Mexico, following another fruitful round of discussions, is pursuing strategies for securing enduring tariff exemptions.
In a bid to reduce the threat of new tariffs and manage its growing bilateral trade surplus with the United States, the Sheinbaum administration in Mexico is implementing a strategic approach that focuses on economic diversification and strengthening ties with other trade partners.
The strategy, which was instrumental in achieving a tariff reprieve with the U.S., primarily through direct diplomatic engagement focused on security cooperation, is now centred on broader economic and trade diversification.
Mexico's trade surplus with the United States increased by 16.6% between January and May, reaching a record high of $79.442 billion. However, the Sheinbaum administration is not seeking direct trade concessions with the U.S. Instead, they are focusing on strengthening economic ties and trade with other partners, notably Canada, through enhanced cooperation on resilient supply chains, port-to-port trade, artificial intelligence, and energy security.
The goal is to diversify Mexico’s export markets and reduce reliance on the U.S. Mexico is currently the largest trading partner of the U.S., with nearly 85% of Mexican exports falling under the USMCA. Canada, on the other hand, has a trade surplus of $27.381 billion during the same period, but now faces 35% tariffs on non-USMCA goods, putting Mexico in a more favourable position.
To further deepen integration with Canada and other countries within existing multilateral agreements, the Sheinbaum administration is developing bilateral work plans that focus on sectors like autos, energy, and security. The aim is to strengthen these sectors, rather than creating new bilateral deals, as Sheinbaum dismissed the need for a separate Mexico-Canada trade agreement beyond the USMCA.
The strategy also positions tariff reprieves as part of a broader diplomatic strategy linking trade relief to progress on security and migration. This approach focuses on structural reforms and coordinated enforcement to address underlying bilateral tensions, rather than immediate trade balance adjustments.
Mexico has made significant progress in combating the fentanyl crisis, seizing large quantities of the synthetic opioid and dismantling over 1,000 clandestine labs. This progress, coupled with enhanced border security efforts, including sending more National Guard troops to the border, has played a crucial role in the diplomatic negotiations with the U.S.
Following the most recent call with U.S. President Donald Trump, President Claudia Sheinbaum focused on restoring stability to North American trade relations. The delay in the tariff, which Trump agreed to after threatening a 30% tariff on Mexican imports, was hailed as the "best possible agreement" by Sheinbaum.
In a bid to further reduce the U.S. trade surplus, the Mexican government aims to encourage firms to "buy American" by identifying more U.S. product source markets for companies established in Mexico. If private companies, in addition to the government, stop or reduce purchasing from countries with which they do not have a trade agreement, and purchases of U.S. products are strengthened, without generating inflation, it is clearly a way to reduce the U.S. trade deficit.
The Sheinbaum administration's strategic approach combines diplomatic negotiation on security to maintain favourable trade terms with near-term tariff relief, while concurrently pursuing regional cooperation and economic diversification to manage Mexico's growing surplus and external trade risks. The ultimate goal is to ensure a stable and favourable trade scenario under the USMCA framework into 2026.
The Mexican government has maintained and strengthened channels of communication with the U.S. government, ensuring that the diplomatic negotiations remain open and productive. The successful implementation of this strategy will not only benefit Mexico but also contribute to the stability and growth of North American trade relations.
- The Sheinbaum administration's focus has shifted from direct trade concessions with the U.S. to strengthening economic ties and trade with other partners, such as Canada.
- In an attempt to reduce the U.S. trade surplus, the Mexican government aims to encourage firms to "buy American" by identifying more U.S. product source markets for companies established in Mexico.
- The Sheinbaum administration is developing bilateral work plans that focus on sectors like autos, energy, and security with Canada, aiming to strengthen these sectors, rather than creating new bilateral deals.
- Mexico's strategic approach combines diplomatic negotiation on security to maintain favourable trade terms with near-term tariff relief, while concurrently pursuing regional cooperation and economic diversification.
- The successful implementation of this strategy will not only benefit Mexico but also contribute to the stability and growth of North American trade relations.
