Understanding the US-Mexico Aluminium Trade Relationship: Challenges and Opportunities

What's Driving Mexico's Push for a New Aluminium Trade Deal with the US?

The Mexican aluminium industry finds itself at a critical crossroads in late 2025, actively pursuing a trade agreement with the United States while simultaneously working to reduce its dependence on Chinese imports. This strategic pivot comes amid escalating tariffs impact investment markets, changing supply chain dynamics, and increasing geopolitical tensions that are reshaping North American trade relationships.

Current Trade Landscape

At the AluMexico event held in Monterrey from September 9-11, 2025, industry leaders made it clear that forging stronger ties with the US is their top priority despite current trade tensions. The Mexican aluminium sector faces substantial challenges with US Section 232 tariffs on Mexican aluminium increasing from 25% to 50% between March and June 2025.

These tariff increases have created significant economic pressure on Mexican manufacturers, with many slowing operations or considering relocation to the US. As one producer source bluntly stated during the conference: "The Mexican aluminium industry does not have any alternative but to ally with the US. It's our only market."

The additional 30% blanket tariff on Mexican goods has been suspended for 90 days (until November 2025) pending negotiations, creating a critical window for reaching a new trade framework.

How Have Recent US Tariffs Impacted the Mexican Aluminium Industry?

Economic Consequences of Tariff Escalation

The timeline of tariff increases has been particularly damaging to established supply chains. On March 12, 2025, the Trump administration reinstated a 25% Section 232 tariff on steel and aluminium imports from Mexico. By May 30, plans were announced to increase this to 50%, with implementation following on June 4.

These escalating US tariffs effects have significantly disrupted longstanding supply chains between Mexico and the US. According to industry sources at the AluMexico conference, "Companies are slowing their operations in Mexico at the moment. We have an automaker client reducing its presence in Mexico. They will focus on building plants in the US because of the tariffs."

The automotive sector has been particularly affected, with manufacturers accelerating plans to relocate production to US facilities to avoid the tariff burden, further threatening Mexico's manufacturing base.

Market Response

The uncertainty has created significant pricing pressure and reduced spot market activity. According to Fastmarkets data, the aluminium 6063 extrusion billet premium (cif Mexico) was assessed at $370-420 per tonne in September 2025, having dropped 4.82% from $380-450 per tonne in late August.

Similarly, the P1020A premium (cif Mexico) fell 5.88% to $300-340 per tonne in late August. Even the low-carbon aluminium differential has been affected, holding steady at $0-38 per tonne, reflecting market hesitation to make significant moves amid policy uncertainty.

Market participants are adopting a wait-and-see approach, with a seller source noting: "This kind of news causes commodity market volatility. Whoever has metal in Mexico, and is not under tariffs now, will think twice before taking it out of there because the prices might go up."

Why Is Mexico Distancing Itself from Chinese Aluminium Trade?

Strategic Realignment

In a significant policy shift, Mexico announced on September 11, 2025, plans to impose tariffs on approximately 1,400 imported products, including aluminium, from countries with which it does not have trade agreements. These proposed tariffs would range from 10% to 50%, primarily targeting Asian suppliers.

The Mexican government also plans to implement a 50% tariff specifically on Chinese automotive imports beginning in 2026, signaling a broader strategic pivot away from Asian trade dependencies.

This realignment comes as industry leaders publicly advocate for strengthened North American trade integration. Eugenio Clariond Rangel, president of IMEDAL (Mexican aluminium institute) and executive president of aluminium supplier Cuprum, warned during the AluMexico conference that Mexico may develop an anti-Asia stance, particularly regarding China, while emphasizing the need to "strengthen North America."

Historical Context

The current situation stems from trade pattern shifts that began years earlier. When then-President Trump removed tariffs on Mexican imports in 2017, China redirected significant aluminium exports to Mexico. Much of this metal was processed in Mexico before being exported to the US, creating a contentious trade dynamic that the US has increasingly scrutinized.

This redirection of Chinese aluminium through Mexico has become a major friction point in US-Mexico trade relations, with US officials expressing concerns about circumvention of direct trade restrictions with China.

