US lowers automotive steel tariffs—strings attached

Temporary relief for Mexican steel could still spell future industrial strife.

The Big News Breakdown. Unpacking this week’s most important news.

Tariffs on steel for heavy-duty vehicles from Mexico to the US will be halved from 50% to 25%. The tax has been one of Donald Trump’s biggest trade war blows against his neighbours, so Mexican industry is celebrating. The joy might be short-lived.

The Mexico Political Economist predicted that steel tariffs would hurt the very industry that Trump was trying to protect—the US auto industry. A year later, reports began to emerge that higher duties were putting the sector, and particularly heavy-duty truck makers, at a competitive disadvantage… with Mexican truck manufacturers.

Tariffs on trucks followed, which in turn saw the devastation of the Mexican heavy-vehicle manufacturing sector.

So, while the tariff relief on steel may seem like good news for Mexico, the conditions set by the US to qualify send worrying signals. It is a new policy that is both a recognition of how the US auto industry is inextricably linked with Mexico’s and one which seeks to remedy and reverse this dependence.