New Melt / Smelt Rules for Mexican Steel & Aluminum

The United States and Mexico are taking new steps to prevent China and other countries from working their way into Mexico’s supply chains to avoid paying Section 232 tariffs on steel and aluminum by implementing a new rules of origin.

The action follows pressure on the Administration from Congress and the US steel and aluminum industries to do something about a flood of steel from Mexico – which is exempt from the Section 232 tariffs – that can be tied back to China.

Under the new rules for steel, imports from Mexico will be subject to the 25 percent Section 232 tariff unless it has been melted and poured in either Mexico, Canada or the United States.

A similar “smelt and cast” requirement is being put in place for aluminum from Mexico. Specifically, the imports must not have been smelt or cast in China, Russia, Belarus or Iran if they are to be exempt from the 10 percent Section 232 tariff.

To comply with both standards, Mexico will require more information about the country of origin of steel and aluminum products it imports. Those importing of the products from Mexico into the US market will need to provide a certificate of analysis to Customs and Border Protection showing the country of origin for the metals.

“In the coming weeks and months, Mexico and the United States will continue to work together to protect the North American steel and aluminum markets from unfair trade practices,” President Biden and Mexican President Obrador said in a joint statement.

Positive Reaction

Yesterday’s announcement won immediate praise from key Congressional lawmakers and US steel and aluminum producers and manufacturers.“I applaud the Administration for taking action to stop the Chinese Communist Party’s unfair trade practices, and we will keep working to make sure American workers, manufacturers and industrial regions are not left behind on the world stage,” Senate Majority Leader Chuck Schumer (D-NY) said.

The American Iron and Steel Institute applauded the action, but cautioned that the new rules will only be effective if Mexico ensures that accurate and complete information on country of melt and pour is collected and provided to US officials.

“We urge the US government to continue to press for additional actions to address the many schemes by steel traders to circumvent and evade US trade laws, and to ensure this new arrangement is vigorously and fully enforced.”

Alliance for American Manufacturing President Scott Paul called the announcement “a step forward in countering China's predatory trade practices and making North American steel trade more fair. This is the right call by the Biden administration, and both Congress and the executive branch must continue to find ways to take on China's increasingly sophisticated trade cheating."