Mexico Seeks Tariff Relief as US Tightens Border Skies

Mexico’s economy secretary told lawmakers on Friday that he expects Washington to cut tariffs on Mexican steel and cars “in the coming weeks or months.” He named no deal, date or target rate. Hours later, the United States announced a new restriction on drone flights along the shared border.

Marcelo Ebrard appeared before committees of Mexico’s Chamber of Deputies on Oct. 16 and described a relationship that consumes his ministry. He said it spends “probably 80, 85%” of its time and effort maintaining ties with the United States. His summary of the strategy: “cold blood, persevere.”

The Tariff Squeeze

The talks center on U.S. duties of 25% on Mexican cars and 50% on steel and aluminium, including finished goods made from them. Washington imposed the duties under national-security rules known as Section 232. Mexico wants no carmaker paying 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, which Ebrard said already hold the sector’s average payment well below 10%.

Ebrard argued the mismatch hurts American brands, too. He cited General Motors, which builds in South Korea, Mexico and the United States. He also contrasted Mexico with Japan, which he said agreed to invest US$500 billion in the United States. Mexico wants a lower car tariff 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. Officials in both countries denied a deadlock, according to Mexican outlets. Ebrard said Lutnick had never told him he opposed reducing the duties and called him “a good friend.” Talks continue daily, Ebrard said, and are “not interrupted.”

The broader numbers are less alarming than the headline rates. 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%. But the sectors facing the heaviest duties employ large industrial workforces, and officials have announced no relief. Mexico’s priority in the USMCA review is reducing the uncertainty of annual reviews, after the 16-year extension sought by Mexico and Canada wasn’t granted. A fourth round of talks has no date but is due before year’s end.

A Waiver With a Narrow Door

Mexico, meanwhile, is using its own tariff policy to steer investment and protect jobs. The Economy Ministry said only 11 light-vehicle makers with productive facilities in Mexico can use a new zero-tariff waiver for car-assembly parts. The decree took effect Oct. 14 and runs for five years. Parts that carried a 10% import tariff until Oct. 13 now carry none for companies that qualify.

The ministry said the aim is to protect jobs, make Mexico more competitive for investment and move production lines from abroad to makers already operating in the country. It cited President Claudia Sheinbaum’s announcement in May that General Motors would move two production lines from China to Mexico, starting with assembly and gradually adding local content.

The rules come with strings. Importers need a bonded-warehouse authorization and prior ministry permission for every import. Guidelines will set minimum output of complete vehicles and caps on parts imports as a share of output. The SAT tax agency and ANAM customs agency will enforce the rules, and companies must report vehicle identification numbers and data tracing the parts.

Much remains unanswered. The ministry hasn’t named the 11 automakers, published the guidelines, said which firms applied, estimated how many vehicles the waiver covers or calculated the tariff revenue forgone. In 2025, just 0.01% of Mexico’s automotive imports used this customs line. The waiver doesn’t touch the separate tariff of up to 50% on many passenger cars from countries without a trade deal, including China, which Mexico has charged since Jan. 1, 2026.

Drones and Sovereignty

On the security side, the Transportation, War and Homeland Security departments announced a restriction on unauthorized drone flights from the ground to 400 feet within one nautical mile north of the Mexico border. They said the rule aims to counter cartel drone threats and protect federal personnel and facilities.

War Secretary Pete Hegseth said, “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.

DroneXL described three notices taking effect at 00:00 UTC on Oct. 20 and running through Oct. 19, 2027, and said the rule covers all drones, including recreational models under 250 grams. Approved flights would require requests at least 48 hours ahead. The announcement itself gave no penalties; DroneXL said the notices permit interception, detention, fines and loss of an FAA certificate. U.S. Northern Command said on Sept. 4 that its border task force had defeated more than 300 unmanned aircraft in 2026.

Mexico has pushed back before on unilateral action. Its defense ministry said U.S. forces downed three drones inside U.S. territory on the nights of Aug. 25 and 26, and described them as commercial drones used by migrant smugglers. It called the incident part of “mirror operations,” in which each country acts on its own side. Sheinbaum has repeatedly rejected unilateral U.S. military action inside Mexico, EFE reported in August. By Saturday morning, her government hadn’t commented on the new restriction.

Why This Matters: Trade and security are now being negotiated in the same breath, and workers on both sides of the border sit at the center of it. Tariffs of 25% on cars and 50% on steel fall hardest on industrial communities, and Mexico’s officials say they’ve been given no timetable for relief. The uncertainty of annual USMCA reviews makes it harder for employers to commit to long-term hiring. Mexico’s narrowly drawn waiver shows a government trying to use public rules to keep production and jobs at home, but without published guidelines or named beneficiaries, there’s little way yet for the public to judge who gains. On the border, the official announcement hasn’t spelled out the drone rule’s penalties and enforcement details, a gap that matters for ordinary operators and for the cross-border cooperation both governments say they want. The notices run through Oct. 19, 2027.