Tariffs on aluminum and steel make construction more expensive

The increase in tariffs on steel and aluminum by the United States will further increase the cost of construction projects.

Luis Méndez Jaled, president of the Mexican Chamber of the Construction Industry (CMIC), expressed his concern about the imposition of 25% tariffs on Mexican steel and aluminum, effective March 12, 2025, and increasing to 50% starting June 4. According to Méndez, these tariffs will have a significant impact on the sector by raising the costs of key inputs such as steel and aluminum, which represent between 20% and 30% of total expenditures on construction projects.

He warned that this could raise housing construction costs by 3% to 4%, building costs by 5% to 6%, and infrastructure costs by up to 10%, affecting projects such as ports, airports, roads, and railways .

Méndez also noted that the tariffs could reduce the construction sector's Gross Domestic Product (GDP) by between 3.5% and 5%, which would have an impact on the national GDP of up to 0.3 percentage points . He also warned that this measure creates uncertainty and affects Mexico's competitiveness in international trade, since 82.5% of Mexican steel exports are destined for the United States.

The leader expressed his support for President Claudia Sheinbaum's administration in seeking solutions to mitigate the effects of tariffs, promoting dialogue and respect for the USMCA agreements. He also advocated for strategies to strengthen regional competitiveness and protect economic development, investment, and employment in the country.

Experts consulted agreed that the increase in tariffs will affect Mexico's economic growth and will also impact states with strong industrial activity, such as Jalisco.

Last Tuesday, US President Donald Trump Trump signed an executive order doubling ad valorem tariffs on steel and aluminum imports from 25% to 50%.

Analysts explained that this measure will harm not only its main trading partners, such as Mexico and Canada, but also countries like China, the second largest supplier of aluminum to the United States .

Gabriela Siller, director of Economic and Financial Analysis at Banco Base, believes the tariff increase appears to have a political undertone, following the U.S. Supreme Court's blocking of President Trump's initiative. She noted that this decision will have negative repercussions on the growth of the Mexican economy and could lead to a decline in exports of steel, aluminum, and other manufactured goods.

The Mexican metal production sector stands out worldwide.

In 2023, Mexico ranked as the 15th largest steel producer worldwide, with a production of approximately 16.2 million tons.

Although this figure represented a slight year-over-year drop, the recent US tariffs—which rose from 25% to 50%—threaten more than $20 billion in exports and 380,000 jobs.

Regarding aluminum, Mexican exports totaled $2.69 billion in 2024. Domestic production also reflects this dynamic: the market, valued at $3.86 billion in 2023, projects compound annual growth of 6.7% through 2030.

The United States is the main destination for Mexican aluminum, with purchases totaling $2.1 billion in 2024.

Domestic demand is driven by nearshoring, as well as by the automotive and packaging sectors, which contributes to the dynamism of this industry.

In short, steel and aluminum are strategic sectors for Mexico: they generate employment, provide foreign currency, and face significant risks in the face of the international tariff situation.

CT