Analysis
May 7, 2026
USMCA Review: Time to finish the job for North American steel
Written by Kevin Dempsey
The United States-Mexico-Canada Agreement (USMCA) was a necessary and overdue modernization of NAFTA. It reinforced the foundation of manufacturing that supports our auto sector, infrastructure, energy systems, and national security—and recognized steel’s essential role in those sectors and others.
But today, as the required six-year review of USMCA is set to occur, that foundation is under pressure. North America competes in a world distorted by massive global steel overcapacity, fueled by foreign government subsidies and non-market practices that have caused surges of foreign steel imports into the region.
Over the past decade, steel imports from outside the USMCA region into Mexico and Canada have surged by roughly 75%. Meanwhile, the United States—through strong enforcement tools like Section 232 steel tariffs and trade remedy laws—has reduced its exposure to imports of steel from outside the region. The imbalance is clear.
When one part of North America becomes a back door for unfairly traded steel, it weakens the entire region. This is not just a steel issue—it is a North American economic security issue. Steel is the backbone of our manufacturing supply chains. If those supply chains are undermined by foreign trade-distorting practices, the consequences ripple throughout the entire economy.
USMCA made important progress. Stronger rules of origin for autos and auto parts—including the requirement that 70% of steel purchases by automakers originate in North America—have helped drive demand for regional steel.
But key provisions remain incomplete or insufficiently enforced, and new challenges have emerged. AISI has recommended concrete actions needed to ensure the steel industry’s priorities are addressed and America’s manufacturing base remains competitive.
First, North America needs a common external trade policy approach to address the effects of global steel overcapacity. The United States has taken decisive action to address surges in imports driven by excess capacity. Mexico and Canada should align with that approach by adopting tariff measures equivalent to the Section 232 steel program. A consistent tariff framework would ensure that steel importers cannot use Canada and Mexico to circumvent US tariffs.
Second, we must adopt a clear and consistent “melted and poured” standard for determining the origin of steel. In simple terms, steel should count as North American only if it is actually melted here—not merely finished or processed in the region. This is where the real economic value is created, where jobs are supported and where investment is made. Without this standard, foreign steel can be simply processed in the region and effectively relabeled as North American. That undermines both the intent and the integrity of the USMCA.
Third, we need to strengthen the rules of origin for downstream steel-intensive manufactured goods to further incentivize the use of North American steel in North American manufacturing. That includes ensuring that new steel-intensive components are captured and that thresholds for North American content remain meaningful.
Fourth, duty deferral and temporary import programs must be tightened to prevent abuse. These mechanisms should not become pathways to avoid tariffs on imported steel. When duties can be sidestepped, the effectiveness of enforcement is eroded.
Finally, we need greater transparency and cooperation across North America. Better import monitoring across all USMCA countries —especially tracking where imported steel is actually melted and poured—combined with stronger customs coordination, will help identify and stop transshipment, misclassification, and evasion.
The stakes could not be higher. Mexico and Canada are the two largest export markets for American steel, accounting for more than 90% of US steel exports. That success reflects decades of integration and shared growth. But it also underscores why getting the USMCA right matters so much.
Strong trade agreements do not just open markets—they defend them. For the USMCA, that means ensuring North American workers and producers are not competing against distorted markets and subsidized excess capacity from elsewhere in the world.
And it is about recognizing that steel is not just a commodity. It is a strategic asset—essential to our economy, our infrastructure, and our national defense.
The USMCA was a step forward. The upcoming joint review is our chance to take the next step. If we act decisively—aligning policies, closing loopholes, and strengthening enforcement—we can ensure that North America remains the most competitive and secure manufacturing region in the world. The path forward is clear. Now it is time to finish the job.