As Sergio Gómez from IQOM Commercial Intelligence noted during the conference, negotiations with the US will depend heavily on how Mexico handles its relationship with China: "We have to make the US aware that the enemy is on the other side, not in North America."

What Solutions Are Being Proposed for the Mexico-US Aluminium Trade?

Potential Trade Framework Options

Several frameworks are being considered to resolve the current trade impasse. Eugenio Clariond Rangel proposed creating a trilateral monitoring body involving Mexico, the US, and Canada to strengthen North American integration and potentially negotiate exemptions from US tariffs.

This approach would align with the Nuevo León Governor Samuel García's framing of the situation as "North America against China," positioning the trade dispute within a broader geopolitical context similar to the ongoing US–China trade war.

Another key proposal involves developing a system to monitor and verify the origins of aluminium entering Mexico, although specific implementation details remain unclear. This traceability system could address US concerns about Chinese aluminium being processed in Mexico before entering the US market.

Industry Leadership Perspectives

Industry leaders are advocating for constructive dialogue rather than retaliatory measures. As Rangel noted during the conference: "We have a long and complex path in front of us… We will not have a solution this year."

This measured approach recognizes the complexity of the negotiations and the need for sustainable, long-term solutions rather than quick fixes or escalating trade barriers.

The emphasis on North American integration rather than confrontation was echoed by multiple speakers, with the understanding that the region's economic future depends on collaborative approaches to addressing shared challenges, particularly competition from Chinese manufacturers.

How Is the Scrap Metal Market Affecting Mexico's Aluminium Industry?

Changing Scrap Dynamics

A less discussed but critically important aspect of the current situation involves aluminum scrap flows. Under the USMCA trade agreement, Mexican scrap exports to the US remain exempt from tariffs, creating an incentive for Mexican scrap to be redirected northward.

This redirection has created tightness in domestic Mexican scrap markets, forcing secondary producers to rely more heavily on primary aluminium (P1020) rather than scrap. The resulting cost increases further undermine the competitiveness of Mexican manufacturers.

In response, industry leaders are considering potential restrictions on scrap exports. As Rangel noted during the conference: "Limiting scrap exports to the US would be beneficial. We are considering whether to restrict scrap exports – taxing or banning them."

Market Adaptation

The changing market dynamics have prompted new initiatives to track and analyze these shifts. In June 2025, Fastmarkets launched a suite of non-ferrous scrap and alloy price assessments specifically for Mexican domestic markets, reflecting the growing separation between US and Mexican scrap markets.

This adaptation highlights how the aluminium supply chain is evolving in response to trade pressures, with greater emphasis on tracking material origins and flows across North America.

The issue of scrap exports illustrates the complex interconnections within the aluminium value chain and how trade policies in one area can have cascading effects throughout the industry.

What Are the Potential Outcomes of Current Trade Negotiations?

Negotiation Scenarios

Several potential outcomes are possible as negotiations continue through the 90-day suspension period ending in November 2025:

1. Sectoral Agreement: A specific deal addressing aluminum and steel trade could emerge, potentially including origin verification mechanisms and gradual tariff reductions.

2. Enhanced Monitoring: Implementation of new traceability systems to verify aluminum sourcing and prevent circumvention of trade restrictions.

3. Status Quo: Failure to reach agreement could result in continued or even escalated tariffs, further disrupting established supply chains.

4. Graduated Approach: Phased tariff reductions tied to specific milestones in implementing monitoring systems or reducing Chinese imports.

The timeline constraints add pressure to the negotiations, with industry participants recognizing that comprehensive solutions may take longer than the current suspension period allows.

Industry Outlook

Market participants expect continued uncertainty through Q4 2025, with potential for prolonged disruption if negotiations fail to produce a framework agreement by November.

The automotive sector remains particularly vulnerable to continued trade tensions, given its reliance on integrated North American supply chains and the significant aluminum content in modern vehicles.

