Talking Points | Mexico’s Trade Strategy After “Liberation Day”
By Óscar Arcos
April 24, 2025
Market Hall In Guanajuato, Mexico, November 28, 2024 (Unsplash, Marie Volkert/Reiseblog, www.worldonabudget.de)
The brief
Mexico has emerged as a rare exception in President Trump’s aggressive new tariff regime, escaping new duties thanks to USMCA compliance. But that protection comes with evolving expectations. President Trump has reframed trade as a rolling performance review—layering geopolitical demands onto market access, competitive alignment, and the elimination of non-tariff barriers. As the U.S. redefines its trade posture, here’s what businesses need to consider next.
your talking points
After initially being the focus of President Trump’s trade reset, Mexico escaped the ‘Liberation Day’ tariff avalanche. As long as its exports remain USMCA-compliant, the country remains relatively unscathed.
While China, the EU, and others face levies of over 50%, Mexico continues to enjoy tariff-free access for compliant goods.
Steel, aluminum, and non-USMCA auto exports still face legacy tariffs, but the broader outlook favors Mexico. President Sheinbaum’s restrained and cooperative posture stood in contrast to Canada’s retaliatory approach. That strategy appears to have worked—securing investor confidence and opening a window to deepen regional supply chain integration.
While long-term diversification toward Latin America, Europe, or Asia remains compelling, President Trump’s exclusion of Mexico from new tariffs has reaffirmed the centrality of the U.S. relationship. Recent trade diplomacy, renewed focus on Plan Mexico, and security cooperation suggest Mexico is protecting its advantage.
Beyond reciprocity: Non-tariff barriers are the new frontline.
President Trump’s second term has already broken with precedent by transforming trade policy into a continuous performance review, where non-tariff barriers now rival traditional tariffs as a tactic. Issues like migration, fentanyl, and security are now bundled with economic considerations, enabling monthly or even ad-hoc demands in exchange for continued access.
The recently published 2025 USTR National Trade Barriers Report outlines a framework for future demands and potential bargaining chips for future “reciprocity checks.” Priority issues for Mexico include:
Digital economy and cloud services: Regulatory opacity and uncertain rules could become friction points, especially if digital taxes are introduced, as seen in Europe.
VAT treatment: Discriminatory tax treatment of foreign insurers may violate reciprocity norms.
Rule of law and investment climate: Institutional uncertainty, judicial inconsistency, and opaque permitting processes create friction for U.S. investors.
Energy sector distortions: Favoritism toward PEMEX and CFE hampers private investment and erodes competitiveness.
General reciprocity: A perceived lack of symmetry in investment conditions compared to what Mexican firms enjoy abroad.
These issues won’t wait until the formal USMCA review in 2026, though they are likely to feature prominently when that process begins. Mexico has honored the tariff terms of the agreement—but that’s no longer enough. Structural reforms must target non-tariff barriers: from regulatory transparency to digital governance and investment facilitation.
By dismantling key friction points ahead of pressure, Mexico can build credibility, influence the next stage of negotiations, and position itself as the indispensable link in North America’s industrial future supporting investment.
In today’s shifting trade landscape, waiting for governments to act is a risky bet—companies must take the lead.
Hedge the risk: Conduct exposure audits and scenario planning across functions—communications, legal, and operations—to prepare for potential regulatory or reputational risks. Identify which products fall outside USMCA compliance or could face duties of 12%, 25%, or even 50% under evolving trade policies.
Double down on USMCA certification and regional value compliance. Make “USMCA-proof” your operational standard—not just a hopeful outcome. As scrutiny on Chinese manufacturing grows, reassess your exposure and ensure your supply chains align with North American rules of origin.
Engage proactively: This is a time for active public affairs and government relations. Join industry associations, participate in trade consultations, and keep a pulse on both Mexican and U.S. policy shifts. Regulatory advocacy may now be as important as logistics and pricing.
Be prepared to explore beyond: Over the longer term, even modest steps to build presence in the U.S., Europe, Latin America, or the Indo-Pacific can support a broader risk mitigation strategy. Early diversification won’t yield immediate returns, but it enhances flexibility and prepares firms for future shifts.
Mexico may have survived the first inning, but this is a long game. The USMCA remains intact—for now—and that’s a valuable buffer. Yet President Trump’s playbook is dynamic, discretionary, and unapologetically transactional.
For Mexican businesses, thriving in this environment will depend on their ability to closely monitor how structural reforms and diplomatic signals evolve, and to adapt their public affairs strategies to help shape those outcomes. These shifts will serve as early indicators of Mexico’s trade positioning with the U.S.—and will directly affect market access, supply chain planning, and investment decisions.
Published by Basilinna Institute. All rights reserved.