Financial Post | 3 April 2025
Mexico's trade negotiator says USMCA discussions may be sped up
by Carolina Millan and Maya Averbuch, Bloomberg
(Bloomberg) — Discussions over the future of the North American free trade pact could be pushed earlier than originally planned, said one of Mexico’s top trade negotiators.
Mexico’s Deputy Economy Minister for Trade Luis Rosendo Gutierrez, the nation’s second most senior commerce negotiator, said that talks over the White House’s latest round of global tariffs could accelerate the process of reviewing the trilateral trade deal known as the USMCA. Mexico plans to ask the US to allow for duty exemptions covered by the deal to continue to apply to many of its exports, including in the auto sector.
“Saying that we weren’t already working on the USMCA would be a lie. Obviously, if we’re talking about trade, we’re already talking about the USMCA,” Gutierrez said in an interview on Thursday on the sidelines of an event on North America trade in Washington. “More formally speaking, we believe that we’ll be talking about the review of the USMCA in the coming weeks.”
Consultations ahead of a USMCA review expected for 2026 are scheduled to begin in the second half of 2025, but could start sooner, he added. The pact — which replaced the 1994 trade deal known as NAFTA — was signed by President Donald Trump in his first term, but the US leader has repeatedly said he wants a better deal for his country and criticized the trade deficit with his neighbors.
Mexico was among a handful of nations excluded from the slew of blanket tariffs Trump unveiled Wednesday. Still, the US did previously impose some levies on Mexican and Canadian goods that are not subject to the USMCA, along with duties on steel and aluminum. Separate 25% tariffs on finished cars went into effect Thursday.
To counter the autos, steel and aluminum levies, Economy Minister Marcelo Ebrard will be traveling next week to Washington to continue talks with policymakers, President Claudia Sheinbaum said earlier. Ebrard set a deadline of under six weeks to achieve reduced tariffs on those three key products, to coincide with another 25% tariff on auto parts that is scheduled to start on May 3, Gutierrez explained.
Sectoral Talks
In the case of cars, Gutierrez noted that given that the tariff on autos applies only to the portion of each vehicle that’s not made in the US, that will mean that in practice the tariff will fall below the 25% level that was announced. This logic could be applied to steel and aluminum, too, in talks in the coming weeks, he added.
“What we have said to them, ‘It’s not the same if there are exports that have a high US content of 30%, 40%, or 50%, or exports from China or Vietnam that have 10% or 5%,’” Gutierrez said. “We’re trying to negotiate as much as we can so that we maintain the status quo that we have with the free trade agreement.”
For products that are not officially USMCA-compliant, the deputy minister said that there is an existing administrative process that would allow companies that guarantee they are meeting the requirements for a significant portion of parts to be made in North America — known as “rules of origin” — not to the pay a 25% fee introduced on Canadian and Mexican goods in March.
About 49% of US imports from Mexico are exempt from duties under USMCA, according to US Census data analyzed by Bloomberg Economics. An additional 41% of imports previously entered duty-free under the general tariff code, and Mexico’s government estimates that a large portion of those products could meet the rules-of-origin requirements and enter the US without having to pay the new levy.
At least 10% of goods exported from Mexico into the US will be subject to the US’ new tariffs, according to Bloomberg Economics’ analysis.
Separately, Gutierrez expressed optimism that ongoing conversations by other government officials on security and migration would allow the levy that affects goods not falling under the USMCA to be lowered to 12%, a possibility that was noted in a White House fact sheet on Wednesday.
“We do know the US government is recognizing Mexico’s efforts on migration,” he said. “Mexico has done a lot, and we expect maybe in the coming weeks we could maybe receive that new status.”
USMCA Survival
In a separate webcast event on Thursday evening, Ebrard said that he had been worried about the “survival” of the USMCA, but after the tariff announcements on Wednesday that spared Mexico and Canada from any new levies that hadn’t been previously announced, he was more optimistic. Gutierrez echoed the sentiment.
“It’s good news that they’re recognizing the USMCA framework to give Mexico a preferential treatment,” he said.
Gutierrez said Mexico is not at the moment considering a blanket tariff on China, an option that had been mentioned during negotiations with policymakers including US Commerce Secretary Howard Lutnick earlier this year.
Investors piled in on Mexican assets after Trump extended exemptions on USMCA-covered goods, with the country’s stock market soaring the most in the world on Thursday and the peso strengthening to 19.39 pesos per dollar.
Later in the day, Sheinbaum outlined plans to better prepare Mexico for turbulent global times and make it more appealing to businesses, a deepening of her government’s so-called “Plan Mexico” to bolster investment in the country.
“Mexico in the coming months will be focusing on its internal market through Plan Mexico, to develop a new national industrial policy,” Gutierrez said.
