US imports from Mexico are exempt from Section 232 tariffs due to the United States-Mexico-Canada Agreement (USMCA). But the White House announced on July 10 that it would impose a new tariff on steel and aluminium that are shipped from Mexico but produced outside Mexico, Canada or the US, in a bid to curb trans-shipment and excess production.
In the case of aluminium, imports must not contain primary material that was smelted or cast in China, Russia, Belarus or Iran – otherwise they will be subject to a 10% tariff. Material from Russia was already subject to a 200% tariff, thus resulting in a total rate of 210%.
The new rules require aluminium importers into the US to present proof to the US Customs and Border Protection (CBP) of the material’s country of origin in the form of a certificate of analysis, showing that the country of first smelter, second smelter and casting is not one of the four listed above.
“[The requirement] does not surprise us […]. Companies have the option of seeking alternative markets,” Julio César Martínez Rivas, president of the National Chamber of the Aluminium Industry in Mexico (Canalum), told Fastmarkets.
“But the biggest concern right now is that [Mexican exporters] will have to seek certification. Regardless of what it is, if you are importing, you have to present a certificate of origin, which was not mandatory before. You must have a certificate even if you do not buy from China or Russia to demonstrate its origin. That’s [what] companies should be working [on] now. At Canalum, we are going to check which documents can be used,” Rivas added.
Fernando Garcia Martinez, vice president of operations at Mexican aluminium institute IMEDAL, said the US government has yet to clarify what the certificate of origin and analysis should cover, as well as if supplementary documentation will be required.
“Anyone who wants to export [Section] 232 products to the US must generate a license and declare the origin of their raw material. This has existed since last year. The new thing is that you must present a certificate of analysis, which previously was not necessary,” Martinez said.
“What we need to know is if it is a mandatory additional document. Perhaps it is now mandatory to present a certificate with chemical analysis and mechanical properties that mentions the country of first smelter, second smelter and casting with traceability data. We must wait for this requirement to be clarified,” he added.
A Mexican extrusion source told Fastmarkets that there is a lot of uncertainty – and there will be even more if former President Donald Trump wins the US presidential elections in November, according to the source – which prompted them to take a “stand by” approach.
“Right now, we are importing [aluminium] billet from the US but also from other places. We bought recently from a broker in the Middle East, and it can’t be his, because he doesn’t produce, so it most likely comes from China, which is the largest producer of aluminium in the world. When asking for a certificate of origin, we will have a problem. I don’t know exactly how to get it,” they said.
“Even if I buy billet [from] Brazil or Argentina, they will ask me for this new certificate of origin,” they added.
At the end of 2023, 82.7% of Mexico’s aluminium exports went to the US, while 3% were exported to Canada and 1.7% to China, according to IMEDAL.
Mexico exports more than $3 million per year of aluminium, of which around $2.1 million goes to the USA, according to Canalum. In terms of volume, that corresponds to about 80% of all the exports.
On the other hand, in 2023, around 25% of all aluminium imported into Mexico came from China, and only 2% from Russia.
For Martinez, the White House decision to impose the 10% tariff was not unexpected, because that possibility was already being discussed.
“What we didn’t know exactly was how this would be done,” he said, adding that the measure does not widely affect the Mexican industry.
The products most affected by the new rules are products from Section 232, according to IMEDAL. They are:
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