Mexico: Stricter US Section 232 tariffs on steel and aluminum
Mexico: Stricter US Section 232 tariffs on steel and aluminum

11 July 2024 – Mexico and the United States have recently agreed to tighten Section 232 tariffs on steel and aluminum products originating in Mexico. And China has further restricted steel production with blast furnaces and is increasingly relying on EAF production.

Mexico: Stricter US Section 232 tariffs on steel and aluminum

The United States and Mexico have agreed on adjustments to the US Section 232 (S232) tariffs on steel and aluminum products.

Mexico now only exempt from S232 under certain conditions

The US government’s announcement of 10 July 2024, states that products originating in Mexico will now again be subject to the 10% or 25% tariffs if they do not meet certain requirements regarding the origin of the input materials (melt and pour rules). For example, steel products that are 100% melted and poured and processed in Mexico will continue to be exempt from the S232 tariffs. The new measures are to be implemented as quickly as possible.

According to the US, this is intended to prevent circumvention of the existing S232 measures.

China further limits steel production with blast furnaces

According to media reports, in the first half of 2024, China has only approved steel projects that want to produce on the basis of the Electric Arc Furnace (EAF). This is in stark contrast to recent years, in which China has primarily approved projects on the blast furnace route (BF-BOF).

EAF route emits significantly less CO2

The EAF route is generally regarded as the most environmentally friendly form of steel production currently available and emits significantly less CO2 than the classic BF-BOF route. The Chinese government’s goal is to reduce CO2 emissions from steel production by 200 million tons by 2025, which would roughly correspond to the annual emissions of European steel manufacturers.

This could perhaps become a motivator for EU mills, who have not been able to achieve significant CO2 savings through technological progress for decades.

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