KEY POINTS
- New Biden-Mexico Steel Agreement will only affect less than 10% of imports from Mexico.
- Most steel imports from Mexico are melted and poured in Mexico, with other major melt and pour countries such as Brazil receiving an exemption.
- The majority of steel product categories such as pipe and tube, semi-finished steel, and long steel products will see essentially no relief.
- Agreement does nothing to address Mexico’s violation of the previous 2019 joint steel agreement which is causing great harm to U.S. producers and American jobs.
Biden-Mexico Steel Agreement Summary
- The agreement establishes a Melted and Poured requirement for steel and steel product imports from Mexico in order to keep duty-free entry. Any steel or steel products where the steel was not originally melted and poured in Mexico, the United States, Canada, or Brazil will be subject to a 25% tariff.
- The agreement is effective immediately as of July 10, 2024.
- Notably, the agreement takes no steps to enforce or address continuing gross violations of the United States 2019 joint steel agreement with Mexico, where Mexico agreed to limit steel exports to the United States to historic levels from 2015 to 2017. A previous CPA economic analysis shows that Mexican steel imports for 2024 will surge to nearly 700% of historic levels.
Little Impact from the Melted and Poured Requirement
The Biden Administration’s steel agreement with Mexico will have an extremely limited effect on Mexican steel imports into the United States. As shown in Figure 1, only 9.8% of U.S. steel imports from Mexico are melted and poured outside Mexico, the United States, Canada, and Brazil. 90% of steel imports from Mexico will continue being imported into the United States duty-free.
Figure 1: 2024 U.S. Steel Imports from Mexico (Tariff Subject vs. USMCA Melted and Poured)
Melt and Pour Country | Metric Tons | % of Total |
Subject | 145,317 | 9.8% |
USMCA + Brazil | 1,340,001 | 90.2% |
Grand Total | 1,485,319 | 100% |
Source: U.S. Department of Commerce Steel Import Monitoring and Analysis (SIMA) System
Most Steel Imports from Mexico are Melted and Poured in Mexico
According to current U.S. Steel Import Monitoring and Analysis (SIMA) System data, most steel being imported from Mexico into the United States is melted and poured in Mexico itself. As shown in Figure 2, this accounts for about 82% of total imports from Mexico. None of these imports will be affected by the 25% steel tariff from the agreement.
Figure 2: 2024 U.S. Steel Imports from Mexico (by Country)
Country of Melt and Pour | Metric Tons | % of Total |
Mexico | 1,214,718 | 81.8% |
Brazil | 96,442 | 6.5% |
South Korea | 46,534 | 3.1% |
United States | 28,841 | 1.9% |
Vietnam | 24,766 | 1.7% |
EU/EFTA | 22,938 | 1.5% |
Indonesia | 22,368 | 1.5% |
Japan | 21,365 | 1.4% |
Australia | 2,976 | 0.2% |
Russia | 2,082 | 0.1% |
China | 347 | 0.0% |
Other Countries | 1,941 | 0.2% |
Source: U.S. Department of Commerce Steel Import Monitoring and Analysis (SIMA) System
A further 2% of steel imports from Mexico are melted and poured in the United States. This steel melted and poured in the United States is used in Mexican manufacturing for products ultimately sold back to the United States. Even though U.S. steel is used for these products, U.S. jobs and industry are still harmed since the steel product manufacturing process for these products is diverted to Mexico.
Furthermore, Mexico also negotiated an exemption for steel melted and poured in Brazil. This further weakens the effectiveness of the deal as 6.5% of steel imports from Mexico are melted and poured in Brazil. All the exemptions together exclude over 90% of steel imports being imported from Mexico from the tariff, resulting in an extremely ineffective deal.
The primary countries that would be affected by the 25% tariff are South Korea, Vietnam, the European Union, Indonesia, and Japan. However, these melted and poured countries have very little share of the total imports. South Korean steel is only 3% of imports and the rest of the subject countries hold less than 2% each.
Flat Steel Most Affected, Little Impact on Semi-Finished, Long, and Pipe & Tube
The effect of the melted and poured tariff is also uneven across steel product categories. The most affected products are flat steel and stainless steel products. As shown in Figure 3, about 29% of flat steel imports from Mexico would be subject to the new tariff rate, and about 19% of stainless steel imports.
