Insights 
VT 
The United States and Mexico are nearing a deal to eliminate a 50% tariff on a specified volume of steel imports, as per sources. This agreement updates a similar arrangement from Trump’s first term.
The arrangement could allow US buyers to import Mexican steel without duties, provided total shipments remain within historical trade volumes. There is no definite quota mentioned in previous agreements, and any new deal needs Trump’s approval.
Ongoing Negotiations
Meanwhile, Canada and the US are reportedly negotiating a similar deal, hinting at behind-the-scenes discussions. Although there were concerns over Mexico due to its role in trans-shipments, it remains included in the talks.
Under the proposed terms, Mexican steel can enter the US duty-free, adhering to shipment limits based on past trade data. This update continues to follow the pattern set by earlier agreements yet awaits formal confirmation.
The first few paragraphs of the article describe an upcoming trade agreement between the United States and Mexico that would reduce or remove high tariffs on steel imports. Specifically, Washington appears ready to allow some volumes of Mexican steel to enter the US market without incurring the 50% duty, so long as these imports don’t exceed typical historical quantities. A similar arrangement might follow with Canada. These talks suggest a recalibration of trade policy but are still waiting for final approval from leadership.
For our part as traders, this signals more than a policy shift—it signals the return of structured thresholds and specific allowances that carry predictive value. The lack of a formal quota last time meant there was ambiguity, but if historical averages are to be used as de facto caps, that gives a rough ceiling to work with.
Market Implications
Given this, short-term volatility around steel and industrial metals may stay elevated until the terms are officially laid out. We should anticipate a moderate rebound in hedging activity from those previously pushed out by the high tariff, particularly among US-based buyers who now see fresh scope to reintroduce inventory strategies reliant on Mexican sourcing.
With talks underway between Canada and the United States too, it would be wise to watch freight differentials and supply chain adjustments closely. Some producers may begin adjusting their sourcing plans pre-emptively, which could lead to unexpected flow shifts through Gulf Coast ports. Logistical lags might widen spreads between domestic and cross-border delivery costs—a scenario that, if played well, can offer entry points both on flat price movement and basis swings.
On our side, any trader currently holding positions tied to integrated North American steel exposure will need to reconsider timing assumptions. Longer-dated volatility contracts might begin pricing in higher movement if the agreement rolls out within the next cycle. The introduction of a volume-based scheme also puts a soft upper bound on duty-free flow, generating a floor-and-ceiling effect on implied premium structures.
This is not a guessing game. It’s about reading what’s implicit in the structure of the talks—what data points are being used to frame the trade volume limits tells us where behaviour is being modelled and priced. There’ll be recalibrations in models as more granular import data sets are used to weigh contract values.
We’ll also be reviewing curve shape movements, particularly around shorter maturities which had previously priced immobility due to the tariff barrier. The renewed possibility of smoother trade across the border will lift expectations of variability in steel inputs, particularly for manufacturers managing cost-sensitive budgets.
It’s worth watching open interest around segment-specific hedging mechanisms. If steel import flows resume, even conditionally, it will mean repositioning by buyers, notably those who had previously leaned on local suppliers. The knock-on effects will ripple into finished goods pricing pipelines over the next quarter. That’s not far off.
As ongoing negotiations reach their endgame, the flow of this agreement will not merely remove duties—it effectively reshapes the region’s baseline assumptions. Strategy from here must adjust with that, not after it.
