Category: Mexico

Section 232 tariffs are expected to go into effect March 12.

The penalties are expected to be reinstated on Wednesday, March 12. 

The administration’s trade rollercoaster is moving at record speeds, running along the rails of innovation and expansion. But it can be confusing and difficult to keep up with. US manufacturers that follow these developments closely could benefit from the ride. Companies that miss new updates, or fail to accurately interpret their duty liability, could be left feeling queasy. Some rollercoasters are not for the faint of heart, and this one is a bit like Space Mountain. We are all riding without much ability to see the next turn or drop.

Domestic shredded scrap has experienced a renaissance in pricing since January. And that increase had caused traditional exporters to ship their material to domestic users instead of overseas. But with recent changes, this cycle may end with the resurgence of export demand and continued foreign exchange fluctuations.

Imposing country-of-origin duties plus the upwardly revised Section 232 duties would create an untenable value for Midwest P1020. Modeling the extreme outcome of 25% country-of-origin tariffs plus 25% Section 232 tariffs could put Midwest physical premiums as high as $0.65 per pound. No, that is not a typo: $0.65 per pound! Primary aluminum supply chains would rotate from importing Canadian aluminum to importing it from India, the Middle East, or other very distant origins. That is worrisome for manufacturers.

Steel imports ended 2024 on a low note, with November trade falling to a one-year low and December seeing a modest 3% recovery. Then as the new year began, import volumes spiked.

SMU interviews JSW USA CEO Robert Simon.

"We urge you to resist any requests for exceptions or exclusions and to continue standing strong on behalf of American steel," the companies wrote.

The Trump 1.0 tariffs appeared to have little positive effect on the US manufacturing, partly because they hurt export competitiveness.

An inventory valuation of the assets of Altos Hornos de Mexico SA (AHMSA) has been completed. Local reports suggest an auction for the assets of the bankrupt steel company could come as soon as the end of this month.

Wonder what the fallout from all the Trump tariffs might be? A manufacturing renaissance? A post-WWII order in ashes? Or something a little more down the middle? Then register for our next Community Chat on Thursday, March 13 at 11 am ET. Yes, you read that correctly, SMU is shattering precedent by holding a Community Chat on a day that is not Wednesday. Our featured speaker will be Alan Price, a leading trade attorney at Wiley and someone whose columns you read regularly in SMU.

Before we get whipsawed by the current moment, it’s important to reflect on optimism. Whatever happens, consumers are going to need steel.

The situation on ferrous scrap has cleared up with the pause of the implementation of Canadian and Mexican blanket tariffs.

Facing an uncertain tariff trade war, Algoma Steel took action this week, halting steel shipments to the US, laying off employees, and prepping for an unknown future, according to local media reports.

The latest on the trade war

Mexico has launched an anti-dumping investigation into imports of hot-rolled steel from China and Vietnam.

On 4 March, new 25% blanket tariffs across all products exported to the USA from Canada and Mexico are now in effect. The only exception is Canadian energy products, which will be assessed a 10% tariff.

April 2 is when reciprocal tariffs are expected to kick in.

Remember infrastructure week in Trump 1.0? It became a running joke. Because it was almost always derailed by whatever the scandal of the day was. In Trump 2.0, we've got tariff week. And unlike infrastructure week, tariff week is no joke.

Don't forget that Trump's reinstatement of the Section 232 tariffs on steel and aluminum imports is slated for Wednesday, March 12.

The Association of Equipment Manufacturers slammed the use of "broad and indiscriminate" penalties.

Steel Manufacturers Association (SMA) President Philip K. Bell stressed a mood of "cautious optimism" for steel on what turned out to be Tariff Eve.

We really don’t know yet what and how severe the impact will be. But we do know ferrous scrap will become more expensive in the US. And it will be less expensive for Canadian mills. The larger consequences will be felt on the Canadian front. Even so, in the Southwest, the tariffs on Mexico will lower prices for Mexican scrap and might limit normal flows across the border.

SMU’s Monthly Review provides a summary of key SMU steel market metrics for the previous month, with the latest data updated through February 28th.

President Trump reaffirmed Monday afternoon that his 25% universal tariff on all imports from Canada and Mexico would take effect on Tuesday. “Tomorrow – tariffs 25% on Canada and 25% on Mexico. And that’ll start,” Trump told reporters Monday, according to an Associated Press report. “They’re going to have to have a tariff.”

The main impact of tariffs on scrap prices would be felt in Northern states - and especially among those along the Canadian border. Many steelmakers in this area receive a substantial portion of their monthly scrap charge from Canadian processors. Much of it is prime scrap used by hot-rolled (HR) coil producers.

While Congress has given the president enormous power over trade policy, the president wants to test the limits of that authority. If there are no guardrails, our economic and political liberty may be on the block. Stay tuned.

The demise of the VAT rebate system in China might be the most tangible sign that Beijing realizes that its unbridled access to global markets is over. There was no point in continuing a system of financial incentives to the export sector when the tariff headwinds were getting stronger.

That’s not to say Section 232 shouldn’t be tightened up. Or that certain trade practices – even among our traditional allies – weren’t problematic. But when it comes to the reboot of Section 232, I do wonder whether there will be some unintended consequences.

On Thursday morning, Trump posted on Truth Social about Canada and Mexico: “the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled.”