Mexico wants relief from 50 percent U.S. duties on steel and aluminum and a cut in vehicle tariffs to 15 percent from 25 percent, while the Trump administration says the metals tariffs are rebuilding domestic industry and protecting national security; here is what the proclamations, negotiating record and trade data show, and what is at stake for California.
On a stage in Park City, Kan., on Oct. 19, President Trump told a rally crowd that a trade agreement with the United States’ largest trading partner was within reach. “Mexico and us are very close to a great deal,” he said, adding that it could bring the U.S. trade deficit with Mexico down sharply, possibly to zero. “We’re not going to lose $150 billion with Mexico anymore!” he said.
The next day, Mexican President Claudia Sheinbaum agreed that a deal was very close. But the same week, people familiar with the negotiations told Bloomberg News that talks had hit an impasse over one issue in particular: the Section 232 tariffs the United States imposes on steel, aluminum and the products made from them. Two of those people said Commerce Secretary Howard Lutnick had objected to Mexico’s demands for lower metals duties and that his counterproposal did not address Mexican concerns, according to Bloomberg’s report, which said significant progress might now wait until after the Nov. 3 midterm elections. The White House and the Commerce Department did not respond to Bloomberg’s requests for comment.
“We’re a little bit stuck on the details,” Roberto Lazzeri, Mexico’s ambassador to the United States, said on a panel in Miami on Oct. 19. “I think the sticking point is the 232 tariffs.”
This Inquirer Investigation examines what those tariffs are, why the administration imposed them and says they are working, what Mexico is asking for, and why the answer matters to California, which sends more of its exports to Mexico than to any other country.
What the tariffs are, and the administration’s case
Section 232 of the Trade Expansion Act of 1962 lets the president adjust imports that the Commerce Department finds threaten to impair national security. President Trump first used it for steel and aluminum in March 2018. In his second term, he restored the duties on Canadian and Mexican metal in March 2025 and, through Proclamation 10947 of June 3, 2025, raised the rate to 50 percent.
The administration’s argument, set out in the proclamations themselves, is that steel and aluminum are being imported in such quantities and under such circumstances as to threaten to impair national security, and that sustained domestic production, rather than reliance on foreign metal and global overcapacity, is essential to the country’s defense and industrial base. In an April 2, 2026 proclamation, the president wrote that the duties “are strengthening the American aluminum, steel, and copper industries and addressing the national security threats” his earlier orders identified. The proclamation cites Commerce figures showing domestic aluminum capacity utilization rising from about 39 percent in 2017 to about 50.4 percent, and steel from about 72.3 percent to about 77.2 percent, closer to the department’s goal of a sustained 80 percent.
That April order, effective April 6, also changed how the tariffs are calculated. Duties now apply to the full customs value of covered goods rather than only their metal content: 50 percent on core steel and aluminum articles, 25 percent on many derivative products and 10 percent on derivatives made with U.S. metal. It also closed the process by which companies could ask Commerce to add products to the list.
A June 1, 2026 proclamation, effective June 8, eased the burden for some downstream goods, including agricultural equipment, heating and cooling systems and mobile industrial machinery. For products that qualify under the U.S.-Mexico-Canada Agreement, the 25 percent derivative duty through the end of 2027 applies only to non-U.S. content, with a 15 percent minimum, according to an analysis by Holland & Knight. The Commerce Department’s Bureau of Industry and Security issued guidance to Customs on Oct. 14 on how that U.S. content is measured, the trade compliance group ICPA notes.
Vehicles are handled separately. Passenger vehicles and light trucks face a 25 percent Section 232 tariff, with USMCA-compliant vehicles paying only on their non-U.S. content. Mexico also faces 25 percent on auto parts and trucks and 10 percent on buses, El Economista reported.
What Mexico wants
Mexico’s government has sought a deal that would lower U.S. tariffs on light vehicles to 15 percent from 25 percent and reduce the 50 percent rate on steel and aluminum, according to Bloomberg, which said the two sides had not settled on a new metals rate. El País reported in September that Mexico’s target for steel was 25 percent. Mexican leaders have also said they will not accept a deal without relief on derivative products, whose duties now reach deep into Mexico’s manufacturing economy, Bloomberg reported.
Economy Secretary Marcelo Ebrard, Mexico’s lead negotiator, has made his case publicly. He says the United States runs a trade surplus with Mexico in steel and that the metals tariff is therefore “unjustified and unfair,” and that Mexican steel exports include no transshipped metal from third countries, Mexico News Daily reported. “We pay an average effective tariff of 3%,” he said. “There is no main exporting country that has a better condition.”
