The United States announced a deal with Mexico on Thursday to head off action by Washington on electrical transformers that use a specialty steel imported from third countries.

"From the fourth quarter of 2020 onward, Mexico will closely monitor shipments of these products to the United States," the US Trade Representative said in a statement.

Mexico agreed to "establish a strict monitoring regime" by the end of the year for exports of electrical transformer parts made with a steel-silicon product known as grain-oriented electrical steel (GOES) that is produced outside of North America.

In exchange, Washington's "imports from Mexico will not be subject to any action," the statement said.

President Donald Trump early in his administration imposed steep tariffs on steel and aluminum imports in an effort to protect US producers, citing national security concerns.

Trade officials since then have focused on preventing the lower priced product made in targeted countries like China from entering the US market through third countries.

Under the US-Mexico-Canada Agreement (USMCA), which entered into force in July, goods and services enjoy duty-free treatment, and Washington lifted steel and aluminum tariffs on its neighbors in May 2019 in exchange for aggressive monitoring to prevent a surge in imports like GOES.

"The resilience of North America's energy infrastructure is significantly enhanced by having electrical steel production capability within our region," US Trade Representative Robert Lighthizer said in a statement Thursday.

"An influx of low-price steel from third countries imperils this capability."

In a separate action, the US Commerce Department launched an investigation into whether steel tubes used in the oil industry produced in China are circumventing US tariffs by entering through Brunei and the Philippines.

Commerce cited steep increases in imports of goods from those countries, although the total from Brunei rose to just $29 million and from the Philippines to $105 million between 2017 and 2019.

Products found to be circumventing US rules will face tariffs, the statement said.

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