(Bloomberg) — The US has asked Mexico to mirror Washington’s tariff wall against Chinese steel and aluminum by imposing Section 232-style duties on imports from outside North America, according to four people with direct knowledge of the matter.

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The goal is to preserve preferential treatment for steel produced in the US, Mexico and Canada, while applying a common external barrier to China. While it represents a big ask from US trade officials, Mexico is open to pursuing it amid talks for a broader deal under the USMCA trade agreement review, said the people, who asked not to be identified because the talks are private.

The precise rates and products covered by the possible tariffs are still under discussion, they added. The US aims to close a framework agreement with Mexico by the end of the year, one of the people said.

The US and Mexico have been holding bilateral talks as part of a process to review the North American trade deal known as USMCA. Stakes are higher since the US declined on July 1 to renew the pact in its current form, instead shifting to rolling negotiations as it seeks to tighten regional rules of origin and limit China’s role in North America.

As part of those conversations, US Trade Representative Jamieson Greer and Economy Minister Marcelo Ebrard held a third bilateral round of talks in Mexico City last week. The conversations included the topics of steel and aluminum, autos, economic security, labor and agriculture. The governments plan to meet again in Washington in September and have stressed the need to stop “free-riding” by countries outside the pact.

In its attempt to move forward in the talks, Mexico offered earlier this year to sharply reduce purchases of Chinese steel, one of the people said.

USTR and Mexico’s Economy Ministry did not respond to requests for comment.

Tariff Discussions

As it stands, the US steel regime is broader and more punitive than Mexico’s.

The US has set a Section 232 tariff of 50% on core steel and aluminum from China and most other economies, and charges 25% on derivatives products and a lower tariff on selected machinery.

Mexico taxes metals on a product-by-product basis. Steel imports from countries Mexico does not have trade deals with are subject to rates of as much as 25%, as well as certain anti-dumping duties.

Earlier this year, Mexico implemented new tariffs on roughly 1,500 products from countries that it does not have trade deals with — a move that mostly affects imports from China. The decision, approved by Mexico’s congress last year, was seen as an attempt by President Claudia Sheinbaum’s administration to more closely align its tariff structure with the US’s.

American steel producers have asked the Trump administration to call on Mexico and Canada to adopt measures equivalent to the US’ restrictive Section 232 duties, matching their tariff levels as well as product and country coverage. They also requested a “melted and poured” rule that would call for steel to be made at the furnace stage in North America — not merely rolled or finished there — to receive special treatment.

A broader industry wishlist calls for raising the share of North American steel that automakers must purchase to 85% from 70%, extending labor-value rules to more steel-intensive goods and restricting investment from non-market economies such as China.

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