US targets China with tariffs on steel, aluminum sent via Mexico

President Joe Biden’s administration will apply new tariffs to steel and aluminum shipments diverted through Mexico in a bid to prevent China from circumventing existing levies through so-called transshipment.

The measure, announced Wednesday, applies 25% tariffs to steel arriving from Mexico that wasn’t melted and poured in that country, the US or Canada, White House National Economic Council Director Lael Brainard said. The US, Mexico and Canada have a free trade agreement.

Aluminum cast or smelt in China, Russia, Iran or Belarus that arrives via Mexico will face a 10% tariff, she said. The measures take effect Wednesday.

The moves, made jointly with Mexican President Andres Manuel Lopez Obrador, follow a broader announcement on tariffs targeting China. The White House is looking to head off what it fears could be a flood of steel and aluminum products from oversupply in China, the world’s second largest economy.

The change would impact small volumes of existing shipments, but is meant to deter what could otherwise be a forthcoming spike, officials familiar with the measure said, speaking on condition of anonymity to discuss the effort.

“These actions fix a major loophole that the previous administration failed to address,” Brainard told reporters. “Steel and aluminum will remain the backbone of our economy as we build the industries of the future here in America.”

Biden and his general-election challenger, former President Donald Trump, have both taken steps to curb certain imports from China, jockeying to appear tough on Beijing and what they say is the threat it poses to the US economy. 

The US imported about 3.8 million tons of steel from Mexico in 2023, 13% of which came from outside North America and would now be subject to the tariff, the officials said. The US imported 105,000 metric tons of aluminum from Mexico in 2023, and 6% was smelted or cast abroad. 

Importers have to provide documentation to US customs officials about the source of imports, leaving them to prove Mexican origin to avoid the tariffs, the officials said. 

China’s slumping real estate sector, in particular, has fueled American expectations that a flood of steel imports could hit the US market. The US has long made clear to China that the steel sector is a critical domestic industry, one of the officials said. 

The move to apply new tariffs should not surprise Beijing, the official added.