Mexico may be an ally of the United States, but lately, it hasn’t been behaving like one. Not only is Mexico helping China avoid U.S. tariffs, but it’s also openly violating an agreement not to flood the U.S. with steel products. Unfortunately, President Biden keeps failing to act. Unless he responds soon, our steel industry could be irreparably damaged.
In the past few years, trade with Mexico has become a serious challenge for Washington. Even though Mexico is our southern neighbor, it has also become a significant industrial rival. In particular, Mexicois a major assembly and shipment point for Chinese parts and components sold in the United States.
Essentially, Mexico is helping China bypass many of the tariffs imposed during the Trump administration. This has helped to boost Mexico’s annual trade surplus with the United States — and to a record $152 billion in 2023 alone. Now, Mexico enjoys the third-largest trade surplus with the United States, behind only those of China and the European Union.
It’s disturbing that Mexico is helping China to weaken our industrial base. It’s even worse that Mexicois also openly violating the terms of a 2019 agreement to limit its steel exports to the U.S.
What a difference five years can make. In 2019, Mexico pledged not to flood the United States with steel products and agreed to limit the volume of its steel exports to specific baseline levels.
That sounded like a good deal. In response, the Trump administration lifted its tariffs on Mexican steel.
Since then, however, Mexico has blatantly violated the agreement — and refused to honor its commitments.
Starting in 2021, Mexican steel shipments to the U.S. rose dramatically. Now, they’ve reached an astounding 472% above the levels set in 2019. Mexico’s steel shipments account for over 87% of all U.S. steel conduit imports. And this year, Mexican steel imports are on track to reach nearly 700% of 2019 levels.
How has the Biden administration responded to this steel flood? Not with action, but with talk.
Because the president has conducted ineffectual negotiations with the government under President Andres Manuel Lopez Obrador, Mexico’s steel producers keep taking advantage. It’s estimated that Mexico’s steel industry will expand by as much as 38% in the next few years alone.
America’s steel companies have already taken a hit, particularly for the steel conduit pipes used in home and building construction. In that sector alone, Mexico’s steel shipments have risen a stunning 86% above agreed-upon baseline levels.
America’s steel industry still employs 143,500 workers, including 75,000 in the Midwest alone. But the Mexican steel flood is putting many of these jobs at risk. And U.S. steel companies have also halted hundreds of millions of dollars in planned investments.
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. And Zekelman’s recent investment of $400 million to expand an Illinois plant and hire 250 new workers could also be in jeopardy.
The Mexican steel flood has grown so serious that a bipartisan group of 10 senators recently introduced bipartisan legislation to reimpose tariffs on Mexico. It’s time for the president to take the issue as seriously.
The failure of the 2019 steel agreement has put U.S. jobs and investment at risk. It’s time to ask, what’s the point of a trade agreement if countries won’t follow it? And why won’t the administration enforce it?
Mexico may be an “ally,” but it shouldn’t get a pass for flooding the United States with steel. President Biden must address Mexico’s clear violations of the 2019 steel agreement. Unless Mexico immediately adheres to its obligations, the president should reimpose tariffs on Mexican steel.
