The United States and Mexico are close to a deal that would remove a 50% tariff on a specific amount of steel imports, according to sources. This new agreement updates an earlier one from Trump’s first term. Under the proposed deal, U.S. buyers could import Mexican steel without paying duties, as long as the total shipments stay within typical historical amounts. Previous agreements didn’t specify a quota, and any new deal will need Trump’s approval. Canada and the U.S. are also discussing a similar deal, suggesting that negotiations are happening behind the scenes. Despite concerns about Mexico’s involvement in trans-shipments, it is still part of the discussions. If approved, Mexican steel could enter the U.S. without duties by following limits based on past trade data. This would continue the trend set by earlier agreements, but it still needs official confirmation. The initial paragraphs discuss a new trade agreement between the U.S. and Mexico aimed at cutting down or removing high tariffs on steel imports. Washington seems ready to allow certain amounts of Mexican steel into the U.S. market without the 50% duty, as long as imports do not exceed typical historical levels. Canada may also be included in a similar arrangement. These discussions indicate a shift in trade policy but await final approval from leaders. For traders, this news means more than just a policy change. It also suggests a return to defined limits and allowances that can help predict market behavior. Without a formal quota in the last agreement, there was some uncertainty. But if past averages are used as informal caps, it gives a clearer framework to operate within. Due to this situation, short-term volatility in steel and industrial metals may remain high until the agreement is finalized. We can expect a moderate increase in hedging activities, especially from U.S. buyers who were previously affected by the high tariff. They now have an opportunity to rethink their inventory strategies relying on Mexican supplies. With similar talks happening between Canada and the U.S., it’s important to closely monitor freight costs and supply chain changes. Some producers may start adjusting their sourcing strategies early, which might lead to unexpected shifts in shipments through Gulf Coast ports. Delays in logistics could widen the cost differences between domestic and cross-border deliveries; if managed well, this could offer opportunities for both price movement and basis swings. Traders who currently have positions tied to North American steel should reconsider their timing. Longer-term contracts may begin to reflect increased price movements if the agreement is finalized soon. The volume-based approach also sets a soft upper limit on duty-free imports, creating a floor-and-ceiling effect on pricing. This isn’t just speculation. It’s about understanding the details of the negotiations—what data shows the trade volume limits will inform pricing and market behavior. As more precise import data becomes available, models will need adjustments to accurately reflect contract values. We will also examine changes in the curve shape, especially for shorter contracts which had expected no movements due to tariff barriers. The possibility of smoother trade across the border may increase expectations regarding fluctuations in steel inputs, especially for manufacturers with tight budgets. It’s essential to monitor interest in segment-specific hedging strategies. If steel imports restart— even with conditions—it will lead to buyers rethinking their strategies, especially those who depended on local suppliers. The impacts will flow through to finished goods pricing in the next quarter. As negotiations approach a conclusion, this agreement will not just eliminate tariffs—it will reshape the baseline expectations in the region. Strategies must evolve with the upcoming changes, not after they occur.

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