Mexico Presses for Lower US Tariffs as Border Tightens

Mexico's economy secretary says relief from U.S. tariffs on steel and cars is coming “in the coming weeks or months.” He couldn't name a signed deal, a date or a target steel rate.

Marcelo Ebrard told committees of Mexico's Chamber of Deputies on Friday, Oct. 16, that his ministry spends “probably 80, 85%” of its time and effort maintaining the economic relationship with the United States. He summed up Mexico's approach as “cold blood, persevere.” The dispute centers on U.S. duties of 25% on Mexican cars and 50% on steel and aluminium, including finished goods made from them. The duties were imposed under national-security rules known as Section 232. No tariff deal had been announced.

The Tariff Ask

Mexico wants no carmaker to pay more than 15%, the rate the United States applies to vehicles from South Korea. Expansión reported that Mexico also wants to keep model-by-model discounts for regional content. Ebrard said those discounts already hold the sector's average payment well below 10%. El Universal described the proposal differently: a cut from 25% to 15%, regardless of regional content.

Ebrard pointed to General Motors, which builds in South Korea, Mexico and the United States. He argued that misaligned tariffs hurt U.S. brands as well as Mexico. He contrasted Mexico's position with Japan's, saying Japan agreed to invest US$500 billion in the United States. Mexico wants a lower car tariff, he said, but won't make an investment of that size.

The Wall Street Journal reported, citing people familiar with the talks, that U.S. Commerce Secretary Howard Lutnick resisted deep cuts to car and metals duties. Mexican outlets relaying the report said officials in both countries denied a deadlock. Ebrard said Lutnick had never told him he opposed reducing Section 232 duties and called him “a good friend.” Talks continue every day and are “not interrupted,” he said.

The headline numbers look less punishing than the rhetoric. Ebrard said about 80% of Mexico's trade with the United States enters without tariffs, later putting the duty-free share of exports at 82% to 85%. He put the average effective tariff on Mexican exports at 3% to 3.2%. Mexico's priority in the USMCA review is reducing uncertainty from annual reviews. The 16-year extension sought by Mexico and Canada wasn't granted. A fourth round of talks had no date, but was to take place before the end of the year.

Mexico's Parts Waiver

As it presses Washington for lower duties, Mexico City is rationing its own. The Economy Ministry said Friday that only 11 light-vehicle makers with productive facilities in Mexico can use a new zero-tariff waiver for car-assembly parts. The decree appeared Tuesday, Oct. 13, took effect Wednesday, Oct. 14, and runs five years. The ministry didn't name the 11 automakers.

The waiver changes customs line 9803.00.01, which carried a 10% import tariff until Oct. 13. It now carries none. The paperwork, however, is heavy. Importers need a bonded-warehouse authorization under Mexico's Customs Law and prior ministry permission for every import. Guidelines will set minimum output of complete vehicles in Mexico and caps on parts imports as a share of output. The SAT tax agency and ANAM customs agency will enforce the controls. Companies must report vehicle identification numbers and data tracing the parts.

The stated goal is to move from assembly to full car manufacturing and cut imports of finished vehicles from countries without a Mexican trade treaty. The ministry cited President Claudia Sheinbaum's May announcement that General Motors would move two production lines from China to Mexico. The measure doesn't affect the separate tariff of up to 50% on many passenger cars from countries without a trade deal, including China. Mexico has charged that tariff since Jan. 1, 2026.

Key details remain unanswered. The ministry hasn't published its guidelines, identified which firms applied, estimated how many vehicles are covered or put a number on the tariff revenue forgone. In 2025, just 0.01% of Mexico's automotive imports used the customs line.

Security on the Border

That same Friday, the United States announced a drone flight restriction along the border. It covers unauthorized flights from the ground to 400 feet (122 metres) above ground within one nautical mile (1.85 km) north of the Mexico border. The Transportation, War and Homeland Security departments said the measure aims to counter cartel drone threats, reduce risks to border operations and protect federal personnel and facilities.

War Secretary Pete Hegseth put it bluntly: “our warfighters will shoot down any cartel drone that threatens America's sovereignty.” Transportation Secretary Sean Duffy said the action doubled down on the pledge to secure the southern border. Homeland Security Secretary Markwayne Mullin said it would help counter cartel drone threats.

The figures behind the move are sizable. U.S. Northern Command said on Sept. 4 that its border task force had defeated more than 300 unmanned aircraft in 2026, including more than 100 in August. An Army high-energy laser, first used in operations on Aug. 24, had neutralized 11 cartel-linked drones by Sept. 4.

The start date remains murky. DroneXL described three notices taking effect at 00:00 UTC on Oct. 20, or the evening of Oct. 19 along the border, and running through Oct. 19, 2027. The departments' announcement called the restriction effective Friday and gave no end date. DroneXL said it covers all drones, including recreational models under 250 grams. It also reported that Customs and Border Protection can approve flights for defence, law enforcement, firefighting, medical evacuation, search and rescue, and disaster response, with requests due at least 48 hours ahead. The announcement itself gave no penalties.

Mexico's defense ministry said in late August that U.S. forces downed three drones inside U.S. territory on the nights of Aug. 25 and 26, after Northern Command notified the Mexican army. Mexico called them commercial drones used by migrant smugglers and described the incident as part of “mirror operations,” in which each country's forces act on its own side. By the morning of Oct. 17, no statement from Sheinbaum's government on the new restriction had surfaced. The restriction applies north of the border and places no new limit on Mexican airspace.

Why This Matters:

Two tracks are running at once, and both turn on who pays and who decides. On trade, Mexico wants relief from duties while Washington keeps leverage. Ebrard's own figures—a 3% to 3.2% average effective tariff—show how much of the relationship already flows freely. The question is whether car and steel carve-outs arrive before annual-review uncertainty chills investment. Mexico's parts waiver also shows how quickly managed trade turns into permits, caps and tracking, while the revenue cost remains unstated.

On security, the drone restriction treats cartel aircraft as a threat to national sovereignty and federal personnel. It follows hundreds of intercepted drones this year. Whether enforcement stays firmly on the U.S. side of the line will shape how steady the wider partnership remains.