Final Thoughts

A lot can change in a month.

We all remember the supply-chain headaches that followed the onset of the Covid-19 pandemic. Countless ships backed up at the port of Long Beach, Calif. Shelves ran low or empty at department stores. Goods once thought common vanished.

“Near-shoring” the supply chains was considered to be a potential a solution. And “friend-shoring” was a close cousin. Bringing the supply-chains back to friendly, neighboring nations.

In fact, this is baked into the very idea behind the US-Mexico-Canada Agreement from 2020. From the preamble:

Strengthen anew the longstanding friendship between them and their peoples, and the strong economic cooperation that has developed through trade and investment.

“Friendship.” It’s right there in the beginning.

But today’s steel market is volatile and competitive—even among friends.

On Feb. 14, a bipartisan group of 13 US senators wrote a letter to US Trade Representative (USTR) Katherine Tai and Commerce Secretary Gina Raimondo. No, this was not a Valentine.

Their issue was “unfair imports” of certain Mexican steel products, notably of conduit, that were “surging” into US markets. They said this resulted in the shuttering of an American plant in California. In the letter, the senators floated a controversial solution: the reinstatement of 25% Section 232 tariffs.

The Mexican steel industry was not pleased. Industry association Canacero wrote a letter rebutting the US senators’ claims. It called on Mexican authorities to execute an “objective” analysis of the situation. Canacero went so far as to speculate that protectionist rhetoric in the US would heat up as the 2024 elections approach.

The tit for tat has already begun. Mexican politician Ricardo Monreal Ávila called on the Mexican Economy Ministry to look into countermeasures against the US, according to a report in BN Americas on Feb. 25.

Avila is a Mexican senator and senate majority leader of the ruling party Morena. Canacero applauded the action on Twitter.

The war in Ukraine has already dealt a blow to the connections of globalism. The 200% tariffs on Russian aluminum are just the latest example. An adversarial trade relationship between two nations on opposing sides of a major war is not a shock.

What might be more interesting in the coming year is the more nuanced debate developing in North America. In short, for the US, Mexico, and Canada, what does it mean to be a friend?

By Ethan Bernard, ethan@steelmarketupdate.com