U.S. and Mexico Edge Toward Steel Tariff Deal as Trade Imbalance Widens

The United States and Mexico are nearing a deal that would remove President Donald Trump’s 50% tariffs on Mexican steel imports up to a certain volume, according to official statements from both governments and data from the US Department of Commerce.

The talks, led by US Commerce Secretary Howard Lutnick and Mexican Economy Minister Marcelo Ebrard, aim to resolve a dispute that has unsettled North American steel markets and exposed a growing trade imbalance between the two countries.

Under the proposed arrangement, US buyers could import Mexican steel duty-free if total shipments remain below a threshold based on historical trade volumes.

Officials have not finalized the exact quota, but sources confirm it will exceed the cap from a similar agreement during Trump’s first term. The US imposed the current 50% tariff in early June, doubling the previous rate, to protect domestic producers and address national security concerns.

Mexico’s government has pushed back, arguing that the tariffs are unjustified. Ebrard points out that the US exports more steel to Mexico than it imports, giving the US a surplus of $4 billion in finished steel products.

Data shows that in 2024, Mexico exported 3.2 million metric tons of steel to the US, a 10% drop from the previous year, while US exports to Mexico rose by 21% compared to the 2015-2017 base period. This shift has widened the US surplus and created a lopsided trade relationship.

The tariff dispute comes as both countries face weak domestic demand for steel. Major infrastructure projects in Mexico are winding down, and the US steel market is seeing price spikes, with costs rising from $650 to $1,000 per metric ton since the tariffs took effect.

Mexican steelmakers, including Ternium and Deacero, are expanding capacity to meet nearshoring demand, but oversupply risks loom if exports to the US remain restricted.

Negotiators from both sides have signaled progress, but the deal’s final terms remain uncertain. If talks fail, Mexico may impose its own measures to protect its industry, though officials stress this would not be retaliatory.

The outcome will shape the future of North American steel trade and impact jobs, prices, and supply chains on both sides of the border.