With trade talks between the United States and Canada collapsing, Mexico is looking for a windfall. Analysts say the Trump administration is unlikely to wage trade conflicts with two major trading partners at once ahead of the midterm elections, increasing the chances that tariffs on Mexican cars and steel and aluminum will be lowered.
On the 24th (local time), according to foreign media including Bloomberg and the Financial Post, Mexico President Claudia Sheinbaum, responding to reporters' questions about the U.S.-Canada dispute, said, "As President Trump said, we also hope to reach an agreement with the United States," and "We are optimistic that we can reach an agreement."
Mexico's chief trade negotiator, Economy Minister Marcelo Ebrard, is set to continue talks in Washington to lower the U.S. 50% tariff imposed on Mexican steel and aluminum and the 25% tariff imposed on cars.
Mexico has closely watched the U.S.-Canada trade negotiations. That is because the United States discussed applying a low 25% tariff up to a certain volume on Canadian steel and aluminum and cutting the car tariff to 15% from the current 25%. Mexico believed it could also demand tariff cuts comparable to Canada's.
Minister Ebrard said on the 21st, "Not all the conditions are exactly the same, but we think we can achieve a similar outcome," adding, "Before long we will clearly be in a better situation than now." President Trump the same day also said the United States "is beginning negotiations for a much better new agreement with Mexico."
However, talks between the United States and Canada that had been nearing a deal recently broke down. U.S. President Donald Trump said he will double the tariffs imposed on Canadian cars and auto parts starting next year. The United States also imposed a 50% tariff on about $20 billion (27.6 trillion won) worth of Canadian products, and Canada Prime Minister Mark Carney is pushing back, saying he will implement retaliatory tariffs starting on the 8th of next month.
Some analysts say the deepening U.S.-Canada rift could instead be a negotiating opportunity for Mexico. If the United States, after Canada, also enters a trade war with Mexico, the North American supply chain could be shaken and prices of key products such as cars could rise. With the midterm elections coming in Nov., the Trump administration also has to weigh inflation concerns.
Jimena Zúñiga, a Latin America geoeconomics analyst at Bloomberg Economics, said, "The breakdown of talks between the United States and Canada could strengthen Mexico's hand in negotiations with Washington," adding, "Especially ahead of the midterm elections, considering the risk of rising prices, the United States may be reluctant to engage in a second major conflict with another key trading partner."
The United States, Mexico and Canada are also proceeding with the annual review of the United States-Mexico-Canada Agreement (USMCA), now in its sixth year in force. Bloomberg projected that as the three countries conduct separate bilateral talks in parallel, if Mexico first reaches a deal with the United States on tariff cuts, the center of gravity in the North American trade order could tilt from Canada to Mexico.