In an effort to curtail China's avoidance of import taxes by using Mexico as a trade route, the Biden administration has announced the imposition of tariffs on steel and aluminum shipped from Mexico that were made elsewhere. The move, made under section 232 of the Trade Expansion Act, aims to protect US national security from potential threats posed by certain imports.

Under the new regulations, a 25% tariff will be imposed on steel not melted or poured in Mexico, while a 10% tariff will apply to aluminum. These tariffs are targeted specifically at addressing China's evasion of trade tariffs, as China is the primary producer of more than half of the world's steel. Furthermore, the tariffs on aluminum will also impact production from China, Belarus, Iran, and Russia.

The decision carries a political undertone, as it directly challenges the actions of former President Donald Trump, who had the opportunity to take similar measures but failed to do so. Lael Brainard, director of the White House National Economic Council, emphasized that President Joe Biden is closing the loopholes left by his predecessor, which allowed China to circumvent trade rules.

While the financial impact of these tariffs may be relatively modest, given the volume of steel and aluminum being routed through Mexico, the issue carries political significance. Senator Sherrod Brown, a Democrat from Ohio, has expressed concerns about the surge in Mexican steel imports, considering it a threat to US steelworkers and an avenue to evade tariffs. Brown, who is up for reelection against Republican Bernie Moreno, is aiming to address the issue and secure support in a region that previously voted for Trump in the last two presidential elections.

According to administration officials, the United States imported a total of 3.8 million tons of steel from Mexico last year, with 13% of that being poured or melted outside of Mexico. Additionally, the US imported 105,000 metric tons of aluminum from Mexico, and only 6% of it was smelted or cast outside of Mexico.

The implementation of these new tariffs will commence immediately following the announcement. The Biden administration hopes that by closing these trade loopholes, they can create a fairer and more secure trade environment while safeguarding US industries from unfair practices.