum or be smelt or cast in Belarus, China, Iran or Russia.
The new measures aimed at preventing Chinese steel from triangulating through Mexico, which both the administration and a bipartisan group of lawmakers have accused Mexico of allowing.
The move is part of an effort from Mexico's government to avoid negative effects on the country's steelmaking sector, which is suffering because of a 50-day long strike at one of its key mills, ArcelorMittal's Lazaro Cardenas mill in the Michoacan state, that has cost the firm almost 500,000 metric tonnes (t) in lost production.
Brazil is an important steel exporter to Mexico. In June, the South American country exported around 68,480t of slab to Mexico, more the double the amount from the same month in 2023, according to Brazil's ministry of development, industry and foreign trade data compiled by the Global Trade Tracker.
Steelmakers that have greater exposure to selling products with less added value to units in Mexico to then be rolled there are the companies that tend to benefit the most from this situation, Genial Investimentos metals analyst Igor Guedes told Argus.
