Mexican Government Faces Backlash from Domestic Steel Industry over Removal of Steel Safeguards

The Mexican government that has imposed safeguard duty of 15% on steel imports from the countries with which Mexico does not have trade agreements, did not renew the same this year which has subsequently disappointed the country’s domestic steel industry.

The safeguard was established in October 2015 to protect the Mexican steel industry from increasing imports from Asia, particularly from China and since then, the measure had been renewed every six months. It was applied on imports of slabs, plate, hot- and cold-rolled coil and wire rod.

However, country’s industry associations have echoed their concerns that this decision could lead to Mexico being used as a destination to dump steel products that were meant for U.S. and Europe as both have restricted steel imports.

Members of the National Chamber of the Iron and Steel Industry ‘Canacero’ and the workers of the mining-steel industry said that it is necessary to establish a [safeguard] percentage similar to that of our main trading partner (the US) in order to avoid being considered a triangulation platform for steel into that country. The sum of all these measures has helped to increase national production and has been implemented in line with what all other countries are doing to defend their investments and jobs. The fundamental problem has not yet been solved and the signs of recovery are still incipient so we cannot slacken the pace.

Canacero, in its statement, said: “The Mexican steel industry, which maintains a workforce of more than 700,000 direct and indirect jobs throughout the country, is facing a complex situation from the crisis generated by the global steel overcapacity, and aggravated by the 25% tariffs imposed unilaterally and unfairly by the US against our exports.”

Ultimately, the industry fears direct impacts on domestic production and prices but the impact of the same can be seen within how fast is still uncertain.

Before the safeguards were introduced on steel imports in Mexico in Oct’15, China, South Korea and Taiwan were the key steel exporting countries for Mexico. However, post trade restrictions, U.S. and Japan became the top two countries to export steel to Mexico. Now, it is likely that once again China may start steel exports to Mexico.