Mexico Steel Tariffs: Section 232, USMCA Carve-Out, and 50% Rate

Steel imported into the United States from Mexico is subject to a 50% Section 232 tariff, the rate that took effect on June 3, 2025 under Presidential Proclamation 10947.¹ A partial carve-out for USMCA-qualifying goods lets importers pay duty only on the non-U.S. portion of a product’s value, subject to a 15% minimum. Mexico has not retaliated on U.S. goods; instead, it has raised its own tariffs on steel from countries without a free trade agreement and cracked down on irregular importers at home.

The Current Rate and What It Applies To

The 50% duty covers primary steel articles from Mexico. A 25% rate applies to certain derivative articles, and a transitional third tier caps duties at 15% for specific metal-intensive industrial equipment through December 31, 2027.² The country-level exemption Mexico had held since 2019 was revoked effective March 12, 2025, along with all general approved exclusions and the exclusion request process itself.³

Coverage has broadened over time. In August 2025, 407 additional product categories were added, sweeping in steel and aluminum content in derivative goods that range from lawn mowers to motorcycles.³

The USMCA Carve-Out for U.S. Content

A June 2026 refinement introduced a preferential calculation for USMCA-qualifying steel from Mexico and Canada. The 25% duty applies only to the “non-U.S. content” of the product, calculated as total value minus the value of U.S.-origin parts, with a minimum effective duty of 15%. Up to 40% of a qualifying article’s value, if represented by U.S. content, may enter duty-free.⁴

A separate reduced rate of 10% is available for products made entirely from U.S.-origin metal, determined by where the steel was “melted and poured.” The threshold to count as made “entirely” from U.S.-origin metal was lowered from 95% to 85% by weight.⁴⁵

One caveat matters if you’re planning shipments. The U.S. Department of Commerce and Customs and Border Protection were tasked with issuing detailed implementation guidance on how importers should calculate and document U.S. content. That guidance had not been finalized as of mid-2026.

Reduced Rates for Producers Investing in U.S. Capacity

Under Proclamation 10984, steel and aluminum producers in Mexico or Canada can apply for reduced tariff rates, down to a floor of 25%, if they commit to expanding primary production capacity in the United States. A qualifying company must operate production facilities in Mexico or Canada, supply U.S. producers of automobiles or heavy-duty vehicles directly or indirectly, and submit a detailed project plan for new U.S.-based production.⁶

The reduction is capped at import volumes equal to the newly committed U.S. production capacity. Approved companies file quarterly progress reports covering land purchase, facility design, construction start, equipment installation, and first production. Missing a milestone can pause the tariff adjustment and trigger assessment of back-duties. The Department of Commerce began accepting applications on April 23, 2026.⁶

What the Tariffs Have Done to Mexico’s Steel Industry

Mexican steel exports to the United States fell by roughly 53% to 60% under the 50% tariff regime, depending on the measure and timeframe.⁷⁸ By value, Mexican steel exports to the United States totaled $2.47 billion in 2025, down from $3.53 billion in 2024.⁹

Inside Mexico, finished steel production dropped 8.1% to 16.8 million tons in 2025, and domestic steel consumption fell 10.1%, the sharpest decline in recent history.¹⁰ The industry was operating at approximately 55% of installed capacity, described as its lowest level in 25 years.⁷ An estimated 350,000 manufacturing jobs were at risk by the end of 2026, with the automotive sector, which accounts for roughly one-third of Mexico’s manufacturing employment, considered especially vulnerable.⁸ Mexican domestic steel demand experienced 22 consecutive months of decline.¹¹

How Mexico Has Responded

Mexico has not imposed retaliatory tariffs on U.S. goods in response to the 50% Section 232 duties.¹² The response has run along two other tracks: raising duties on steel from countries without a free trade agreement with Mexico, and enforcing against irregular imports at home.

