Mexico tariffs on steel, plastics to affect 7% of total imports

Mexico’s decision to slap tariffs on some goods from countries with which it doesn’t have trade agreements will only affect about $48 billion of the country’s imports, around 7% of the total, according to a Finance Ministry official.

The new tariffs, seen as a response to US concern about Chinese steel and other goods entering the North American country, will also be imposed on aluminum, textiles, and plastics. Once in force, the tariffs could reduce Mexican imports by $6 billion to $7 billion, said Rodrigo Mariscal, head of the Economic Planning unit at the Finance Ministry, underscoring the ministry’s assessment that the effect would be minimal. 

“We don’t believe that it is fundamentally important,” Mariscal said. 

Last week, President Andres Manuel Lopez Obrador’s administration published a decree placing temporary tariffs of 5% to 50% on over 500 kinds of goods, also including aluminum, wood, chemicals, paper and cardboard, glass, electrical equipment, among others.

The decision seeks, according to the government decree, “to provide certainty and fair market conditions to sectors of the national industry that face situations of vulnerability as a result of practices that alter and affect international trade.” It also seeks to maintain competitiveness in sectors such as electricity, electronics, automotive and auto parts. 

The new tariffs appear to be mainly aimed at China, after the US accused the Asian country of affecting global prices by over-producing goods that often sell below the cost of production. Earlier this month, US Trade Representative Katherine Tai said that steel originally from elsewhere was being worked in Mexico and improperly exported to the US as though it originated in Mexico. 

Mexico’s Economy Minister Raquel Buenrostro said last week that the move, along with an earlier measure intended to improve tracing of steel, should address some US concerns. She added that the tariffs were targeted at goods whose prices were lower than the production cost or subsidized, and they could create “trade conditions that are fairer.”

Some Chinese aluminum fabricators have been rearranging international shipments in response, said Liu Xiaolei, analyst with Shanghai Metals Market.