US Expects USMCA Trade Talks With Mexico to Include Tariffs

The United States expects tariffs will be included in trade negotiations with Mexico this week, but renewing the North American agreement with Canada could be challenging, U.S. Trade Representative Jamieson Greer said May 26.

“President [Donald] Trump is concerned about our deficit with Mexico,” Greer said during a conversation with the Council on Foreign Relations, a nonpartisan think tank in Washington, D.C. “The U.S. is going to have tariffs, even with [a country like] Mexico, or another country in our hemisphere.”

The United States is heading into negotiations with Mexico and Canada on a renewal of the North American free trade agreement known as the U.S.-Mexico-Canada Agreement (USMCA).

During the upcoming negotiations, officials are expected to talk about changing the agreement’s criteria to require more American-made content in goods produced in North America, Greer said.

“Mexico has been one of the big winners of American diversification with China,” Greer said.

The United States is seeking a broader and more balanced distribution of production and a decrease in the trade deficit with the country as the Trump administration continues to bring back manufacturing, according to Greer.

Mexico competes with Asian economies for the U.S. market and has already taken steps to align with U.S. trade and manufacturing goals, he said.

“At the end of the day, I want to have our supply chain sources from this hemisphere,” Greer said. “We all lived through COVID and we couldn’t get certain things from Asia. We want to have supply chains here as much as possible.”

While Greer expects negotiations with Mexico to be productive, trade negotiations with Canada have been strained during Trump’s second term.

“Our sense is that we have, with Canada, some trade challenges,” Greer said. “To us, they’re significant.”

Canada and China were the only two countries that retaliated against the United States on tariffs.

Canada and the United States continue to trade in energy, minerals, and other goods that have not been affected.

“Canada’s approach has been different,” Greer said. “It’s hard to see where that ends.”

Canada’s chief U.S. trade negotiator Janice Charette said in April she didn’t expect an agreement on the USMCA before July 1, when formal negotiations were set to begin.

“We are hoping the resolution that comes will deal … with tariffs, as well as the underlying framework,” Charette said at a business summit in Toronto. “USMCA is a very good, strong agreement. There’s no need to renegotiate. We don’t have a lot of tinkering to do there.”