The White House is taking steps to close loopholes that allow China to avoid tariffs on steel and aluminum by exporting through Mexico. President Joe Biden will sign a proclamation to ensure that steel from Mexico receives duty-free benefits only if it’s melted and poured in Mexico, with importers required to disclose the origin of their steel products. These efforts will be outlined in a joint announcement by President Biden and Mexican President Andrés Manuel López Obrador.
An estimated 3.8 million tons of steel arrived in the United States from Mexico in 2023, with concerns arising over 13 percent of it being melted or poured outside of North America. The actions taken aim to address a loophole that countries like China have exploited to bypass U.S. tariffs by shipping products through Mexico, as stated by Lael Brainard, the director of the National Economic Council.
In a similar move, the Canadian government has affirmed its commitment to prevent Chinese steel and aluminum from entering the country undetected. Canada has emphasized its trade-remedy system to safeguard against unfair trade practices.
Biden’s Focus on Chinese Steel Industry
President Biden has been vocal about the impact of cheap Chinese exports on the U.S. steel industry, referring to it as cheating rather than fair competition. The White House has announced increased tariffs on Chinese imports, including aluminum and steel, with rates rising from 7.5 percent to 25 percent.
Former President Donald Trump had previously imposed tariffs on certain steel and aluminum imports using Section 232 of the Trade Expansion Act. However, he did not extend these tariffs to all steel and aluminum products.
President Biden faces pressure from lawmakers and industry representatives to protect American steel from Chinese trade practices. Calls for maintaining or increasing tariffs have been made to support American workers and ensure a level playing field.
Chinese Steel Market Overview
China dominates global steel production, accounting for over 50 percent of output. The country’s steel sector benefits from significant subsidies, enabling it to flood international markets with steel at artificially low prices.
Recent data shows a surge in China’s net exports of finished and semi-finished steel, highlighting the country’s export-driven strategy. Chinese steel production has also rebounded, contributing to the global steel market’s overall growth.
While China supplies only a small percentage of steel to the U.S., the White House remains vigilant in preventing the import of cheap, carbon-intensive steel that could harm American businesses and workers. The administration aims to proactively address this issue to protect domestic industries.
Despite a slump in steel prices due to oversupply and reduced construction activity, the White House’s focus on preventing cheap imports underscores its commitment to supporting American industries and workers.
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