Permanent Tariffs on Steel From Non-FTA Countries

On December 29, 2025, Mexico published a reform to the Import Duties Act, effective January 1, 2026, that made previously temporary tariffs permanent. The reform covers more than 1,400 products across 17 industrial sectors, including 268 tariff lines for steel, with rates from 5% to 50%. It applies to imports from countries that do not have a free trade agreement with Mexico, primarily China, South Korea, India, Vietnam, Thailand, Brazil, and Indonesia. Preferential rates for FTA partners, including the United States and Canada under USMCA, remain unchanged.¹³

A presidential decree on April 23, 2026, added tariffs of 5% to 35% on 185 tariff lines, including steel, aluminum, auto parts, and wind turbine generators.¹⁴ Economy Minister Marcelo Ebrard announced in March 2026 that tariffs on 220 steel products from Asian nations would be permanently extended.⁷ China called Mexico’s measures damaging to Chinese companies’ interests and opened a domestic trade and investment barrier investigation, but had not brought a formal WTO dispute as of mid-2026.¹⁵

Operation Clean-Up

In March 2026, Mexico launched Operation Clean-Up, a coordinated enforcement action targeting irregular steel importers. The Ministry of Economy, the Tax Administration Service (SAT), the National Customs Agency (ANAM), and the Digital Transformation and Telecommunications Agency inspected 750 firms. Of those, 350 companies had their import operations suspended and faced cancellation of their IMMEX (maquiladora) permits, while another 400 remained under investigation.¹⁶ Authorities cited the triangulation of import operations as a key violation; in one case, the company Bremsa Regiomontana was accused of collaborating with Elegant Fashion to triangulate 76,761 tons of steel imports during 2025.¹⁷

In 2025, federal authorities also canceled the registrations of more than 1,000 entries in the steel industry registry after identifying irregularities, including what they described as “simulation of productive processes.”¹⁸ The government began phasing out temporary import permits under the IMMEX program for various steel products, requiring manufacturers to either source domestically or pay applicable tariffs.⁷

Where Relief Could Come From

The mandatory six-year review of USMCA begins in July 2026 and has become the main venue where Mexico is seeking tariff relief. Canada is the largest steel exporter to the United States and Mexico is the third-largest.¹⁹ Ebrard has called current tariff levels “unsustainable” and is formally seeking their reduction or removal for goods that comply with USMCA rules of origin.⁸

The Trump administration has been resistant. U.S. Trade Representative Jamieson Greer said in April 2026 that the administration’s trade policy “has not changed” and that it would not return to a situation without tariffs. On June 10, 2026, President Trump said he is “not looking to renew” the USMCA.¹²

One negotiating option that has surfaced is a tariff-rate quota that would reduce tariffs on a volume of steel imports deemed essential by U.S. automakers and other industries. As of mid-2025, U.S. and Mexican officials were reported to be “homing in” on such a system, though no final agreement had been reached.²⁰

Congress is a separate track. On April 3, 2025, Senators Chuck Grassley and Maria Cantwell introduced the Trade Review Act of 2025, which would require the president to notify Congress of any new or increased tariff within 48 hours, cause new tariffs to expire after 60 days without congressional approval, and let Congress terminate existing tariffs at any time through a resolution of disapproval.²¹ The bill drew 12 bipartisan cosponsors, including Senate Republican leader Mitch McConnell. Its prospects remain uncertain given the administration’s position that the tariffs are essential to national security.

How the Tariffs Got to 50%

Section 232 duties on Mexican steel are not new. On March 8, 2018, President Trump imposed tariffs on steel and aluminum imports under Section 232 of the Trade Expansion Act of 1962, initially at 25% for steel and 10% for aluminum.²²²³²⁴

By 2023, U.S. steel industry groups argued Mexico had failed on both counts. Total steel mill product imports from Mexico that year were 36% higher than the 2015–2017 baseline, with steel conduit imports reaching 472% above the baseline; Mexico accounted for 87% of all U.S. steel conduit imports.²⁵ Chinese exports of steel to Mexico grew from $386 million in 2018 to $1.39 billion in 2023, and critics pointed to Mexico’s IMMEX (maquiladora) and PROSEC programs as mechanisms that allowed foreign-origin steel to be processed in Mexico and re-exported to the United States while avoiding duties.²⁴

In February 2025, Presidential Proclamations 10895 and 10896 reinstated 25% tariffs on steel and aluminum and extended coverage to additional derivative products.²² Proclamation 10947 doubled that rate to 50% on June 3, 2025, for all countries except the United Kingdom, which remained at 25% under a separate bilateral deal.¹

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