US President Joe Biden’s administration intensifies regulations to thwart tariff evasion on aluminium imports arriving via Mexico.

The administration has imposed an additional 10% tariff on primary aluminium from China, Russia, Iran, or Belarus, and a 25% tariff on steel to close the loophole of countries using Mexico to circumvent US import tariffs.

The new import requirement, announced by the White House on July 10, under the US Section 232 tariffs, states that aluminium imports from Mexico will be subjected to a 10% tariff if they contain primary aluminium smelted or cast in China, Russia, Iran, or Belarus, or a 25% tariff to steel arriving from Mexico that was not melted and poured in Mexico, the USA or Canada. Under this new policy, importers into the USA must provide a certificate of analysis to US Customs and Border Protection, demonstrating the origin of products to bypass border taxes. The announcement follows the US-imposed antidumping and countervailing duties announcement in April on aluminium extrusions from Mexico to tackle the influx of aluminium imports sold at below market value, as well as President Biden’s decision to increase tariffs on strategic goods including steel, electric vehicles, semiconductors and batteries in May. The White House has now decided to reassess Mexico’s tariff exemption due to exploitation concerns as the country has become a transit point for tax evasion which may change trade relations with Mexico.

This strategic move is supported by US-based aluminium industry groups including Century Aluminum, the Aluminum Association, and the Aluminum Extruders Council, who agree that not only does the new rule address unfair trade from third parties through transhipment via Mexico, but it also safeguards domestic aluminium and the North American aluminium market as over US$10Bn has been invested in new and expanded aluminium plants across the US, with nearly US$200M invested this year alone. Project Blue estimates a 2.1% CAGR demand growth in aluminium from 2023 to 2034, necessitating more aluminium smelters to come online over the next decade to meet the growing requirement.

The regulation highlights President Joe Biden’s stance on China amid growing concerns about China’s surplus industrial capacity inundating global markets due to its weak domestic demand, especially as the 2024 US presidential election approaches. Furthermore, Donald Trump has pledged to intensify his trade policies if re-elected; potentially imposing tariffs as high as 60% for goods originating from China.