Mexico intends to considerably increase the number of complying companies selling to the United States under a regional trade agreement in the coming weeks, Economy Minister Marcelo Ebrard said Friday, after Washington suspended tariffs on Mexican goods entering the country under the agreement.
At a presser, Ebrard admitted that a segment of enterprises responsible for 10% to 12% of Mexico’s exports may have substantial difficulty in satisfying the standards of the USMCA, alluding specifically to issues in the car sector.
To address these concerns, Mexico intends to engage directly with automakers in the coming weeks to ensure an easier transition to compliance with the agreement’s terms.
The complex rules of origin established by the USMCA require that a certain amount of car parts, as well as the steel and aluminium used in manufacture, be from inside the region.
According to a Reuters report, while major automakers including General Motors, Ford, and Stellantis have campaigned for tariff exemptions for USMCA-compliant items and welcomed the tariff halt, companies that do not satisfy these compliance requirements may face 25% tariffs.
Ebrard also informed that Mexican officials and US trade authorities are set to meet next week to continue the negotiations regarding fresh tariffs on steel and aluminium coming into the US.
USMCA trade landscape
The USMCA significantly altered commercial relations between Canada, Mexico, and the US.
Currently, more than 50% of Mexico’s exports are compliant to the USMCA.
Ebrard expects that portion to reach 85% to 90% in the next weeks as companies adjust to the new trade rules, which might stabilize economic relations between the two nations.
Having more compliance with USMCA rules may result in a more favourable and predictable trading environment.
Potential challenges ahead
The expectation that greater compliance with the USMCA is on the horizon is a positive one, but specific industries may have difficulty adjusting to the new standards.
Ebrard mentioned the auto sector in particular as an area that could face challenges, saying that not all companies would be able to readily pivot to USMCA standards.
The Mexican government aims to negotiate good terms for its economy while also ensuring a robust economic connection between the countries.
Mexico’s President Claudia Sheinbaum stated on Wednesday that the country may seek new trade partners due to rising economic tensions with the US.
Sheinbaum’s remarks come amid growing uncertainty across various sectors of the Mexican economy, particularly in the automotive industry.
According to Goldman Sachs, the US imported $181.4 billion worth of automobiles and auto parts from Mexico in 2024, accounting for nearly 10% of the country’s economy.
These next negotiations between Mexico and the US might be a crucial opportunity for both countries to effectively manage the challenges of international trade dynamics.
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