The EV Shift Is Real — and So Is the Growth in Electrical Steel

The transition to electric vehicles is no longer a question of “if,” but “how fast.” While the speed of EV adoption may differ by region and policy, the long-term direction is clear. Environmental regulations, carbon reduction goals, and energy efficiency standards continue to push automakers toward electrification.

As EV production expands, demand for electrical steel — a core material for electric motors — is also expected to grow steadily across North America.

The Real Issue Isn’t Demand — It’s the Risk of Oversupply

The more complex question lies on the supply side.

Electrical steel is not a product that can be scaled up easily. It requires massive capital investment and high-level technical know-how. This creates a unique market dynamic: when new capacity arrives, the market can shift from tight supply to oversupply faster than many expect.

Several major steelmakers are already positioning themselves:

ArcelorMittal is actively investing in electrical steel production in North America.
Nippon Steel has clarified its strategic intent through its attempted acquisition of US Steel.
Cleveland-Cliffs is expanding its electrical steel facilities.

Taken together, these moves suggest that a prolonged, severe shortage of electrical steel in North America is unlikely.

High-Grade Electrical Steel Still Depends on Imports

Despite new investments, the market is far from “self-sufficient.”

High-grade non-oriented electrical steel used in EV motors still relies heavily on imports from Japan, Korea, and Europe. North American producers are improving their capabilities, but quality, consistency, and scale remain challenging.

This means competition in the North American market is set to intensify — not decline.

One EV Does Not Use as Much Electrical Steel as You Think

There is a common misconception that more EVs automatically mean explosive growth in electrical steel demand.

In reality, the amount of electrical steel used per vehicle is smaller than many assume. Because of this, EV growth does not directly translate into exponential growth in material demand.

Once new North American production lines stabilize — and imports continue to fill quality gaps — the market could face a mid-term oversupply cycle.

In that scenario, the real test will not be demand, but the financial and technological endurance of steel producers.

Mexico’s Perspective: Not a Producer, but a Strategic Processor

When viewed from Mexico, the story changes significantly.

Mexico is not positioning itself as a primary producer of electrical steel. Instead, it is becoming a critical processing hub inside the North American EV value chain.

While:

The United States focuses on high-grade steel production,
Canada invests heavily in batteries and related materials,

Mexico has quickly emerged as a manufacturing base for:

Electric motors
Powertrain components
Motor core processing

Value Is Shifting from “Making Steel” to “Shaping Steel”

Electrical steel in Mexico is no longer treated as a simple imported raw material.

It undergoes multiple high-value processes:

Slitting
Stamping
Lamination
Stacking

before being transformed into motor cores supplied to global automakers.

POSCO International has already built motor core processing operations in Mexico, supplying major OEMs. Japanese and German Tier-1 suppliers are following the same path by expanding lamination and motor component facilities.

Oversupply Risk Could Be Mexico’s Opportunity

What looks like a risk for steel producers may actually be an opportunity for Mexico.

If U.S. and Canadian production expands successfully, Mexico will benefit from:

More stable raw material supply
Better pricing conditions
Stronger foundation for value-added processing

Mexico’s competitive edge is shifting away from raw material production — toward precision processing and manufacturing efficiency.

Final Thought: The Battle Isn’t About Volume — It’s About Positioning

The North American electrical steel market will almost certainly grow.

The real question is not whether demand will rise, but:

Who will survive the oversupply risk?
Who will control the processing ecosystem?
And who will capture the real value?

In that game, Mexico is no longer just a manufacturing base — it is becoming a strategic player.

What Exporters Must Know About the New Trade Rules in the US and Mexico

North America’s steel market has entered a period of rapid regulatory tightening. Both the United States and Mexico have raised tariffs, strengthened customs controls, and intensified their scrutiny of supply-chain routes and origin claims. As a result, exporters now face a more complex environment where tariff costs, origin documentation, and even production pathways can determine market access.

This article summarizes the latest 2025 policies, explains how they affect US-Mexico-Asia trade flows, and outlines what Korean and global steel exporters should prepare for.

1. US–Mexico Steel Trade and Tariff Updates

■ US Section 232 Tariffs (2025 Status)

Under Section 232 of the Trade Expansion Act, the US has imposed national-security-based tariffs on steel and aluminum since 2018. In 2025, the regime became significantly stricter.

Key updates include:

As of June 4, 2025, most countries face a 50% tariff on steel and aluminum products.
Previous exemptions have been largely removed.
The United Kingdom remains at 25%.
Steel derivatives are assessed based on actual steel content, bringing more products into the tariff scope.
General Approved Exclusions (GAEs) and similar waiver processes have been curtailed.

For Mexican exports to the US:

Products meeting USMCA rules of origin enter duty-free.
Products that fail to meet origin criteria face the full 50% tariff, even if produced in Mexico.

Reflecting the impact, Mexico’s steel exports to the US fell approximately 16.6% in the first half of 2025.

