US President Joe Biden has ordered that steel items imported from Mexico must be melted and poured in Mexico, Canada or the US to be eligible for Section 232 exemptions. This effectively slaps a 25% tariff on any steel trans-shipped through Mexico that originated in China or other sources outside North America, Kallanish understands.

“In my judgment, these measures will provide an effective, long-term alternative means to address any contribution by Mexican steel articles imports to the threatened impairment of the national security by restraining steel articles imports to the United States from Mexico, limiting trans-shipment, and discouraging excess steel capacity and production,” Biden says in a White House proclamation issued Wednesday.

Biden notes that US domestic steel production utilisation rates remain below the recommended 80% threshold due to the effect of imports. The administration is monitoring unfairly traded foreign entries and circumvention of existing tariff orders.

Commerce Secretary Gina Raimondo has determined that “steel articles are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States,” the proclamation states.

In particular, “imports of steel articles from Mexico have increased significantly as compared to their levels at the time of Proclamation 9894,” which was issued by then-President Donald Trump in 2019 to accommodate Mexico's request for Section 232 exemptions..

Biden’s new measures apply to steel melted and poured in any nation other than the parties to the regional US-Mexico-Canada Agreement (USMCA). Still, comments from the White House make it clear that the prime target is the Chinese.

China cannot be allowed to “play by its own rules,” proclaims Lael Brainard, director of Biden’s National Economic Council. “The president is taking action to close loopholes … that countries like China used to avoid US tariffs by shipping their products through Mexico."

Last month, domestic interests including Cleveland-Cliffs chief executive Lourenco Goncalves and the United Steelworkers spoke out against the surge in steel volumes arriving via Mexico amid suspected circumvention (see Kallanish 27 June). Goncalves calls Mexico a “trans-shipment playground” and urges the US and Canada to drop Mexico as a USMCA partner (see Kallanish 18 June).

Biden’s new duty order is effective immediately, the presidential proclamation specifies.

The proclamation states that importers will be required to inform US Customs and Border Protection of the melted-and-poured origin of their steel and derivative steel items. That rule will be implemented “as soon as practicable."