Steel Stocks Slide After US Nears Deal With Mexico To Cut Steel Duties, Cap Imports

After weeks of quiet, Trump’s trade deals are starting to take shape: first it is the ongoing negotiations with China which are “going well”, then we learned that an interim deal with India was largely completed, and now Bloomberg reports that in the third positive trade news of the day, the US and Mexico are closing in on a deal that would remove cut steel duties – including Trump’s 50% tariffs on steel imports up to a certain volume – in a revamp of a similar deal between the trade partners during his first term. 

The talks are being led by Commerce Secretary Howard Lutnick, and since Trump hasn’t been directly involved in the negotiations he would need to sign off on any deal.

While the agreement hasn’t been finalized, under the current terms it would allow US buyers to import Mexican steel duty-free as long as they kept total shipments below a level based on historical trade volumes. The new cap would be higher than what was allowed under a similar deal during Trump’s first term, Bloomberg sources reported, which was never a fixed figure but designed to “prevent surges.”

Following the Bloomberg report, US steel stocks moved lower: Cleveland-Cliffs dropped more than 7%, and Nucor fell more than 4%. The Mexican peso trimmed losses.

At an event on Tuesday, Mexican Economy Minister Marcelo Ebrard said he told US officials in meetings last week that steel tariffs are not justified in Mexico’s case because the US sends more steel to Mexico than vice versa. Last Friday, he posted a picture that showed him shaking hands with a smiling Lutnick in Washington.

“We are waiting for their response, because on Friday we gave them the details of Mexico’s argument and we are right,” Ebrard told reporters Tuesday. “So we are going to wait for their response which will probably be this very week.”

Last week Trump announced he would double steel duties to 50% after saying he would approve the purchase of US Steel by Japan’s Nippon Steel, a move he said would protect the domestic industry and national security. While domestic steelmakers welcome the move, end-users have urged the administration to ease the tariffs. 

The negotiations come as Sheinbaum seeks an accommodation with Trump over immigration and drug trafficking across their shared border, which the US leader has demanded Mexico halt. Homeland Security Secretary Kristi Noem accused Sheinbaum Tuesday of “encouraging” more anti-deportation protests in Los Angeles, where the US has deployed troops. Sheinbaum has called Noem’s claim “absolutely false.”

The talks also come ahead of a Group of Seven leaders summit in Canada, where the two presidents are likely to meet.