Mexico Wins More Time in US Trade Negotiations
Sheinbaum Says Tariff Hike Paused as Talks Make Progress
Key Takeaways:
- The U.S. extended its trade negotiation deadline with Mexico beyond Nov. 1 after President Claudia Sheinbaum and President Donald Trump agreed to allow more time for talks.
- The move delays planned tariff increases on Mexican goods linked to fentanyl concerns and lifted the peso as markets viewed it as a positive signal for trade stability.
- Sheinbaum said the countries are close to resolving non-tariff issues and will continue discussions in the coming weeks, while U.S. talks with Canada remain stalled.
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The U.S. is extending a deadline to reach a trade deal with Mexico for several weeks, President Claudia Sheinbaum said, in what would be the latest reprieve Donald Trump has granted his neighbor from punishing tariffs.
Sheinbaum and Trump spoke briefly Oct. 25 and agreed to extend talks to give the nations more time to reach a deal on non-tariff trade barriers that are still under discussion, she said during her daily press briefing Oct. 27.
Trump had set a Nov. 1 deadline to raise the fentanyl-related tariffs he imposed on certain Mexican goods to 30% from 25%. The levies apply to products that are not protected by the U.S.-Mexico-Canada trade agreement.
But Sheinbaum said there is “no situation, for now, in which there could be any special tariff on November 1,” adding that they are close to a deal and had agreed to speak in again in the coming weeks. The White House didn’t immediately respond to a request for comment.
The Mexican peso surged to a session high after Sheinbaum’s remarks, gaining as much as 0.5% against the dollar.
Her comments on progress in the discussions were “boosting market optimism over Mexico’s relatively favorable position in the trade negotiations with the U.S., especially given its large exposure to the U.S. market,” said Dan Pan, an economist at Standard Chartered Bank.
Sheinbaum and Trump spoke briefly Oct. 25 and agreed to extend talks. (Mayolo Lopez Gutierrez/Bloomberg)
Trump has imposed tariffs on a range of imports from Mexico, including steel, aluminum and vehicles. But he’s also shown a willingness to negotiate, repeatedlydelayingthe implementation of higher levies orexemptingcertain Mexican goods from them, decisions he’s often made after conversations with Sheinbaum.
The apparent extension stands in contrast to Canada’s dealings with Trump, who said Oct. 27 that he doesn’t anticipate meeting with Mark Carney any time soon despite the prime minister’s insistence that they’re near a deal to lower metals tariffs.
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The U.S. president halted trade talks with Canada last week in reaction to a TV advertisement by the province of Ontario that criticized his tariff regime. On Oct. 25, Trump said he would increase the import tax on goods from Canada by 10% due to the ad, although he didn’t provide further details.
Sheinbaum, however, said that she and Trump agreed that talks between the U.S. and Mexico were going “very well,” even on contentious topics like security and migration.
The Mexican leader has maintained hercool-headed approachthroughout negotiations with Washington. She has also worked to shore up the relationship with the U.S., the destination of more than 80% of Mexico’s exports.
(Bloomberg)
Earlier this year, Sheinbaum submitted a plan to Congress that would impose tariffs of as much as 50% on products from countries with which Mexico has no trade agreement, particularly China. Lawmakersdelayed discussionof the proposal until November.
Mexican Economy Minister Marcelo Ebrard has insisted that despite the current tariffs, Mexico is in a privileged position compared to other nations, since it doesn’t have general levies and more than 80% of its exports remain duty-free and protected by the USMCA.
Canada currently faces a base U.S. tariff of 35%, although most of its goods also remain duty free because of the USMCA.
Carney said Oct. 27 he’s ready to sit down with Trump and that “considerable progress” has been made in steel, aluminum and energy.
“In any complicated, high-stakes negotiation, you can get unexpected twists and turns and you have to keep your cool during those situations,” Carney said.
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