Tensions and Opportunities in U.S.-Mexico Steel Trade
In recent years, the integration between the Mexican and U.S. steel industries has been far from seamless, as highlighted by Marcelo Ebrard, Mexico’s Secretary of Economy. At a recent American Society of Mexico General Assembly, Ebrard raised questions about the inefficiency of the current trade strategy, pointing out that despite both nations being in a steel deficit, they continue to impose tariffs on each other’s steel products.
The figures show a mixed picture. On one hand, the U.S. has become Mexico's primary destination for steel exports, but on the other, Mexico has seen a drop in steel exports to the U.S., suggesting a need for better alignment in industrial strategies.
Steel Exports from the U.S. to Mexico: Growth Amidst Tariffs
According to data from the U.S. Department of Commerce, steel exports from the U.S. to Mexico have shown consistent growth. In the first 11 months of 2024, the U.S. exported $14,044 million worth of steel and related products to Mexico, which marks a 5.4% increase from the previous year.
Looking back at the past few years, the trend of growing exports to Mexico is clear:
• 2018: $10,132 million
• 2019: $9,519 million
• 2020: $8,137 million
• 2021: $11,795 million
• 2022: $13,885 million
• 2023: $14,314 million
• 2024 (January-November): $14,044 million
However, despite the growth in exports, the U.S. steel industry is still grappling with trade imbalances and continues to face challenges from steel imports, including from Mexico.
Mexican Steel Exports to the U.S.: Declining Figures Amid Tariffs
On the flip side, Mexico’s steel exports to the U.S. have been in decline. In the first 11 months of 2024, Mexico's steel exports to the U.S. totaled $9,661 million, a decrease of 8.6% compared to the previous year. This marks a shift in the trade balance, with Mexico falling behind countries like Canada and China in steel exports to the U.S.
Over the years, Mexico's steel exports to the U.S. have fluctuated, as seen in the following data:
• 2018: $7,261 million
• 2019: $7,128 million
• 2020: $6,559 million
• 2021: $10,879 million
• 2022: $13,491 million
• 2023: $11,337 million
• 2024 (January-November): $9,661 million
Ebrard emphasized that while the two countries share a significant steel trade relationship, there remains an unresolved trade deficit in North America, which both countries continue to exacerbate through the imposition of steel tariffs.
The Steel Tariff Dilemma: A Barrier to Effective Integration?
Both the U.S. and Mexico have imposed tariffs on each other’s steel products, with the U.S. placing tariffs on Mexican steel in response to global steel overcapacity and concerns about national security, under Section 232 of the Trade Expansion Act of 1962. Similarly, Mexico retaliated by implementing tariffs on U.S. steel imports.
Ebrard argued that the steel tariff policy harms both nations by complicating trade relationships and increasing costs for key industries. Mexico’s automotive and aeronautical industries, which heavily depend on affordable steel, suffer the most from these tariffs, as they make the raw material more expensive and harder to source.
Ebrard’s pointed criticism:
"What is wrong with these friends? Why do they both keep picking each other’s eyes if they are in deficit? Why don’t we organize ourselves so as not to be in deficit?"
He stressed the need for both countries to rethink their strategy and move towards better productive and commercial integration in the steel sector, especially given their shared dependence on the industry for sectors like automotive manufacturing and infrastructure.
Comparative Global Steel Trade: U.S. and Mexico’s Role
To provide further context, global steel trade data highlights the overall imbalance between U.S. steel exports and imports. From January to November 2024, the U.S. imported $74.585 billion worth of steel and its manufactures, while it exported only $39.755 billion in steel products. This imbalance underscores the need for better trade strategies to ensure both nations benefit from steel integration.
U.S. Steel Market Share in Mexico vs. Mexican Steel in the U.S.
Ebrard also highlighted the market share dynamics between the two countries, noting that U.S. steel represents 14% of Mexico’s steel market, while Mexican steel makes up only 2% of the U.S. market. This discrepancy suggests that the U.S. is much more reliant on Mexican steel than the reverse, adding weight to Ebrard’s argument that the two nations need a more strategic approach to their trade relationships.
The Path Forward: Reimagining Steel Industry Integration
Marcelo Ebrard’s remarks emphasize the pressing need to rethink the integration of the steel industries between Mexico and the U.S. Despite the overall growth in trade, especially in steel exports to Mexico, the trade imbalances, tariffs, and inefficiencies persist. Both nations will need to reassess their strategies to ensure that the steel sector can benefit from closer integration, reducing barriers like tariffs and fostering collaboration for mutual growth.
By adopting a more coordinated approach, Mexico and the U.S. could unlock greater potential in the steel industry, benefiting industries dependent on steel, such as automotive, aerospace, and construction, while addressing global concerns about trade imbalances. The integration of the two countries’ steel industries remains an ongoing challenge, but the potential for economic growth and cooperation is significant.
