Bilateral Trade Negotiations
US and Mexico Accelerate Bilateral Trade Talks Ahead of U.S. Midterms
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Key Points
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Mexico recorded a $196.9 billion goods trade surplus with the United States in 2025, while its surplus reached $102.6 billion in the first half of 2026 and $26.31 billion in July alone.
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The United States declined to grant the USMCA a 16-year extension on July 1, activating annual reviews of the agreement through 2036 and adding structural pressure to the negotiations.
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Mexico’s ambassador to the United States, Roberto Lazzeri, said some new investments are being held back pending clarity on trade terms, while arguing that U.S. tariffs are diverting business to other economies rather than benefiting American producers.
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Mexican President Claudia Sheinbaum views a successful negotiation as important for maintaining market confidence amid domestic financial uncertainty, according to an anonymous member of Mexico’s negotiating team.
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Mexico’s Economy Minister Marcelo Ebrard and U.S. Commerce Secretary Howard Lutnick met on the issue at the G20 summit, focusing on tariffs affecting steel, aluminum and automobiles.
Mexico and the United States are racing to finalize a bilateral trade deal before U.S. midterm elections in less than eight weeks, CP24 reported. Officials from both countries say talks are progressing, with Mexico seeking relief from American tariffs on steel, aluminum, and automobiles that have disrupted North American supply chains and delayed investment decisions.
The urgency reflects Mexico's massive trade surplus — $26.31 billion in July alone — and pressure from President Claudia Sheinbaum to maintain market confidence amid domestic financial uncertainty, BNN Bloomberg reported. The U.S. is pushing for stronger North American content rules for vehicles and measures to block Chinese goods from entering America through Mexico.
The Trade Surplus Forcing Mexico's Hand
Mexico posted a $196.9 billion goods trade surplus with the United States in 2025, then $102.6 billion in the first half of 2026. The July figure alone hit $26.31 billion, making the imbalance impossible to ignore. CP24 noted that these numbers have become a flashpoint in negotiations, with Washington viewing them as leverage to demand concessions.
Mexico's Economy Minister Marcelo Ebrard and U.S. Commerce Secretary Howard Lutnick discussed the issue at the G20 summit, focusing on tariffs that disrupt integrated supply chains. Mexican Ambassador Roberto Lazzeri told sources that some new investments are on hold until trade terms become clear, a sign that uncertainty itself is costly.
U.S. Wants Stronger Rules and China Barriers
The United States is not simply seeking tariff relief for Mexico. Washington wants higher North American content requirements for vehicles to qualify for tariff-free status under USMCA. Yahoo News reported that officials are also demanding measures to prevent Chinese companies and goods from using Mexico as a backdoor into the American market.
These demands reflect broader U.S. concerns about supply-chain security and Chinese competition. By raising local-content thresholds, America aims to move production northward rather than seeing more work outsource to Asia or have Chinese products simply repackaged in Mexico for U.S. entry.
A Bilateral Deal After Canada Dropped Out
Canada's withdrawal from the broader USMCA negotiations shifted momentum toward a Mexico-U.S. deal. The U.S. declined to grant USMCA a 16-year extension on July 1, triggering annual reviews through 2036, CTV News reported. This structural pressure added urgency to finding an interim agreement before the U.S. midterms and a comprehensive deal by year-end.
An anonymous member of Mexico's negotiating team told sources that President Sheinbaum views a successful trade agreement as crucial for maintaining confidence in Mexico's economy during a period of domestic financial pressure. Another negotiating round is scheduled for late September, with both sides describing progress but acknowledging that significant gaps remain on tariff cuts and supply-chain rules.
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