USMCA Steel Tariffs: Mexico Demands Cut to 10% to Save Trade

Trade: USMCA

Mexico is pushing for parity with the United Kingdom on steel tariffs as the next USMCA review round approaches, arguing that its status as the largest buyer of US steel should disqualify it from the same punitive rates applied to countries Washington treats as competitive threats.

Why Mexico Wants the UK Rate

The core of Mexico’s argument is trade-balance arithmetic. Economy Minister Marcelo Ebrard has repeated throughout 2026 that Mexico buys more US steel than any other country, making it the trading partner with which the United States runs its largest steel surplus. Under that logic, Ebrard says, the national-security rationale for Section 232 tariffs — that imports threaten domestic industry — does not apply to a country that is a net buyer of American steel.

Washington currently applies a 10 percent rate to UK steel, well below the 50 percent imposed on Mexico. Ebrard has framed the gap as the clearest evidence that the tariff structure is not calibrated to actual trade dynamics, and therefore the clearest opening for negotiation in the September round.

The minister also notes that Mexican industry has spent years investing in domestic smelting and processing capacity specifically to avoid triggering US tariff action, a strategy he describes as consistent since 2018. That investment, he argues, should be rewarded with parity rather than punished with a rate five times higher than the UK’s.

The Damage Already Done

The figures Ebrard cites are not projections; they are backward-looking trade data. Mexico’s steel exports to the United States fell 36.6 percent in 2025 under the 50 percent duty, and domestic steel capacity utilization dropped to 55 percent, according to Mexico Business News reporting on July 31, 2026.

The pain extends beyond steel makers. Automotive shipments fell 5.1 percent year-over-year in the first four months of 2026, according to the same source, because the 50 percent steel and aluminum tariffs are layered on top of 25 percent automotive tariffs that hit goods missing USMCA content thresholds. The Asociación Mexicana de la Industria Automotriz, Industria Nacional de Autopartes and related associations warned in March 2026 that the measures could disrupt supply chains and reduce the region’s global competitiveness.

Ebrard called the 50 percent rate “unsustainable” during the first formal negotiating round in May 2026, warning that continued duties threaten up to 350,000 manufacturing jobs tied to the automotive supply chain. That number has become a fixture of Mexico’s public case for relief.

What Is on the Table in September

The narrowing agenda reflects how the review process has evolved. Mexico says the number of unresolved US demands fell from 54 to 14 between the 2025 and 2026 review cycles, with Mexico presenting 13 of its own concerns in return. The remaining contested points are concentrated in four areas: steel, aluminum, automotive tariffs and the Rapid Response Labor Mechanism.

The September round in Washington is not happening in isolation. A separate US Section 301 determination on structural excess manufacturing capacity across 16 economies — including Mexico, China, the European Union, Japan and South Korea — is pending, with new tariffs possible as soon as August 2026. Ebrard has indicated Mexico intends to treat the two tracks as linked rather than separate, arriving in Washington with a consolidated position across both the USMCA review and the Section 301 exposure.

For now, roughly 85 percent of Mexico’s exports to the US still enter duty-free under USMCA rules of origin, a figure Ebrard says US negotiators have accepted as part of the bilateral dialogue. The question is whether that share holds if steel and aluminum tariffs remain unresolved.

Why the Outcome Matters Beyond Steel

The steel dispute is a proxy for a larger question: whether the USMCA review will be a technical update or a structural renegotiation. Mexico and Canada have asked to extend the agreement to 2042; the United States has so far declined, opting instead for annual reviews. If steel tariffs are resolved, the path to a longer extension becomes easier. If they are not, the annual-review cycle could become permanent, embedding uncertainty into investment decisions for years.

For Latin American readers, the stakes are less about steel chemistry than about whether a trade agreement that governs roughly US$2 trillion in annual commerce will stabilize or fragment. Mexico’s argument — that a loyal buyer of US steel deserves better than a hostile competitor’s tariff rate — is a test of whether trade rules will be applied by formula or by politics.

Frequently Asked Questions

What tariff does Mexico currently pay on steel exports to the US?

Mexico pays a 50 percent duty under Section 232 on steel and aluminum exports to the United States, according to Mexico Business News reporting on July 31, 2026.

What rate is Mexico asking for?

Mexico wants the 10 percent rate that Washington applies to United Kingdom steel, arguing that Mexico’s status as the largest buyer of US steel justifies parity, per Economy Minister Marcelo Ebrard on July 31, 2026.

When is the next USMCA review round?

The fourth round is scheduled for September 2026 in Washington, D.C., with steel, aluminum, automotive tariffs and the Rapid Response Labor Mechanism on the agenda, according to Mexico Business News on July 24, 2026.

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