White House Unveils Plan to Stop Chinese Steel From Entering US Through Mexico

An employee looks on at steel rolls at a factory in Nantong, in China's eastern Jiangsu Province, on March 1, 2022. STR/AFP via Getty Images

The White House will close loopholes that allow China to evade tariffs by exporting steel and aluminum to the United States through Mexico, a senior administration official announced on July 10.

President Joe Biden will sign a proclamation ensuring that steel coming from Mexico receives duty-free benefits if it’s melted and poured in Mexico, and importers will have to share information on the origin of their steel products, the White House confirmed.

President Biden and Mexican President Andrés Manuel López Obrador will make a joint announcement outlining the efforts.

Estimates suggest that 3.8 million tons of steel arrived in the United States from Mexico in 2023. Eighty-seven percent of the steel is melted and poured in North America, although 13 percent is melted or poured outside of the United States, Canada, and Mexico, which is the main concern among officials.

“These actions fix a major loophole ... that countries like China used to avoid U.S. tariffs by shipping their products through Mexico,” Lael Brainard, the director of the National Economic Council, said in a press call.

“China is simply too big to play by its own rules.”

The Canadian government confirmed in May that it also wouldn’t function as a “back door” for Chinese steel and aluminum.

“Canada has a robust, responsive trade-remedy system to prevent dumped and subsidized imports and is committed to protecting our workers and industry from unfair trade,” Navpreet Chhatwal, spokesperson for Canadian Finance Minister Chrystia Freeland, said in a statement.

Biden Targets Chinese Steel Industry

President Biden has previously discussed the effects of cheap Chinese exports on the U.S. steel industry.

“They’re not competing. They’re cheating,” the president said in prepared remarks to the United Steelworkers union in Pittsburgh in April. “They’re cheating. And we’ve seen the damage here in America.”

Earlier this year, the White House announced new and higher tariffs on China, such as levies on aluminum and steel imports that will increase to 25 percent from 7.5 percent.

In 2018, then-President Donald Trump used Section 232 of the Trade Expansion Act to introduce a 25 percent tariff on some imported steel products and a 10 percent levy on some aluminum imports. However, the former president didn’t raise tariffs on other steel and aluminum products.

People watch the CNN presidential debate between President Joe Biden and former President Donald Trump at The Continental Club in Los Angeles on June 27, 2024. Mario Tama/Getty Images

The presumptive Republican presidential nominee has suggested tariffs on Chinese imports as high as 60 percent and an across-the-board 10 percent tariff on all products coming into the United States.

Former President Trump questioned why it took so long for the incumbent to impose higher levies on the world’s second-largest economy.

“They should have done that a long time ago,” he told reporters in May.

In recent months, Democrat lawmakers, such as Sens. John Fetterman (D-Pa.) and Bob Casey (D-Pa.), have pushed President Biden “to protect American steel from China’s cheating.”

In a letter to President Biden, the senators advocated keeping tariffs intact or “increasing tariffs where necessary” as they are “a critical piece of a pro-worker trade agenda.”

“American workers can compete with anyone if they have a level playing field, and now is not the time to roll back support,” they wrote in the May 2 letter.

Chinese Steel

China is the world’s largest steel producer, accounting for more than 50 percent of global steel output. It manufactures more steel than the global economy can absorb.

The domestic sector receives significant subsidies, allowing Beijing to accelerate exports into foreign markets at artificially low prices.

According to S&P Global Commodity Insights calculations, China’s net exports of finished and semi-finished steel surged by 35 percent year-over-year in the first quarter of 2024 to 6.16 million metric tons. In the first three months of 2024, Beijing has exported nearly 24 million metric tons.

Chinese steel production has also rebounded, climbing by 2.7 percent year-over-year in May and totaling 92.9 million metric tons, according to World Steel Association data.

By comparison, total global crude steel production was 165.1 million metric tons in May, up 1.5 percent from the same time a year ago.

Although China supplies just 4 percent of the steel in the United States, senior administration officials say that the White House is being “forward-looking” on this issue. The administration wants to be proactive and ensure that the country isn’t importing cheap steel that is carbon-intensive and undercuts American businesses and workers.

Meanwhile, steel prices have slumped this year as buyers manage excess supply from the COVID-19 pandemic and slowing construction activity. The price of hot-rolled coil is down about 40 percent year-to-date.