Bloomberg: 'US–Mexico Steel 50% Tariff Removal Agreement Imminent'

A hybrid form that combines quota application when exceeding a certain threshold

Mexico's exports to the US reached 3.5 million tons at the end of last year

Bloomberg reported on the 11th (local time) that the United States and Mexico are close to reaching an agreement to remove the 50% tariff on steel products. The agreement is said to be a revision of a similar pact combining quotas and tariffs, first established during President Trump's initial term.

Citing anonymous sources, Bloomberg says U.S. Secretary Howard Lutnick led the negotiations, and President Trump plans to sign the agreement soon.

Sources indicated that the deal has not yet been finalized. According to reports, as long as U.S. importers keep total import volumes below a historic trade benchmark, steel from Mexico can enter the country duty-free. The new ceiling will reportedly be set higher than the levels allowed under the similar agreement during Trump’s first term. This limit is not fixed but is designed as a safeguard against surges.

Data from the American Iron and Steel Institute (AISI) show that last year, Mexico exported about 3.5 million tons of steel to the United States, the third largest after Canada (6.56 million tons) and Brazil (4.5 million tons). South Korea was the fourth largest exporter, at 2.8 million tons.

After the Bloomberg report, shares of U.S. steel companies trended downward. Cleveland-Cliffs fell by over 7%, and Nucor dropped by more than 4%. The Mexican Peso limited its decline.

The previous day, Mexico's Minister Marcelo Ebrard stated in a meeting with U.S. officials last week that the steel tariffs imposed on Mexico are unfair, citing that the U.S. exports more steel to Mexico than vice versa.

Ebrard told reporters, "On Friday, we conveyed detailed arguments supporting Mexico's position, and we believe we are right." He added, "A response may come this week."

Last week, President Trump announced he would approve Nippon Steel’s acquisition of U.S. Steel and double the steel tariff rate to 50%. He said the measure was to protect domestic industry and national security. U.S. steelmakers welcomed the move, but consumers urged the government to ease tariffs.

Claudia Sheinbaum, President of Mexico, has been holding talks with President Trump, seeking a compromise on immigration and drug trafficking issues across the border.

In 2019, during President Trump's first term, the U.S. and Mexico agreed to prevent U.S. steel imports from exceeding the average annual level between 2015 and 2017.

Kim Jeong-a, Contributing Reporter kja@hankyung.com