US Trade with Mexico 8-4-25

US-Mexico trade agreements in July 2025: An overview

The primary trade agreement between the United States and Mexico is the United States-Mexico-Canada Agreement (USMCA), which entered into force on July 1, 2020, replacing the North American Free Trade Agreement (NAFTA).  

Here's an overview of the US-Mexico trade relationship in July 2025:

·       USMCA as the Foundation: The USMCA governs the vast majority of trade between the two countries, focusing on aspects like tariff reduction/elimination, market access, and labor and environmental standards.

·       Tariff Landscape: While the USMCA aims for duty-free trade, recent US policy changes have introduced new tariffs and uncertainty, according to the Center for American Progress.

o   Specific Tariffs: In July 2025, a 17% tariff was imposed on fresh tomatoes from Mexico after the US withdrew from a 2019 agreement, citing alleged dumping practices.

o   Threat of Broader Tariffs: There have been threats of a 30% general tariff on all Mexican imports beginning August 1, tied to concerns about fentanyl trafficking and irregular migration, reports FreightWaves. Mexico is actively seeking a trade deal to avoid these broader tariffs.

·       Key Economic Sectors: US-Mexico trade is deeply integrated across various sectors:

o   Manufacturing: Mexico is a significant exporter of manufactured goods, particularly in the automotive industry. The USMCA includes rules of origin that encourage North American production and higher wages in the automotive sector.

o   Agriculture: Mexico is a key supplier of fruits and vegetables to the US, including avocados and berries.

o   Energy: US and Canadian companies have concerns about Mexico's energy policies, and disputes have been initiated under the USMCA.

·       Impact of Tariffs:

o   Economic Disruptions: Tariffs on Mexican imports are expected to raise production costs, potentially leading to job losses and reduced foreign direct investment in Mexico.

o   Higher Prices and Supply Chain Issues: For US consumers and businesses, tariffs could translate to higher prices for imported goods and disruptions to supply chains.

·       Future Outlook: The USMCA is scheduled for a joint review by the three member countries in July 2026. This review will provide an opportunity to address new issues and strengthen cooperation, including in areas like critical minerals, electric vehicle transition, and AI regulation. Mexico is actively working to strengthen its position in the North American trade landscape, including exploring nearshoring opportunities and diversifying its markets. 

In summary: While the USMCA serves as the foundation for trade relations between the United States and Mexico, recent tariff actions and potential future tariff hikes have introduced complexity and uncertainty. The upcoming 2026 review of the USMCA will be a crucial juncture for shaping the future direction of this important trade relationship. 

US trade agreements with Mexico July 2025 AI Overview

US-Mexico trade relations in July 2025 are primarily governed by the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) in 2020

Here's an overview:

The cornerstone: USMCA

·       The USMCA sets the framework for trade between the three North American nations, aiming for freer markets, fairer trade, and economic growth.

·       It maintains largely tariff-free trade between the U.S. and Mexico for most goods.

·       Key provisions include:

o   Rules of Origin: requiring a significant percentage of products (like automobiles) to be manufactured within North America to qualify for preferential treatment.

o   Labor Provisions: aimed at improving working conditions and narrowing wage gaps, particularly in Mexico's automotive sector, by requiring a portion of components to be made by workers earning at least $16/hour.

o   Intellectual Property: strengthening protections for patents, copyrights, and trade secrets.

o   Digital Trade: prohibiting customs duties on electronically transmitted products and restricting data localization requirements.

o   Agriculture: providing expanded access for U.S. dairy, poultry, and egg exports to Canada, and expanded import quotas for Canadian dairy and sugar products in the U.S.

o   Sunset Clause and Review: The agreement includes a review clause every six years, with the next scheduled for July 2026, where the parties will assess and potentially adjust the terms.  

Current status and considerations (July 2025)

·       Tariffs: While the USMCA aims for free trade, there have been instances of the U.S. imposing tariffs on Mexican imports. In March 2025, the U.S. implemented a 25% tariff on most Mexican imports, later paused and exempted for USMCA-compliant goods until April 2nd, 2025, suggesting a potential for tariffs outside the agreement's scope or non-compliant goods.

·       Negotiations: The current US administration has indicated a desire to potentially renegotiate parts of the USMCA in the future to further protect American jobs and industries.

·       Impact of Tariffs: The implementation of tariffs has been shown to have a negative impact on both U.S. and Mexican economies, leading to higher consumer prices and potential job losses in the U.S.

·       Rapid Response Labor Mechanism: A recent resolution of a labor rights complaint at a Mexican facility highlights the ongoing enforcement and monitoring of the labor provisions within the USMCA. 

In essence, USMCA remains the core of the US-Mexico trade relationship, with ongoing discussions and potential adjustments, particularly as the joint review approaches in 2026. The application of tariffs on certain goods and ongoing efforts to ensure compliance with the agreement's labor provisions also remain significant aspects of the trade landscape. 

https://www.google.com/search?q=US+trade+agreements+with+Mexico+July+2025

Comments

Mexico is home to 3 large Drug Cartels and their fentanyl production facilities.

Mexico had a Nominal GDP of $1.821 trillion in 2024. Nominal per capita GDP was $14,000. Population was 130 million. US Trade Deficit with Mexico in 2024 was $171.8 billion. US Tariffs on Mexican Goods are 25% to 30%.

Norb Leahy, Dunwoody GA Tea Party Leader