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Mexico imposes temporary import tariffs of 5% to 50% on steel, aluminum and other commodities


Published:

2024-05-07

Mexican President Lopez signed a decree on the 22nd to impose temporary import tariffs of 5% to 50% on 544 commodities, including steel, aluminum, textiles, clothing, footwear, wood, plastics and their products. The decree takes effect on April 23 and will be valid for two years.

According to the decree, textiles, clothing, footwear and other products will be subject to a temporary import tariff of 35%; round steel with a diameter less than 14 mm will be subject to a temporary import tariff of 50%.

Goods imported from regions and countries that have signed trade agreements with Mexico will enjoy preferential tariff treatment if they meet the relevant provisions of the agreement.

Gabriela Siler, director of economic analysis at BASE Financial Group in Mexico, believes that tariff measures may lead to increased inflationary pressure in Mexico, and "protectionism does not work anywhere."

To prevent unfair competition

Mexico's Economy Minister Raquel Buenrostro said on Tuesday the government's goal was to "prevent unfair competition."

“We are seeing a lot of products coming into Mexico at very low prices and displacing our domestic producers,” she told an Inter-American Council event in Mexico City.

"... domestic prices are not going down, but cheap imports are displacing textile manufacturers, footwear manufacturers and other manufacturers," she said. "This worrying import comes from having no trade agreement with Mexico. s country."

At the same time, the Mexican Ministry of Economy also stated that the new tariffs are intended to provide certain and fair market conditions for national industrial sectors facing fragile situations, thereby promoting the development of national industries and supporting the internal market.

Previously, on August 16, 2023, Mexico increased import tariffs on 392 tariff items. Nearly 92% of the products in these tariff items are now subject to a 25% import tariff, and only certain textiles will be subject to a 15% tariff. All of this is also for countries with which Mexico does not have a free trade agreement. It is valid until July 31, 2025. (Click to view: Breaking! Large Latin American countries have raised import tariffs on 392 items, with nearly 92% of products as high as 25%)

China is Mexico's second largest trading partner

Mexico is a major economic power in Latin America and a member of the United States-Mexico-Canada Agreement (formerly the North American Free Trade Area). It is one of the most open economies in the world and has signed free trade agreements with 50 countries. There are complete industrial categories, with petrochemical, electric power, mining, metallurgy and manufacturing industries being relatively developed. According to statistics, the GDP in 2022 will be US$1.4 trillion.

In terms of foreign trade, Mexico mainly exports crude oil, industrial products, petroleum products, clothing, agricultural products, etc. The main export destinations are the United States, Canada, the European Union, Central America, China, etc.; it mainly imports food, pharmaceutical products, communication equipment, etc. , the main import source countries are the United States, China, Germany, Japan, South Korea, etc. The total foreign trade volume in 2022 will be US$1.18281 billion, of which exports will be US$578.19 billion and imports will be US$604.61 billion, a year-on-year increase of 18.5%, 17.2% and 19.9% respectively.

China is Mexico's second largest trading partner, and Mexico is China's second largest trading partner in Latin America. According to statistics from the General Administration of Customs of China, the total trade volume between China and Mexico in 2023 will reach US$100.2 billion, of which China’s export volume will be US$81.5 billion and import volume will be US$18.7 billion. China mainly exports electronic components, kitchen supplies, motor vehicle parts, etc. to Mexico, while it mainly imports petroleum crude oil, electrical equipment, medical instruments and other products from Mexico.

It is worth noting that shortly before the introduction of this tariff measure, the Mexican Ministry of Economy had imposed tariffs on steel nails and steel balls from China. Lopez said at the end of March that steel-related issues had not affected Mexico's trade relations with the United States and China, and claimed that the government did not want to be involved in any form of "war, even a trade war."