US, Mexico Near Deal to Cut Steel Duties and Cap Imports

Yahoo

2 days ago

(Bloomberg) — The US and Mexico are closing in on a deal that would remove President Donald Trump's 50% tariffs on steel imports up to a certain volume, according to people familiar with the matter, a revamp of a similar deal between the trade partners during his first term.
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Trump hasn't been directly involved in the negotiations and would need to sign off on any deal. The talks are being led by Commerce Secretary Howard Lutnick, according to the people, who asked not to be identified as the discussions are private.
The people said the agreement hasn't been finalized. Under its current terms, it would allow US buyers to import Mexican steel duty-free as long as they kept total shipments below a level based on historical trade volumes, according to the people. The new cap would be higher than what was allowed under a similar deal during Trump's first term, they said, which was never a fixed figure but designed to 'prevent surges.'
The White House didn't immediately respond to a request for comment. Mexican President Claudia Sheinbaum's office also didn't respond to a request for comment.
US steel stocks moved lower in late trading after Bloomberg's report. Cleveland-Cliffs Inc. dropped more than 7%, and Nucor Corp. fell more than 4%. The Mexican peso trimmed losses.
At an event on Tuesday, Mexican Economy Minister Marcelo Ebrard said he told US officials in meetings last week that steel tariffs are not justified in Mexico's case because the US sends more steel to Mexico than vice versa. Last Friday, he posted a picture that showed him shaking hands with a smiling Lutnick in Washington.
'We are waiting for their response, because on Friday we gave them the details of Mexico's argument and we are right,' Ebrard told reporters Tuesday. 'So we are going to wait for their response which will probably be this very week.'
Trump last week announced he would double steel duties to 50% after saying he would approve the purchase of United States Steel Corp. by Japan's Nippon Steel Corp., a move he said would protect the domestic industry and national security. While domestic steelmakers welcome the move, end-users have urged the administration to ease the tariffs.
The negotiations come as Sheinbaum seeks an accommodation with Trump over immigration and drug trafficking across their shared border, which the US leader has demanded Mexico halt. Homeland Security Secretary Kristi Noem accused Sheinbaum Tuesday of 'encouraging' more anti-deportation protests in Los Angeles, where the US has deployed troops. Sheinbaum has called Noem's claim 'absolutely false.'
The talks also come ahead of a Group of Seven leaders summit in Canada, where the two presidents are likely to meet.
US steel imports from Mexico totaled about 3.2 million metric tons last year, accounting for 12% of total shipments of the material according to Commerce Department data. A previous deal the US reached with Mexico in 2019, during Trump's first term, agreed to prevent import volumes that exceeded average levels for the 2015-2017 period.
—With assistance from Josh Wingrove and Alex Vasquez.
(Updates with market activity in fifth paragraph)
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