President Claudia Sheinbaum confirmed Friday that Mexico's trade negotiations with the United States are advancing following a Wednesday call with Donald Trump, as both nations work to reduce tariffs that have effectively suspended key provisions of the USMCA trade agreement.
Sheinbaum said her government delayed announcing the call because of ongoing progress in the talks. "Certain agreements" were reached, she said, though she provided no details until a final deal emerges. The objective, she explained, was "at least a reduction in the tariffs we currently have."
The Tariff Burden
The United States currently charges 50 percent on Mexican steel and aluminum and 25 percent on cars and auto parts that don't qualify under the USMCA, the trade pact between the United States, Mexico and Canada. These tariffs represent significant costs for manufacturers on both sides of the border and have disrupted supply chains that developed under the original agreement.
Sheinbaum acknowledged the USMCA "has not disappeared," but said U.S. tariffs mean "the original idea is not preserved." The United States declined to renew the agreement in its current form on July 1, 2026, about 3 months ago, moving it into annual reviews that can run through 2036.
Next Steps in Washington
The next formal round opens on September 28 in Washington. US Trade Representative Jamieson Greer leads for Washington, and Economy Secretary Marcelo Ebrard leads for Mexico City. The direction of movement, according to the report, is toward an agreement, but no tariff line has changed and neither side has published any text.
Sheinbaum said security wasn't discussed this time, focusing the conversation squarely on commercial terms. She also said she respects Prime Minister Mark Carney's decisions, a reference to Ottawa's turn toward the European Union after its own talks with Washington broke down.
Market Pressure
The peso traded near 17.15 per US dollar on Thursday, close to a one-month low, after the Federal Reserve raised rates on September 16, 3 days ago. Mexico's central bank decides its next interest rate on Thursday, September 24. Currency markets are watching closely as trade uncertainty compounds monetary policy challenges.
The tariffs have created particular strain for automotive and metals sectors, which rely on cross-border integration. Cars and auto parts face a 25 percent duty if they don't meet USMCA requirements, while steel and aluminum producers confront a punishing 50 percent charge. These costs ripple through manufacturing networks that span both nations.
Sheinbaum's decision to keep the Wednesday call private until progress materialized suggests both sides are working to avoid the public breakdowns that characterized Ottawa's failed negotiations. The planned announcement only after reaching "certain agreements" indicates a more structured approach than previous rounds.
Why This Matters:
The outcome of these negotiations will determine whether North American manufacturing can operate under predictable trade rules or continue facing tariff barriers that undermine continental supply chains. The 50 percent steel and aluminum tariffs and 25 percent automotive duties represent real costs that manufacturers either absorb or pass to consumers. Mexico's willingness to negotiate outside the full USMCA framework shows the practical limits of multilateral agreements when one party demands renegotiation. The annual review structure that replaced the original pact creates ongoing uncertainty for businesses that need stable rules to plan investments. Currency markets are already pricing in this instability, with the peso near one-month lows despite Mexico's central bank maintaining higher rates. Whether Washington and Mexico City can reach a bilateral understanding before the September 28 formal round will signal whether pragmatic deal-making can restore some predictability to cross-border commerce, or whether North American trade continues fragmenting into separate bilateral arrangements.