Trump Tariffs Push Gerdau to Reassess $500 Million Mexico Steel Venture

Brazilian steelmaker Gerdau reevaluates its $500 million plan for a special steel plant in Mexico due to Trump’s tariffs.

The U.S. imposes a 25% duty on steel imports starting March 2025, impacting the project’s goal of 600,000 tons yearly. Gerdau targets a final decision by July, weighing Mexico’s auto market potential.

Mexico consumes 1.2 million tons of special steel annually, with 70% imported from the U.S. and Brazil. Gerdau, operating three long steel plants there, aims to supply the USMCA-driven automotive sector with this $500 million facility.

However, the tariffs jeopardize exports to the U.S., which took 4 million tons from Mexico in 2024. CEO Gustavo Werneck notes that tariffs aren’t the sole factor—energy, water, scrap costs, and location also count.

Gerdau manages 14 North American plants, producing 5.4 million tons yearly, and watches for Chinese steel influx into Brazil and Mexico. Meanwhile, the U.S. market offers 1.2 million tons of unused capacity.

In the U.S., Gerdau’s 4 million-ton output benefits from rising demand and prices post-tariffs. With 30% idle capacity, the company boosts production without extra spending, eyeing a 12% EBITDA gain if steel prices rise 5%.

This fits America’s “Buy America” trend, forecasting 5 million tons of demand by 2035. Brazil faces 4.6 million tons of Chinese steel imports in 2024, up 24% from last year.

Gerdau, earning $7.66 billion from 9.6 million tons exported globally, pushes for a 35% tariff on Chinese steel to shield its 37% Brazilian EBITDA slice. The firm commits R$ 6 billion to Brazil through 2026.

Gerdau’s Mexico pause mirrors a steel sector hit by trade barriers and surplus supply. Using a 98% scrap-based process in North America, it stays efficient, but Mexico’s energy and water issues loom large. By July 2025, Gerdau’s decision will shape its North American path in a turbulent global landscape.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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