Mexico and the United States are evaluating an interim bilateral trade agreement ahead of the November 3, 2026 U.S. midterm elections. Mexican President Claudia Sheinbaum is pursuing major tariff cuts on auto, steel, and aluminum exports while addressing Washington's non-tariff concerns. The talks follow Washington's July decision not to extend the USMCA for 16 years and the August breakdown of U.S.-Canada trade negotiations. Meanwhile, Canadian Prime Minister Mark Carney maintains Ottawa is not ready to sign a deal.
US-Mexico trade negotiations and goals
- ▪United States President Donald Trump asserted during an October 25, 2026 campaign rally in Michigan that the United States and its trading partners are very close to reaching an agreement.
- ▪Mexican President Claudia Sheinbaum stated on October 28, 2026 that Mexico and the United States are evaluating whether a bilateral trade agreement can be reached before November 3, 2026.
- ▪Mexican President Claudia Sheinbaum noted that Mexico has resolved many of the 54 non-tariff barrier demands raised by the United States without ceding sovereignty.
- ▪The bilateral talks aim to achieve an interim agreement granting Mexico relief from United States tariffs while addressing Washington's concerns regarding automotive content and Chinese investment.
United States tariffs on Mexican exports
- ▪Mexican President Claudia Sheinbaum confirmed Mexico seeks significant United States tariff reductions on automotive exports, including 25% on medium and heavy trucks, and 50% on steel and aluminum.
- ▪Bilateral trade negotiations between Mexico and the United States have also addressed a 17% compensatory tariff applied to Mexican tomatoes.
USMCA status and Canada talk breakdown
- ▪Washington declined in July 2026 to extend the United States-Mexico-Canada Agreement for another 16 years, forcing the trade pact into annual reviews.
- ▪Following the breakdown of trade talks, Washington instituted import bans on Canadian alcohol, motorcycles, and dairy, prompting Canada to vow dollar-for-dollar retaliatory tariffs.
- ▪The refusal to extend the USMCA left unresolved issues including rules of origin, Chinese investment, labor provisions, and environmental standards.
- ▪United States negotiations with Canada collapsed in August 2026, leading Washington to impose 50% tariffs on $20 billion worth of Canadian imports.
- ▪Canadian Prime Minister Mark Carney stated on October 28, 2026 that Canada is not currently in a position to sign a trade deal with the United States.
United States tariffs on Canadian goods
- ▪Canadian Prime Minister Mark Carney stated on October 26, 2026 that negotiations to ease United States tariffs on Canadian automobiles and steel had experienced a slight intensification.
- ▪Section 232 measures applied under United States trade law include duties of up to 25% on Canadian automotive imports and up to 50% on steel imports.
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