Figure 3: Figure 2: 2024 U.S. Steel Imports from Mexico (Metric Tons by Product Category)
Product Category | Subject | USMCA | Grand Total | % Subject |
Semi-Finished (Carbon and Alloy) | 53 | 510,591 | 510,644 | 0.01% |
Flat (Carbon and Alloy) | 133,289 | 325,986 | 459,275 | 29.0% |
Long (Carbon and Alloy) | 385 | 279,254 | 279,639 | 0.1% |
Pipe and Tube (Carbon and Alloy) | 8,606 | 211,817 | 220,423 | 3.9% |
Stainless | 2,940 | 12,353 | 15,293 | 19.2% |
Other | 45 | 45 | 100% | |
Grand Total | 145,317 | 1,340,001 | 1,485,319 | 9.8% |
Source: U.S. Department of Commerce Steel Import Monitoring and Analysis (SIMA) System
Conversely, pipe and tube, semi-finished steel, and long steel products would see next to no tariff impact. Only about 4% of pipe and tube products will be affected by the melted and poured requirement and tariff. Semi-finished steel and long steel contain almost no steel melted and poured outside of USMCA countries and will see absolutely no relief from the tariff.
Mexico Steel Surge Continues and Biden Agreement Does Nothing to Stop It
Notably, the Biden Administration’s steel agreement with Mexico does nothing to stop or address the surging steel imports from Mexico itself. This is a continuing violation of the 2019 U.S.-Mexico steel agreement where Mexico agreed to monitor and restrain steel exports to the United States to historic 2015-2017 levels. Mexico agreed to do this in exchange for the United States dropping Section 232 steel tariffs on Mexico. However, despite the agreement, Mexican steel exports to the United States have surged and continue to enter the U.S. duty-free.
The import surge from Mexico has been especially severe for steel pipe and tube products (HTS 7305, 7306, and 7307). As shown in Figure 4, steel pipe and tube imports from Mexico have continued to surge above the 2015-2017 levels (in blue). Both steel pipe imports in the 7305 and 7307 HTS categories have increased substantially since the agreed baseline levels. Imports in 2024 (in red) have continued to rise above even 2023 levels (in orange).
Figure 4:
Imports have also surged for steel pipe imports in 7306 HTS category. Monthly imports in 2024 have also surged to historically high levels (4,800 metric tons per month more than the agreed 2015-2017 import level). The surge is clearly evident at this broad product category, but the surge is even more severe for more specific product categories.
Figure 5:
The surge for specific products such as steel conduit pipe is one of the most blatant examples of the import surge violation. Imports from the steel conduit HTS 7306305028 was 109% above the agreed baseline level in 2023, and in 2024 this import surge has risen even higher (currently at 210% above the baseline). Imports for the steel conduit HTS 7306505050 imports even reached an unprecedented 20614% above the baseline in 2023.
Figure 6: Monthly U.S. Steel Imports from Mexico Compared to 2015-2017 Baseline (by HTS)
HTS | 2015-2017 | 2023 | 2023 (% Above Baseline) | 2024 | 2024 (% Above Baseline) |
730630 | 7,947 | 8,244 | 4% | 12,391 | 56% |
7306305028 | 868 | 1,812 | 109% | 2,690 | 210% |
7306505050 | 11 | 2,195 | 20614% | 6 | -41% |
Source: U.S. Census
This is the official import levels in the U.S. Census data, but the true import levels for many products such as steel conduit are likely much higher because of HTS misclassification abuses. As shown in Figure 7, based on Panjiva data, imports of steel conduit from Mexico reached an astonishing 472% above baseline levels in 2023, and are estimated to surge to 692% above baseline levels in 2024.
Figure 7:
Source: Panjiva
Despite these blatant and severe violations of the 2019 agreement, the Biden Administration’s new steel agreement with Mexico does absolutely nothing to enforce the agreement or limit the import surge that is harming U.S. producers and jobs. For example, Zekelman Industries—the largest independent steel pipe and tube manufacturer in North America—has already closed its Long Beach, California plant and laid off 150 workers specifically because of Mexico’s steel dumping. The continuing import surge is also threatening the more than one million jobs nationwide that depend on the steel industry.
Conclusion
The Biden Administration’s new steel agreement with Mexico is ineffective in addressing any of the issues with the steel import surge from Mexico. The melt and pour requirement will only cover less than 10% of Mexican imports to the United States with the 25% tariff. This tariff will also only affect certain steel products that use steel melted and poured outside of Mexico, completely missing coverage of pipe and tube, semi-finished steel, and long steel products. Importantly, the new agreement completely fails to enforce the previous export limitation agreement with Mexico. Mexico’s continuing violation of the agreement through surging steel exports to the United States is causing great harm to employment and production across the country. Without clear import quotas or similarly automatically enforced measures, the surge will continue and harm even more U.S. jobs and local economies.
