US and Mexico close to agreement on easing Trump’s steel tariffs on imports: report

The United States and Mexico are moving closer to a trade agreement that would limit the impact of President Donald Trump’s proposed 50% tariffs on steel, by allowing a portion of imports to enter the US duty-free, according to a report by Bloomberg.

The arrangement, still under negotiation, would set a cap on Mexican steel shipments based on historical trade volumes, effectively reviving a framework used during Trump’s first term but with a higher threshold.

People familiar with the discussions cited in the report say the cap would be designed to “prevent surges” in steel imports without establishing a fixed numerical quota.

This model aims to reassure US steelmakers while providing flexibility for Mexican exporters and US end-users reliant on Mexican supply chains.

Commerce Secretary Howard Lutnick is leading the talks, which remain private.

Trump has not yet been directly involved, but his approval would be required for the deal to move forward.

Negotiators say the broad outlines of the agreement have been agreed upon, but final details are still being hammered out.

Cleveland-Cliffs, Nucor share prices fall in response

News of the potential softening in tariff policy affected markets late Tuesday.

Shares of US steelmakers, including Cleveland-Cliffs and Nucor, dropped sharply, declining by more than 7% and 4% respectively.

The Mexican peso, which had been under pressure earlier in the session, trimmed some losses after the news broke.

Mexico’s Economy Minister Marcelo Ebrard has been vocal in rejecting the premise behind the proposed 50% tariffs.

Speaking at an event on Tuesday, he said the US actually exports more steel to Mexico than it imports, calling the tariffs unjustified.

Ebrard said he made this case in meetings with US officials last week in Washington, where he was photographed shaking hands with Lutnick.

“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.”

Steel deal part of broader US-Mexico realignment

The talks are unfolding against a backdrop of broader diplomatic repositioning between Trump and Mexican President Claudia Sheinbaum.

Washington has demanded tougher action from Mexico on immigration and drug trafficking, areas where cooperation remains uneasy.

Homeland Security Secretary Kristi Noem recently accused Sheinbaum of encouraging anti-deportation protests in Los Angeles—an allegation Sheinbaum strongly denied as “absolutely false.”

The prospective steel deal also comes just ahead of the Group of Seven summit in Canada, where Trump and Sheinbaum are expected to meet, potentially giving the agreement geopolitical significance as well as economic impact.

Steel trade tensions linger as industries diverge

According to Commerce Department data, the US imported about 3.2 million metric tons of steel from Mexico in 2023—roughly 12% of total US steel imports.

The 2019 agreement between the two nations during Trump’s previous term set import limits based on 2015-2017 averages, and the new framework is expected to exceed those levels while maintaining safeguards against sharp increases.

Trump’s announcement last week to double steel tariffs came alongside his endorsement of Nippon Steel’s proposed acquisition of US Steel Corp., positioning the move as a measure to protect domestic industry.

While the tariff hike has pleased steel producers, downstream manufacturers and construction firms have warned it could increase costs and disrupt supply chains.

If finalized, the agreement could mark a calibrated policy shift—protecting US industry while avoiding full-scale trade friction with a key partner.

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