US Opens Path to Cut Mexico’s Steel, Aluminum Tariffs

SEATTLE (Scrap Monster): The US Department of Commerce opened a process to reduce Section 232 tariffs on eligible steel and aluminum imports from Mexico and Canada, linking relief to USMCA compliance and commitments to expand US production capacity. The measure could ease cost pressures for suppliers tied to North America’s automotive and heavy-vehicle supply chains.

The US Department of Commerce opened a tariff-adjustment process that could reduce Section 232 duties on eligible steel and aluminum imports from Mexico and Canada, provided producers commit to expanding US primary steel or aluminum capacity tied to automotive and medium- and heavy-duty vehicle supply chains.

The measure, published in the Federal Register on April 23, 2026, allows certain steel and aluminum producers operating facilities in Mexico or Canada to submit documentation to obtain tariff reductions under Presidential Proclamation 10984. The adjustment applies to companies that supply, directly or indirectly, US automobile or medium- and heavy-duty vehicle manufacturers and commit to new US production capacity.

Under the mechanism, the US Department of Commerce may reduce steel and aluminum tariffs by up to half the otherwise applicable rate. However, the adjusted rate cannot fall below 25%. The benefit is limited to imports that qualify for preferential treatment under the USMCA and that were melted and poured, or smelted and cast, in Mexico or Canada.

The measure offers potential relief for Mexican steel and aluminum suppliers integrated into North American automotive supply chains, particularly those serving manufacturers of automobiles, auto parts, medium- and heavy-duty vehicles, and related components. However, access to the lower tariff is conditional. Producers must demonstrate that their commitments will expand US primary steel or aluminum production capacity and support key vehicle-related industries.

The policy comes at a time when Mexico’s automotive industry continues attracting major investment despite tariff uncertainty and the shift toward advanced manufacturing. MBN reports that the sector has drawn US$21 billion in investment as companies move into technology-driven projects, reinforcing Mexico’s role as a key production and supplier base for North America’s vehicle industry.

That investment backdrop is important because the new US tariff framework does not simply reward regional integration. It links tariff relief to companies’ ability to demonstrate North American origin, USMCA compliance, and future capacity commitments in the United States. For Mexican suppliers, this means that remaining competitive in the US market may increasingly depend on both maintaining operations in Mexico and aligning part of their investment strategy with US industrial policy.

The Commerce Department said eligible companies may submit project-by-project documentation detailing proposed investment plans, production locations, projected capacity, milestones, suppliers, contractors, raw materials, and expected hiring tied to the new US capacity. Applications must also explain the company’s qualifying status, including its steel or aluminum production in Mexico or Canada and the US vehicle manufacturers it supplies.

The notice follows Proclamation 10984, issued in October 2025, which imposed additional tariffs on imports of medium- and heavy-duty vehicles, parts, and buses under Section 232 of the Trade Expansion Act of 1962. That proclamation cited national security concerns and authorized the Commerce Secretary to adjust tariffs on certain steel and aluminum imports from Mexico and Canada when producers make new commitments to expand US production capacity.

In February 2026, the Federal Register published procedures for importers of medium- and heavy-duty vehicles qualifying for USMCA preferential treatment to determine US content. That framework allows qualifying vehicles from Mexico and Canada to apply additional tariffs only to their non-US content, reinforcing the role of USMCA compliance in tariff treatment.

For Mexico, the policy creates both an opportunity and a constraint. On one hand, eligible producers could reduce tariff exposure if they meet US requirements and maintain compliance with USMCA rules of origin. On the other hand, the benefit depends on commitments to expand production capacity in the United States, meaning Mexican and Canadian suppliers must align future investment plans with US industrial policy priorities.

The measure comes as Washington continues to tighten its Section 232 tariff framework for metals. In April 2026, the White House expanded actions affecting imports of aluminum, steel, and copper, stating that Section 232 duties on aluminum and steel articles and derivatives would generally apply to the full customs value of imported products. 

For automotive and heavy-vehicle manufacturers, the tariff-adjustment mechanism could help ease cost pressures in regional supply chains, particularly for companies sourcing steel and aluminum inputs from Mexico and Canada. Companies will have to provide detailed documentation, meet Commerce Department milestones, and show that the qualifying imports are linked to new US production capacity.

Courtesy: www.mexicobusiness.news