Image source, Getty Images
- author, Natalie Sherman
- role, BBC News
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The United States has announced new rules targeting state-owned companies, including those from China, that ship steel and aluminum through Mexico to avoid tariffs.
The White House said companies that ship products through Mexico must prove their products’ origins if they want to avoid the border tax.
The move comes as President Joe Biden seeks to demonstrate a tough stance on China as he faces off against his predecessor, Donald Trump, in the 2024 presidential election.
The measure expands protections for U.S. steel and aluminum makers introduced in 2018 under President Trump in the name of national security.
The tariffs, which impose a 25% tariff on steel imports and a 10% tariff on aluminum imports, have been controversial and sparked trade wars with countries around the world.
Mexico, one of America’s largest trading partners, was one of the countries that ultimately won an exemption from the rule.
The White House said it decided to reexamine its duty-free treatment of Mexico after rising imports from the country suggested the country was being used as a transit point for tax evasion.
About 13 percent of steel imported from Mexico last year came from outside North America, and just 6 percent of aluminum, officials said.
But officials said the rules were aimed at preventing a further rise as China’s domestic economy falters and companies look overseas.
Under the new rules, announced jointly by Mexican President Manuel Lopez Obrador, companies shipping steel to the United States must prove that the steel was melted and cast in North America.
For aluminum, companies will have to prove it hasn’t been refined in China, Russia, Belarus or Iran.
The head of the National Federation of Manufacturing praised the new measures, calling them “a step forward to combat China’s predatory trade practices and make North American steel trade fairer.”
“This is the right decision by the Biden Administration,” the group’s president, Scott Paul, said in a statement.
“We cannot allow China or other countries to exploit trade with their neighbors to evade U.S. trade enforcement.”
But some say the administration should have done more to curb imports from Mexico.
“Tariffs on Mexican steel must be reinstated until Mexican steel imports return to sustainable levels,” Sen. Sherrod Brown, D-Ohio, wrote on social media.
Since taking office, President Joe Biden has sought to ease trade tensions, replacing many of the Trump-era tariffs with other safeguards, including quotas for countries such as Britain.
But Trump has also maintained or expanded other tariffs imposed by his predecessor, signaling a major shift in U.S. politics once known for promoting free trade.
Party leaders are responding to voter backlash against globalization, particularly in key battleground states such as Pennsylvania, once home to a large steel industry.
Both Trump and Biden have emphasized protecting the steel industry as they rally behind voters in the state.
If elected, Trump has vowed to implement more aggressive policies than those implemented during his first term, proposing a 10% tariff on all imports, rising to 60% on goods from China.
