Mexico says its crackdown on steel shipments from Asia is paying off, with imports from countries outside its trade deals down by about 30%, as it presses the United States for relief from tariffs on steel, aluminium and cars. The government says it has stopped steel from China and other countries being routed through Mexico into the US market.

Luis Rosendo Gutierrez, Mexico's deputy economy minister for foreign trade, told journalists on Wednesday, 11 November, that the government had tightened traceability measures with industry and was guaranteeing that products were not reaching the United States by exploiting Mexico's trade preferences.

"We want to guarantee - and we are guaranteeing - that there is no triangulation of steel or other products that reach the United States taking advantage of our trade agreement," Gutierrez said.

1,100 mill registrations cancelled

Gutierrez said Mexico had cancelled around 1,100 mill registrations, many of them in Asia, after authorities found that the mills did not actually exist. The move helped cut steel imports from Vietnam by 80% in some months, he said.

He added that Mexico had reduced steel and aluminium imports from third countries, including China, South Korea and India, by about 30%, stemming imports worth some 13 billion pesos, or about $698.5 million. Steel imports from mostly Asian countries that lack free-trade deals with Mexico fell by more than 27% in the first nine months of this year, according to separate figures reported by Bloomberg.

The crackdown is aimed at a practice known as triangulation, in which goods from one country are shipped through a second country to benefit from that country's trade agreement with a third. Mexico is working to show Washington that no steel from China or other countries is being rerouted through its territory into the United States under the North American trade pact.

Tariff relief is the priority

Mexico's priority, Gutierrez said, is to reduce the impact of US Section 232 tariffs on cars, steel and aluminium, rather than focus on a broader review of the US-Mexico-Canada trade pact. Section 232 is the US law that allows tariffs on national security grounds, and it has been a major point of friction between the two neighbours.

Gutierrez said US officials had been receptive to proposals put forward by Economy Minister Marcelo Ebrard, and that Mexico hoped for positive news in the coming weeks before the end of the year. The crackdown on Asian imports is also creating an opening for Mexico to buy more US-made steel, according to Bloomberg.

The dispute matters well beyond the steel industry. Cars, steel and aluminium are central to manufacturing supply chains across North America, and tariffs on those goods raise costs for factories in Mexico, the United States and Canada alike. Mexico is seeking to protect its export industries while showing Washington that it is acting on US concerns about Chinese steel reaching the American market through the back door.

Whether the crackdown is enough to win tariff relief will become clearer in the coming weeks, as talks between the two governments continue before the year ends.

Sources: Reuters and Bloomberg Law.