The White House is joining forces with Mexico to prevent Chinese companies from importing steel and aluminum into the U.S. through the Southern border without paying tariffs.
The two countries have agreed to implement a series of policies intended to bolster North American supply chains, they announced in a joint statement Wednesday.
Under the new joint agreement, Mexico will require importers to provide country-of-origin information about their steel products. Mexico will also increase tariffs on aluminum, steel and other products from countries with which it does not have a free trade agreement.
For its part, the United States will impose requirements for melting, pouring, smelting and casting certain aluminum and steel imports before they are allowed to enter the U.S. without tariffs.
“These joint actions with Mexico will help to ensure the long-term viability of our steel and aluminum industries and the integrity of North American steel and aluminum market integration,” U.S. Trade Representative Katherine Tai said in a statement Wednesday.
“This action fixes a loophole left unaddressed by the previous administration and its go-it-alone trade policies and shows that when we act together we strengthen our position to defend American workers and businesses from global non-market excess capacity” in China.
China has been importing steel and aluminum to the United States through Mexico to avoid paying tariffs, senior administration officials said. In April, a U.S. delegation went to Mexico to meet with Mexican President Andres Manual Lopez Obrador to address the issue.
The new coordinated actions with Mexico come almost three months after President Biden proposed tripling the tariff rate on steel and aluminum from China to 25%.
On Tuesday, National Economic Advisor Lael Brainard said the president will sign a proclamation stating that a 25% tariff will be imposed on steel arriving from Mexico if it is not melted or poured in the North American Free Trade Agreement countries of Mexico, the U.S. or Canada.
China makes almost 50% of the steel that is used globally, according to a senior Biden administration official. While Chinese steel accounts for 0.6% of U.S. demand, the official said China is producing more than it can use domestically or the world can easily absorb. China’s export steel prices are about 40% lower than U.S. steel prices.
The last time Chinese steel flooded the market was in the early 2000s, causing more than 14,000 steel workers in Pennsylvania and Ohio to lose their jobs, the president said in April.
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