Trade Policy Shift: Canada and Mexico Under Scrutiny
President-elect Donald Trump is preparing to reintroduce steep tariffs on steel and aluminum imports, potentially targeting Canada and Mexico with duties of up to 25%. This move would disrupt existing trade relationships under the USMCA, where both nations currently enjoy tariff-free access for metals. Canada, the U.S.’s top steel supplier, exported 5.9 million metric tons in 2024, followed by Mexico with 3.2 million tons.
Trump’s proposal stems from national security concerns and suspicions of Chinese steel transshipped through Mexico. The U.S. Steel Manufacturers Association (SMA) has echoed these concerns, urging stricter rules of origin and reinstatement of tariffs. The SMA also wants to eliminate tariff-rate quotas Biden negotiated with allies like the EU, UK, and Japan to sidestep Section 232 tariffs.
USMCA Agreement at Risk
The USMCA, which replaced NAFTA, currently guarantees duty-free steel and aluminum trade within North America. Trump’s actions could undermine the agreement. Critics fear his plans would upend established trade flows and create instability in critical sectors like automotive and construction.
Mexican Steel: A Growing Flashpoint
Mexico faces particular scrutiny after its steel conduit exports to the U.S. surged by up to 500% compared to 2015-2017 levels. A bipartisan group of U.S. senators, including incoming Secretary of State Marco Rubio, accuses Mexico of breaching previous export limits. While the Biden administration reinstated a 25% tariff on certain Mexican steel in 2023, it applied only to 13% of total imports, leaving broader concerns unresolved.
Canada Takes Precautionary Measures
Canada has proactively targeted Chinese transshipment, imposing a 25% surtax on certain Chinese steel and aluminum products. Though Canadian exports haven’t drawn as much criticism, their inclusion in Trump’s tariff plan isn’t ruled out entirely. However, analysts say strong diplomatic ties make Canadian metals less likely to face renewed tariffs.
North American Trade Outlook
If enacted, Trump’s tariffs could reignite trade tensions in North America, especially among USMCA partners. The construction, manufacturing, and automotive sectors—all reliant on low-cost metal imports—would face disruptions. While Trump has legal grounds to impose tariffs under national security exceptions, such moves could provoke retaliatory measures and legal disputes, further straining cross-border economic ties.
Leave a Reply
You must be logged in to post a comment.