Tariff threats: Mexican recycler fears disaster ahead

The threatened US tariffs on imports from Mexico, set to come into effect on 4 March, will disrupt well-established supply chains, jeopardising thousands of jobs and threatening economic stability on both sides of the border, recycling experts warn.

There is deep and widespread concern among metal recyclers in Mexico, according to aluminium recycler and trader Alejandro Jaramillo of Glorem SC. ‘The tariff threats are already affecting industries; it’s halting orders, which depresses industrial activity and scrap generation,’ he tells Recycling International from Tijuana on the Mexican-US border. ‘It’s already threatening jobs, but if the tariffs become reality the job losses would be in the hundreds of thousands on both sides of the border.’

Twin threats

Mexico is facing major economic uncertainty due to two looming tariff threats: a country-specific 25% import tariff plus the increase (from 10% to 25%) on aluminium through the so-called section 232 tariff.
The latter does not apply to scrap although the one targeting Mexican and Canadian exports – which includes metal products and scrap metal – kicks in on 4 March.

It would have a devastating impact, says Jaramillo. ‘Both the US and Mexico rely heavily on recycled aluminium. If, suddenly, scrap aluminum shipped across the US-Mexico border had a tariff of 25%, prices in the Mexican domestic market are likely to collapse and collection would suffer, he argues.

‘Kind of unthinkable’

It is impossible to plan ahead because of the tariffs, says the recycler. ‘It’s also worth noting that the tariffs could go on top of each other so we could be getting 25% country specific tariff and then a 25% 232 aluminium tariff on top of that for a total of 50%, which is kind of unthinkable – but it’s a possibility.’

A long-standing free trade relationship is at stake, according to Jaramillo. ‘For over 30 years, the US, Mexico and Canada have built an integrated trade framework under Nafta and now the Usmca, fostering economic growth, job creation and industrial cooperation.’

Aluminium supply dependance

Jaramillo foresees higher costs for US and Mexican manufacturers. ‘As you can image, many industries, including automotive, aerospace and construction, depend on a seamless aluminium supply chain. Increased costs will lead to price hikes for consumers and business disruptions.’

According to Jaramillo, US manufacturers consume far more aluminium than the country produces. In 2023, imports accounted for nearly 60% of domestic aluminium consumption. ‘The tariff increase will drive up material costs for automobile manufacturers, beverage can producers, construction firms and defense contractors,’ he argues.

What’s more, the US has limited domestic production capacity. ‘The country does not produce enough aluminium to meet demand, forcing reliance on imports. A blanket tariff increase will make sourcing materials more expensive without expanding domestic production.’

Jobs at risk

The US Aluminium Association estimates that the 25% tariff could threaten 100 000 domestic industry jobs. In Mexico, where aluminium-based industries employ over 225 000 workers, it says more than 110 000 would be at risk due to increased costs and reduced demand.