BLACKETT. June 4, 2026

Trump softened steel and aluminum on six categories of derivatives Monday, with USMCA-qualifying content rules baked into the new structure.

Section 232 rewrite goes live June 8 Trump signed a new Section 232 proclamation Monday that runs through December 31 2027, walking the standard derivative rate back to 25% from 50% and carving out lower tiers for trade-deal countries. Agricultural equipment like combines and harvesters drops to 15%, mobile industrial equipment including bulldozers and forklifts drops to 15% if it ships from a trade-deal country, residential HVAC moves in at 15%, and capital equipment carrying 85% or more US-melted steel or aluminum content gets a 10% duty. For USMCA-qualifying goods from Canada and Mexico, the 25% rate now applies only to non-US content, the same content-tracking logic USTR is pushing across the auto rules of origin.

Round 2 Washington, June 16-17 USTR confirmed the second bilateral round between the US and Mexico for Washington on June 16 and 17, with agriculture, "a level playing field" and continued work on rules of origin on the table. Round 3 lands in Mexico City the week of July 20. Joint Review formal deadline stays July 1, which means the substantive work happens in these two rounds before the calendar forces a decision.

Canada's number problem Canada still pays 25% on steel, aluminum and autos that don't qualify under USMCA and 35% on non-USMCA-compliant goods since August. About 85% of Canada-US trade still moves duty-free under the agreement, which is what gives Carney room to wait, and also why nobody on the US side is in a hurry to fix the rest. Carney told reporters Tuesday that the US has "almost 60 issues" with Mexico under CUSMA compared to roughly half that with Canada, a framing that reads as defensive given Mexico has wrapped Round 1 and Canada still has no formal bilateral date.

Mexico's manufacturing floor keeps showing through S&P Global's Mexico Manufacturing PMI came in at 47.1 in February, fifteen straight months below 50, with new orders contracting and employment trimmed. Exports hit a record $72.04 billion in April per INEGI, but intermediate goods now account for 79.9% of total imports and manufacturing carries 91.1% of the export value year to date. The headline number is a Mexico that ships more than ever, the floor underneath is a manufacturing base that hasn't grown organically in over a year.

EIA confirmed Wednesday afternoon that US commercial crude stocks fell another 7.97 million barrels last week, the sixth straight weekly drawdown and the steepest since February.

Source: EIA Weekly Petroleum Status Report, June 3, 2026.

Refineries ran at 94.5% of capacity with inputs averaging 17.0 million barrels per day, up 652,000 bpd from the prior week. Imports came in at 5.2 million bpd, off 804,000 bpd, with the four-week average sitting 7.1% below the comparable period a year ago. Traders read the print as inventories approaching minimum operating levels.

Hormuz traffic is moving again, sort of Vessel traffic through Hormuz has picked up over the past two weeks, with some ships operating in coordination with the US military, though volumes remain well below pre-conflict levels. The recovery is real enough to register in EIA data and in Drewry's container reads, but not deep enough to unwind the fuel surcharges and bunker premiums carriers locked in during the closure window. Brent gave back the third-session rally Thursday morning, falling below $97 as the market read Trump's "this weekend" deal language against Iranian denials of "significant process."

BLACKETT.