Trade between U.S. and Mexico avoids tariff impositions, as Mexico obtains a 90-day deferment on Trump's latest tariff ultimatum.
In a recent development, the United States and Mexico have agreed to a 90-day extension on the postponement of a planned 30% tariff on certain products imported from Mexico. This decision follows a telephone conversation between U.S. President Donald Trump and Mexican President Claudia Sheinbaum.
The tariff avoidance will apply to goods from Mexico that comply with the United States-Mexico-Canada Agreement (USMCA). However, sector-specific tariffs, such as 25% on autos and up to 50% on copper, steel, and aluminum, will remain in effect. These tariffs persist due to ongoing concerns over fentanyl smuggling and trade imbalances.
President Sheinbaum described the call as "very good" and emphasized a commitment to negotiating a long-term agreement through dialogue and working as equals. President Trump characterized the conversation as "very successful," noting improved mutual understanding.
During this 90-day period, Mexico will continue to pay a 25% Fentanyl Tariff, 25% Tariff on Cars, and 50% Tariff on Steel, Aluminum, and Copper. It is worth noting that 84% of Mexico's trade with the United States complies with the USMCA and is therefore tariff-free.
Mexico's trade negotiation strategy, which included a commitment to reduce its large trade surplus with the United States and crack down on the production of fentanyl in Mexico, appears to have been successful. The U.S. president has stated that there will be continued cooperation on the Border as it relates to all aspects of Security, including Drugs, Drug Distribution, and Illegal Immigration into the United States.
In addition, Mexico has agreed to immediately terminate its Non-Tariff Trade Barriers. This agreement covers not only trade but also security and migration issues. Both countries aim to balance trade enforcement with maintaining the US-Mexico economic relationship.
The current 25% tariff, known as the "fentanyl tariff," only applies to products made in Mexico that don't comply with the USMCA. The U.S. content in vehicles made in Mexico is exempt from the United States' 25% auto tariff, lowering the effective duty on Mexican cars to 15% on average.
This extension provides both countries with a window to negotiate a possible long-term deal. The discussions reflect ongoing efforts to maintain a strong economic relationship while addressing concerns related to trade, security, and migration.
- The extension of the tariff postponement negotiation between the United States and Mexico, as stated by President Trump, aims to balance trade enforcement with maintaining the US-Mexico economic relationship.
- As agreed upon, Mexico will continue to pay a 25% Fentanyl Tariff, 25% Tariff on Cars, and 50% Tariff on Steel, Aluminum, and Copper during the 90-day period, due to ongoing concerns over fentanyl smuggling and trade imbalances.
- In the midst of general-news and politics, the agreement to terminate Mexico's Non-Tariff Trade Barriers, covering not only trade but also security and migration issues, signals positive progress in the economic relationship between the two countries.
