Mexico and the US Have a Meeting of the Minds on Steel and Aluminum Transshipment

Jul. 10, 2024
By: Hannah B. Kreinik

For months interests in the United States have been concerned that steel and aluminum are being transshipped through Mexico to avoid tariffs from (some) other countries. Now President Biden and President of Mexico Andrés Manuel López Obrador have an agreement to address this concern and it began implementation in the U.S. today.

The United States published proclamations for both steel and aluminum this morning that took effect today (July 10^th) as of 12:01am. The proclamations are similar in that they aim to prevent imports from target countries from using Mexican processing to avoid Section 232 duties. Products that don’t meet the new requirements will be subject to 232 duties, even if products of Mexico. However, because the steel and aluminum tariffs operate separately, the details of the proclamations differ.

Specifically, for steel, Mexico will require importers to present country of origin documentation for steel products entering Mexico. In addition, the U.S. proclamation requires the reporting of country of melt and pour for steel products from Mexico. Only steel melted and poured in Mexico, the U.S., or Canada will avoid Section 232 duties.

The proclamation for aluminum is similar, requiring primary country of smelt, secondary country of smelt, and country of most recent cast for aluminum products from Mexico to take place outside of China (also retaining the same smelt and cast restrictions from Russia, Belarus, and Iran). To guarantee the primary aluminum was not smelted or cast in any of the restricted countries, importers must present to Customs a certificate of analysis for the aluminum products. Finally, the proclamation explains that primary country of smelt means the place where the primary aluminum is made from alumina (aluminum oxide) via the electrolytic Hall-Héroult process. The secondary country of smelt is defined as the second largest place of production for the new aluminum. Country of most recent cast is identified as the place where the aluminum last liquified by heating and casting into a solid form.

Chinese use of Mexico to avoid duties is not a new concern (see our article on the issue here and on Mexican tariffs here). Importantly, Mexico is not the only country with transshipment issues for goods from China, nor are steel and aluminum the only transshipped goods, and importers need to assess their supply chains for transshipment in other nations trying to avoid Section 232 and 301 tariffs. This is one more reminder of that necessity.

For more information please reach out to Barnes, Richardson & Colburn attorneys.