Trade Agreements and Tariffs: Effect on Metal Imports.
- Grupo Edmar
- Sep 24
- 5 min read
September 24, 2025 - Trade Agreements and Tariffs.
What are trade agreements and why do they matter in metals?
A trade agreement is a treaty between two or more countries that sets rules for the exchange of goods, services, investments, etc. In metals, these agreements may include clauses affecting:
Preferential tariffs : reduction or exemption from customs taxes if the metal meets certain conditions.
Rules of origin : percentage of the product's value that must come from the exporting country or countries within the treaty to qualify.
Environmental or sustainability clauses : Some rules require certifications that the metal was produced without harming the environment, which may require physical testing or audits.
Technical note : Under the USMCA, rules of origin are established for certain metal products that require a proportion of the metal used, processed, or transformed to come from North America, which may exclude materials imported from outside the agreement.
Practical example : If a steel producer in Canada sells to Mexico under the USMCA, and its steel incorporates a certain percentage of scrap imported from third countries, some parts of the product may not comply with the rule of origin, and it may lose the tariff advantage.
Types of Tariffs and Their Impact
I expand on each type and how they are usually applied to metals:
Specific tariff : e.g., “USD 50 per ton” for a specific category of rolled steel. These are useful when the market price fluctuates significantly, as the customs charge is not affected by fluctuating values.
Ad valorem tariff : “15% of the customs value.” In metals, if the international price of the mineral rises, and the seller makes it more expensive, the importer ends up paying a higher percentage, which can make the total cost unpredictable.
Compound tariff : combination of specific + ad valorem, e.g. USD 5/ton + 10%.
Anti-dumping tariffs/safeguard measures : When an exporting country is deemed to be selling a metal at unfairly low prices (dumping), other countries may impose additional tariffs. This is particularly relevant for steel and aluminum.
Impact :
Month-to-month import price variation.
Financial risk: Poor budgeting can mean losses if tariffs change.
Supply chain impact: If an anti-dumping tariff is suddenly imposed, you may have to find alternative suppliers or absorb additional costs.
Impact of regional vs. global agreements.
More details:
Regional agreements such as the USMCA (Mexico-United States-Canada), the Treaty with the European Union, or agreements within the Pacific Alliance offer logistical advantages (shorter distances, shorter transport times), a lower risk of customs disruptions, and greater predictability.
Global/multilateral agreements such as the World Trade Organization (WTO) treaties or the Doha Round agreements. They typically apply general mechanisms for lower tariffs among many countries, but their implementation may be subject to exceptions, quotas, sanctions, etc.
Comparison made simple :
Feature | Regional | Global / Multilateral |
Transport time | Less | Further |
Logistics costs | Inferiors | Generally older |
Localized regulations (quality, technical standard) | Better adapted | Sometimes more generic or diverse requirements |
Risk of abrupt change in conditions | Minor (when the treaty is stable) | Greater, because many more actors are involved |
Real-life example : If a manufacturer in Mexico imports copper from Chile (through a bilateral agreement or via the Pacific Alliance), it could receive very low tariffs. But if it starts importing from Asia under a global agreement, even if the tariff may be low, transportation, insurance, and regulatory barriers could make it more expensive or slower.
Tariff Barriers vs Non-tariff Barriers.
Here are more types and examples:
Tariff barriers : tariffs, import taxes, which vary depending on metal categories, special materials, purity level, etc.
Non-tariff barriers , which are equally relevant:
Quality standards and certifications (e.g. ISO, metal standards, minimum purity, heat treatment).
Import quotas (e.g. quotas on imported steel per year).
Environmental restrictions: emissions, waste, pollution during extraction and transportation processes.
Phytosanitary requirements if there are organic or associated parts (for example in wooden packaging).
Import licenses or special permits, export permits from the country of origin if applicable.
Case in point : An importer can get their steel through at a low tariff, but if it doesn't meet the strength or purity certification required by Mexican regulations, customs will hold it or charge them for additional testing, delaying delivery and generating extra costs.
How Tariffs Fluctuate Based on International Policy.
I elaborate:
Economic sanctions : When a country is sanctioned for political or geopolitical reasons (e.g., restrictions on imports of critical metals).
Trade war / “response” barriers : retaliatory tariffs between countries.
Changes in government and legislation : preferences and agreements may be changed, new tariffs may be imposed, and existing treaties may be revised.
Inflation and currency fluctuation : If the local currency depreciates, import costs rise even if the tariff does not change.
Example : Suppose the U.S. imposes a tariff on steel from China, and China responds with tariffs on U.S. aluminum. This can affect global suppliers, increase international prices, and impact supply chains transiting through these countries.
Total Cost when importing: Beyond the FOB price.
Adding factors that are often not considered:
Exchange rate : If the purchase is made in dollars or euros, any change in the exchange rate has a significant impact.
Political or transport risk insurance : hurricanes, port closures, customs restrictions.
Pre-shipment inspection costs : quality testing at origin, certificates, audits.
Internal transportation and distribution costs : when the material arrives at a Mexican port, it is transported to the plant, stored, and handled.
Financing costs : credit, delays, customs withholdings, interest if you pay in advance.
Simplified numerical example :
FOB metal price: USD 1,000 per ton
Freight + international insurance: USD 100
Ad valorem duty of 10% on customs value (say over USD 1,100): USD 110
Customs, storage and internal transportation costs in Mexico: USD 50
Compliance and certification costs: USD 40→ Total cost effectively USD 1,300 instead of USD 1,000.
Strategies to Minimize Tariffs and Take Advantage of Agreements.
More advanced tactics:
Compliance audits to confirm that suppliers comply with rules of origin, quality, etc.
Negotiate clauses in purchase contracts that address future tariff changes, exchange rates, and regulatory obligations.
Make use of special customs regimes in Mexico such as IMMEX, temporary customs operations, bonded warehouses, and free zones.
Diversify suppliers : Have more than one source for a metal, so that if something changes in one country, you can switch seamlessly.
Advance planning : anticipate imports before new agreements or tariffs come into effect to avoid sudden increases.
Current trends in metal imports.
International metals trade is not static; it is marked by constant changes in supply, demand, and global politics. Some key trends that directly impact importers include:
Diversification of source markets : Many companies no longer rely on a single country; they seek multiple suppliers to reduce risk.
Greater importance of critical metals : Lithium, nickel, and cobalt are gaining prominence in the energy transition, generating new trade dynamics and even export restrictions in producing countries.
Digitalization of customs processes : Online procedures and automation are speeding up import customs clearance times, although global standardization is still lacking.
Sustainability as a requirement : More and more treaties include environmental clauses, requiring that metal production and processing meet ecological standards.
These trends force importers to stay up-to-date and plan strategically to avoid cost overruns, penalties, or disruptions in their supply chain.
Trade agreements and tariffs are factors that can completely transform the cost and viability of importing metals. Understanding the types of tariffs, the differences between regional and global agreements, and non-tariff barriers is essential for making informed decisions. Ultimately, the key is to anticipate changes, diversify supply options, and calculate the true total cost of imports to ensure competitiveness in an increasingly demanding global market.
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