US, Mexico Eye Import Quota in Trade Talks on Steel Deal

A worker grinds a stainless steel tube at a steel manufacturing facility in Mexico City, Mexico, on Thursday, Feb. 6, 2025. Photo by Mauricio Palos /Photographer: Mauricio Palos/Blo

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(Bloomberg) — Trade negotiations between the US and Mexico are homing in on a possible quota system to reduce tariffs on a certain volume of steel imports, a move seen as assuaging concerns of American manufacturers of the metal.

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The developing framework, described by people familiar with the talks, would alleviate crushing duties for some of the Mexican steel imports that US automakers and other industries have described as essential. 

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But the exemption — known in trade parlance as a tariff-rate quota — would be limited to a certain volume of imports, probably tracking the average amount shipped to the US during the 2015 to 2017 period. 

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The approach reflects the challenge facing American negotiators in trade talks with nations seeking lower rates or exemptions from a series of duties President Donald Trump imposed over the past several months.

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The president’s team is being forced to balance conflicting interests: fulfilling his pledge of a US manufacturing renaissance while mitigating the impacts for domestic factories that have long relied on imported products.  

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Suddenly subjecting foreign materials to tariffs — such as the new, higher 50% levy on steel and aluminum — could deter manufacturing of goods made with them, even if the duties simultaneously help bolster US metalmaking. 

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White House spokesmen did not comment on the matter, and Commerce Department representatives did not respond to requests for comment. Mexico’s Economy Ministry had no immediate comment.

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Discussions between the US and Mexico are continuing on several issues but are progressing toward an agreement, people familiar with the negotiations said. Mexico is the third-largest source of imported steel to the US, accounting for 12% of all foreign imports of the alloy.

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Earlier: Canada Moves to Protect Steel Firms, Warns of Higher Tariffs

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The tariff-free steel quota negotiators are discussing is set to reflect historical averages of imports from Mexico. Although varying time frames have been discussed, negotiations are focusing on the 2015-2017 period, said two people familiar with the matter. That would predate a surge in imports as well as a slowdown tied to the pandemic.

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Using that time frame would mean about 2,799,228 metric tons, according to US Commerce Department data. Steel imports under any threshold specified under the deal would avoid the 50% tariff but are still expected to be hit with a 10% baseline charge, people familiar with the matter said. Amounts above it would be subjected to the full duty, said people familiar with the matter. 

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The proposed cap would equal 88% of the total steel US buyers imported from Mexico last year, when customers brought in 3,194,752 metric tons.

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The plan addresses concerns raised by American steelmakers — who balked at a complete reprieve for imports from Mexico they said would undercut efforts to enhance domestic capacity.