■ What Mexican Exporters Must Check Before Shipping to the US

To secure duty-free entry, exporters must verify:

Compliance with USMCA rules of origin
Whether the product qualifies as a Section 232 steel item
Classification as a steel derivative
Updated tariff rates and any derivative-specific requirements
Complete documentation including mill certificates and clear production records

A minor origin-documentation error can shift a product from 0% to 50% duty, making strict compliance essential.

■ Mexico’s Tariffs on Imported Steel (Including US-Origin)

Mexico introduced a broad tariff decree in April 2024:

5% to 50% tariffs now apply to 544 HS codes, including steel.
The measure is temporary but remains in force until April 2026.
FTA-origin goods (such as US-origin products) are exempt from these tariff increases.
However, Mexico has tightened customs procedures, including mandatory importer registration and mill certificates.

Even duty-free goods may face delays if documentary requirements are not met.

2. Mexico’s Restrictions on Steel Imports From Asia

On May 29, 2025, the Mexican government imposed restrictions and non-approval measures targeting steel imports from Vietnam, Malaysia, and Indonesia.

The government’s rationale:

➡ Concern over trans-shipment of Chinese steel through Southeast Asia.

Actions taken include:

Removing certain mills from the approved exporter list
Excluding specific suppliers from Auto Import Notice eligibility
Requiring proof of direct production to rule out Chinese origin

Asian exporters must now secure:

Documentation verifying non-Chinese origin
Transparent supply-chain records
Valid registration in Mexico’s approval systems
Full mill certification and production flow details

While these measures currently target specific Asian countries, similar scrutiny may expand over time—meaning Korean exporters should monitor developments closely.

3. Risks for Chinese-Origin Steel in the US and Mexico

■ United States

The US maintains multiple layers of restrictions on Chinese steel:

Section 232 tariffs
Anti-dumping (AD) and countervailing duties (CVD)
Enforcement against trans-shipment through third countries

Any product linked directly or indirectly to China risks very high duty rates and potential legal exposure.

■ Mexico

Mexico is also tightening controls:

Enhanced monitoring of ASEAN routes suspected of carrying Chinese material
Tariff increases (10–50%) on imports from non-FTA countries
Stricter verification of production origin

The trend is clear: China-linked supply chains face rising costs and uncertainty across North America.

4. Exporting Korean Steel to the US and Mexico

■ Korean Steel Exports to the US

As of 2025, the US applies:

25% Section 232 tariffs on Korean steel and certain aluminum derivatives
Heightened risk of AD/CVD investigations
Stricter origin verification and derivative classification rules

For Korean exporters, product classification (HS codes) and mill documentation are now as critical as pricing.

■ Korean Steel Exports to Mexico

Since Korea and Mexico do not have an FTA:

Korean steel may fall under Mexico’s 5–50% tariff increase
Import approval requirements and mill-certification rules apply
Any dependence on Chinese raw materials could trigger additional scrutiny

Korean suppliers must therefore evaluate their full supply chain before entering Mexico.

5. Key Takeaways and Strategic Implications

The defining theme of 2025 is clear:
origin, supply-chain pathways, and production transparency now matter as much as the product itself.

Here are the main implications:

✔ Rules of origin under USMCA are becoming more decisive

To maintain duty-free access:

Production steps must be carefully allocated
Raw materials must be traceable
Origin documentation must be airtight

For companies operating factories in Mexico, production design and local value-added ratios will determine tariff exposure.

✔ Trans-shipment risk is a major regulatory trigger

Both the US and Mexico are aggressively targeting Chinese supply-chain links.
Any company using Chinese billets, slabs, or coils must fortify its documentation.

✔ Higher tariffs are reshaping downstream industries

A 25–50% tariff environment pushes costs upward across:

Construction
Automotive
Machinery
Consumer durables

Steel exporters must incorporate tariff scenarios into contract structures, pricing models, and long-term supply agreements.

✔ Compliance and documentation are becoming strategic capabilities

In today’s environment, a competitive exporter is not only a producer, but also a company that:

Manages origin matrices
Audits supply-chain routes
Prepares complete mill certificates
Builds customs-ready documentation systems

This is evolving into a core business competency for steel companies in North America.

Conclusion

The North American steel market in 2025 is defined by heightened tariffs, tighter customs controls, and increased sensitivity to supply-chain origins. The United States’ move to 50% tariffs and Mexico’s restrictions on Asian steel are likely to shape the market for years to come.

For Korean and global steel exporters, the path to success in North America is no longer just about competitive pricing—it requires strategic planning across origin compliance, documentation, and supply-chain design.

The companies that adapt to this new environment will be the ones that maintain stable access to the world’s largest steel-consuming region.

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2025년 12월 9일 화요일

The EV Era and the North American Electrical Steel Market - Opportunity, Risk, and Mexico’s Quiet Rise