One silver lining may be the acceleration of nearshoring for aluminum-intensive manufacturing, potentially strengthening North American supply chains over the longer term despite short-term disruptions.

As one producer source noted during the conference: "It makes no sense to add tariffs to products not produced domestically, such as primary aluminium and billets. This only increases costs and undermines the competitiveness of Mexican industry."

FAQ: Mexico-US Aluminium Trade Relations

What tariffs currently apply to Mexican aluminium exports to the US?

Mexican aluminium exports to the US currently face a 50% tariff under Section 232 national security provisions, implemented in June 2025. This represents a doubling of the 25% rate reinstated in March 2025. These sectoral tariffs remain in place despite the temporary suspension of a broader 30% tariff on Mexican goods.

Why is Mexico considering restrictions on aluminium scrap exports?

Industry leaders are exploring potential restrictions on scrap exports because increasing volumes of Mexican aluminium scrap are being redirected to the US market, creating domestic shortages. This redirection has forced Mexican secondary producers to rely more heavily on primary aluminium, increasing production costs and reducing competitiveness.

How might Mexico's proposed tariffs on Asian imports affect the aluminium market?

Mexico's proposed 10-50% tariffs on aluminium imports from countries without trade agreements would primarily impact Asian suppliers, especially China. This measure would likely reduce Chinese aluminium flowing through Mexico to the US market, potentially strengthening North American supply chains while increasing short-term costs for Mexican manufacturers.

What is the significance of the 90-day negotiation period with the US?

The 90-day suspension of additional US tariffs (announced in July 2025) provides a critical window for negotiating a new trade framework. Without a breakthrough by November 2025, broader tariffs could be implemented, further disrupting aluminium trade between the two countries and potentially triggering Mexican countermeasures.

How are Mexican aluminium prices responding to the current situation?

Mexican aluminium premiums have declined amid market uncertainty, with the P1020A premium falling 5.88% to $300-340 per tonne in late August. The 6063 extrusion billet premium has also decreased, reflecting reduced spot market activity as buyers and sellers await clarity on future trade policies.

What Should Companies in the Aluminium Supply Chain Do Now?

Strategic Recommendations

Companies throughout the aluminum supply chain should consider several strategic responses to the current situation:

• Develop contingency plans for multiple tariff scenarios beyond November 2025
• Evaluate supply chain vulnerabilities and diversification opportunities
• Monitor developments in US-Mexico trade negotiations closely
• Consider origin verification enhancements to demonstrate North American content
• Assess potential for increased recycling to reduce primary aluminium dependence

These steps can help businesses navigate the uncertainty while positioning themselves for various potential outcomes of the current negotiations.

Long-term Considerations

Beyond immediate tactical responses, companies should also consider longer-term strategic implications:

• Evaluate investments in light of potential North American market realignment
• Prepare for increased scrutiny of aluminium sourcing and transshipment
• Consider implications of reduced Chinese aluminium presence in North American markets
• Monitor development of new monitoring mechanisms and compliance requirements

The current disruptions may accelerate fundamental shifts in how aluminum flows through North American supply chains, creating both challenges and opportunities for forward-thinking companies.

Table: Key Mexican Aluminium Premium Assessments (September 2025)

Conclusion: North American Integration vs. Global Fragmentation

The Mexican aluminium industry stands at a pivotal moment that will shape its future for years to come. Industry leaders are clearly advocating for stronger North American integration while distancing themselves from Chinese suppliers, recognizing that their economic future is inextricably linked to the US market despite current tensions.

The outcome of current negotiations will not only determine the fate of Mexican aluminium producers but also impact the broader reshaping of global supply chains as nations increasingly prioritize regional integration and security considerations over purely economic efficiency.

This shift from globalization toward regionalization reflects growing concerns about supply chain resilience and national security, with the aluminum industry serving as a prominent example of these broader mining industry trends.

Disclaimer: The information in this article represents the situation as of September 2025 and includes forward-looking statements about potential trade developments. Actual outcomes may vary significantly based on negotiation results, policy changes, and market conditions. Readers should consult with qualified advisors before making business decisions based on this analysis.

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