Chinese steel imports cause industry rift in Mexico

An employee works at a Chinese steel factory that exports to Europe and the Americas.
An employee works at a Chinese steel factory that exports to Europe and the Americas.

By Juan Montes / Wall Street Journal

The Mexican government’s recent decision to impose anti-dumping duties on some key steel imports from China has sparked a rift between the country’s steel and automotive industries, reigniting a debate over whether Mexico should adopt a more protectionist stance over trade policy.

On Thursday, the government announced several additional measures to support domestic steelmakers, including strengthening customs controls to block the entrance of illegal steel. But authorities stopped short of meeting local industry demands for a 15 percent blanket tariff on all steel imports from China. Mexico doesn’t apply import tariffs on steel.

As a result of the global steel glut caused by falling demand and excess output by China, Mexican steel producers have announced thousands of layoffs and have been lobbying in recent weeks for the imposition of tariffs.

The automotive industry cried foul, however, warning that setting up more protective measures could end up hurting the competitiveness of one of Mexico’s best-performing manufacturing sectors. The Mexican auto industry imports around 90% of the steel it uses.

The dispute shows how even champions of free-trade such as Mexico can face policy dilemmas.

http://www.wsj.com/articles/chinese-steel-imports-cause-industry-rift-in-mexico-1436468945

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