Mexico is facing pressure to secure tariff concessions from the Trump administration after Canada reached a preliminary agreement with Washington covering two industries that have been central to Mexico's own trade negotiations: automobiles and metals.
The emerging U.S.-Canada deal would reduce tariffs on certain Canadian steel and aluminum products to 25% and lower tariffs on Canadian automobiles to 15%, Bloomberg reports. A Mexican official familiar with the matter said the concessions provide Mexico with a clearer benchmark as it seeks comparable treatment from Washington.
The development is also prompting questions about Mexico's negotiating strategy. President Claudia Sheinbaum has largely avoided retaliatory measures against the U.S., favoring continued negotiations and cooperation with Washington. Mexico and the U.S. held three rounds of bilateral trade talks between May and July, but have yet to produce similar tariff relief.
Mexican officials have previously pointed to that approach, along with increased security cooperation with the U.S., as evidence that Mexico was better positioned than Canada ahead of broader negotiations over the USMCA. But Mexican automotive and steel industry leaders told Bloomberg that Canada's progress has weakened that argument.
Around 85% of Mexican exports to the U.S. continue to enter tariff-free under the USMCA, according to Mexican officials. However, automobiles, steel and aluminum remain subject to sector-specific U.S. tariffs. Washington has also pushed Mexico to impose additional restrictions on steel and aluminum imports from outside North America, particularly as the Trump administration seeks greater regional alignment against Chinese imports.
The Canadian breakthrough comes after President Donald Trump agreed Tuesday to postpone threatened 50% tariffs on about $20 billion in Canadian imports for three days while negotiations continue, according to the Associated Press. Prime Minister Mark Carney said the two countries had made "substantial progress," although a final agreement had not been completed.
On Wednesday, Trump described the emerging deal as "very fair" and said U.S. farmers would gain greater access to Canada. A senior Canadian official told the Associated Press that the agreement would avert the new tariffs while protecting Canada's dairy system and jobs vulnerable to the levies.
The negotiations could also shape the broader review of the USMCA. The U.S. has already begun formal talks with Mexico, while resolving the Canadian tariff dispute could clear the way for Washington and Ottawa to begin their own negotiations.