Mr. Ebrard has also credited Mr. Lutnick and Trade Representative Jamieson Greer with securing the exemption that leaves, by his count, 82 to 85 percent of Mexico’s exports to the United States free of tariffs. Asked about reports that Mr. Lutnick was blocking a deal, he said: “In my last conversation with him, I didn’t get the impression that he was opposed to reducing those tariffs, at least as far as I know.”
He has been candid about the limits of Mexico’s offer. In remarks reported by El Economista, he said Mexico was seeking something similar to the terms given South Korea, but noted that Japan had pledged $500 billion of investment in the United States and that Mexico would not make an investment commitment of that size.
The negotiating record
The talks run alongside the first formal review of the USMCA, which Mr. Trump signed in his first term. On July 1, the trade representative’s office said the United States “did not agree to renew the USMCA in its current form,” while stressing that “the Agreement remains in force.” Under the pact’s terms, that triggers annual reviews. A Federal Register notice published Oct. 5 seeks public comments by Jan. 12, 2027, ahead of the next review on July 1, 2027.
After a third bilateral round, Mr. Greer and Mr. Ebrard issued a joint statement on July 23 listing economic security, labor, agriculture, electronic payments, steel, aluminum and derivatives, and automobiles among the topics, and calling for a fourth round in Washington in September. That round was postponed without a new date, El País reported, which said U.S. negotiators had pressed Mexico on cybersecurity and on investment from Asian countries.
The U.S. position, as described in public accounts of the review, is that USMCA origin alone is not enough protection against import surges, global overcapacity and content from outside North America. Washington has pressed for more U.S.-specific automotive content and less Asian content, ICPA’s review of the record notes, and has signaled that any metals settlement could come through executive action and origin-linked conditions rather than changes to the treaty text.
The administration has also linked trade to energy. Ms. Sheinbaum confirmed that Mr. Trump has proposed that Mexico buy more U.S. natural gas and give American companies a bigger role in its oil production, though she denied that either is a condition of a trade deal.
The trade deficit Mr. Trump wants to erase has widened. Census Bureau figures show a U.S. goods deficit with Mexico of about $155.9 billion from January through August, up 21.2 percent from the same period of 2025, on imports of about $419.3 billion and exports of about $263.5 billion.
Why it matters in California
For California, Mexico is not an abstraction. It is the state’s largest export market: California shipped $34.91 billion in goods there in 2025, 18.5 percent of its total exports, according to CalChamber’s analysis of Census data. Computers and electronic products, the core of the Bay Area’s hardware economy, made up $10.10 billion of that, and transportation equipment another $4.49 billion.
The flow runs both ways. California imported $61.56 billion in goods from Mexico in 2025, including $17.95 billion in computers and electronics, $13.11 billion in transportation equipment and $6.32 billion in agricultural products, making it the third-largest importing state. Mexican-owned companies employ about 14,700 people at 586 firms in California, CalChamber reports.
Much of that trade crosses at Otay Mesa, in San Diego County. Federal Bureau of Transportation Statistics data show it was the third-busiest U.S. port for truck trade with Mexico in 2025, handling $58.62 billion, or 9.1 percent of the national total, down 3.8 percent from 2024, with auto parts and medical supplies among its leading goods. Calexico East, in Imperial County, handled $19.78 billion in truck trade. Nationally, truck trade with Mexico in articles of iron and steel fell 12.1 percent in 2025 to $12.25 billion, a decline that coincided with the higher Section 232 rates.
Those numbers cut both ways in the policy argument. Supporters of the tariffs point to the rising utilization at U.S. mills as evidence that the duties are drawing production home, and argue that metals made in America are a security asset worth paying for. Mexico and many importers argue that duties on derivative goods raise costs for factories on both sides of the border, including California manufacturers that buy Mexican components, and that uncertainty over the review is freezing investment, a concern Bloomberg reported Mexican officials have raised directly.
What comes next
Neither government has published a draft agreement, and none of the reported changes to the steel, aluminum or vehicle tariffs has taken legal effect. Any reduction in the Section 232 rates would require a new presidential proclamation, and the USMCA review calendar runs well into 2027. Mr. Ebrard has said he hopes for a U.S. response before the end of the year.
The Inquirer asked the Office of the U.S. Trade Representative, the Commerce Department, the Consulate General of Mexico in San Francisco, CalChamber and the Center for U.S.-Mexican Studies at UC San Diego for comment on Saturday. None responded by publication time.
Nasrin Haidari covers foreign affairs and geopolitics, including diplomacy, trade disputes and conflicts, and their ties to California and the Pacific. More from Nasrin Haidari
