Section 232 Tariffs Slow Steel Shipments to the United States and Increase Pressure on Mexico’s Industry

The drop in steel imports into the United States due to tariffs is reshaping costs and production across North America, with direct effects on Mexico.

U.S. tariff policy under Section 232 showed its muscle again in 2025: steel imports fell sharply, both in value and volume, as Washington seeks to shield its domestic steel industry and reduce reliance on foreign suppliers. Official data point to imports totaling $25.091 billion, a 21% year-over-year decline, while volume slipped 12.6%—a sign that trade restrictions are constraining the global flow of the metal.

For Mexico, the adjustment is far from minor. The country remained among the leading suppliers to the U.S. market, but with a meaningful year-over-year contraction in shipments. In a sector where steel is a cross-cutting input—from auto parts and appliances to machinery, infrastructure, and industrial equipment—any tariff-driven distortion translates into pressure on margins, investment decisions, and order continuity, especially in export-oriented manufacturing corridors.

On the U.S. side, the industry continues to openly defend the tariffs. It argues that steel is a strategic asset for infrastructure and national defense, and that the global market is distorted by subsidies and industrial policies that have created overcapacity. In that context, international estimates put excess global steelmaking capacity at hundreds of millions of tons—an imbalance that, in the sector’s view, raises the risk of waves of low-priced exports and import shocks that destabilize domestic producers.

However, pressure is also rising within the United States over costs. The duties—reaching as high as 50% for certain products—don’t just hit primary steel, but also a broad range of manufactured goods that incorporate steel and aluminum. For companies competing on price or operating under long-term contracts, higher input costs can be passed on in part to consumers or absorbed as lower profitability, affecting investment, employment, and inventory planning.

Against this backdrop, U.S. trade authorities have acknowledged the possibility of operational adjustments to simplify compliance and reduce administrative costs. Options under discussion include a category-based redesign—consumer goods, intermediate goods, and industrial goods—with differentiated rates. Such a mechanism could ease the burden for some importers but increase it for others, depending on whether the tariff is calculated based on metal content or on the total value of the finished product.

Impact on Mexico: Idle Capacity, Automotive Supply Chains, and Trade Negotiations

Mexico’s steel industry enters this episode with challenges of its own. Domestic demand tends to be pro-cyclical and depends on construction, infrastructure, and manufacturing; in addition, export momentum is closely tied to the U.S. industrial cycle. With tariffs in place, industry groups and companies have warned that several plants are operating at capacity utilization below historically comfortable levels, which pushes up unit costs and puts expansion plans on hold at a time when Mexico is competing to attract manufacturing investment in North America.

The impact is amplified by regional integration. In industries such as automotive, steel moves “within” value chains: it enters as sheet, is transformed into auto parts, and crosses back again as a component or finished good. When duties extend to downstream products, the hit doesn’t stop at the steel mill—it spreads to second- and third-tier suppliers, logistics, and sourcing decisions by major assemblers. This is happening in an environment where Mexico is trying to lock in advantages from geographic proximity and costs, but still faces bottlenecks such as energy availability, water constraints in certain regions, and transportation infrastructure needs.

On the diplomatic front, the Mexican government has insisted that these barriers are costly for both economies and has pushed to make them a priority in trade talks. A recurring argument is that Mexico does not pose a systemic risk of “flooding” the U.S. market with steel and that, on the contrary, the bilateral relationship in the sector can show deficits on the Mexican side—undercutting the economic rationale for maintaining a broad-based restriction. In practice, the issue intersects with the political climate in the United States and with the trade enforcement agenda, suggesting that any change could be gradual and heavily conditional.

Looking ahead, the main risk for Mexico is that tariff uncertainty translates into fewer orders and more cautious investment decisions—not only in steel but also in metal-intensive manufacturing. The opportunity, if more targeted adjustments materialize, would be to regain flow in specific segments and reduce friction across supply chains. In any scenario, the signal is clear: U.S. industrial and trade policy will remain a determining factor for the performance of Mexico’s export-oriented industry.

In sum, the decline in U.S. steel imports confirms the impact of Section 232 and opens a negotiation phase in which Mexico is seeking certainty. The path of tariffs will influence costs, operating capacity, and investment decisions across North American manufacturing.