The EU cheers, but Mexico fears, their new trade accord. Why? Donald Trump.
Politico | 3 February 2025
The EU cheers, but Mexico fears, their new trade accord. Why? Donald Trump.
By Jakob Weizman
BRUSSELS — The European Commission’s trade department took a victory lap. The Mexican government was silent.
It was a strange way to announce the renewal of a bilateral trade deal that had been years in the making. But the timing, on Jan. 17 — three days before Donald Trump was sworn in for a second term as U.S. president — said it all.
In Brussels, chief executive Ursula von der Leyen and trade czar Maroš Šefčovič were keen to demonstrate that the European Union — under fire from Trump over a yawning transatlantic trade deficit — has other friends it can trade with. The Mexico update followed a major deal with South America, another win with Switzerland, and the revival of talks with Malaysia.
But for Mexico, facing Trump’s threats to impose 25 percent tariffs across the board along with Canada, there was no reason to shout news of the EU accord from the rooftops.
Trump last Saturday issued an order to hit Mexico with those tariffs, affecting imports worth $500 billion, only to suspend them on Monday for 30 days. Economists at EY estimate that, if they enter force, they would cause Mexico’s economy to shrink by 1.6 percent this year and by 4.5 percent in 2026, with inflation rising due to a weaker peso and higher import costs.
“Trade relations with the United States are already tense, and perhaps announcing a Mexico-EU deal in January would not have been well received,” said Cesar Guerra, Mexico’s former chief negotiator on the EU deal. Guerra now represents MexChamEU, a business group, which he said was “pleased with the conclusion of the negotiations.”
Despite the commotion across the pond, Šefčovič has defended the decision to make the announcements on the deal right before Trump took office. Speaking to European lawmakers last Wednesday, he said that the EU “had to seize the momentum, take a chance, and go for it.”
Silence is golden
Carlos Mota, a senior economic journalist, confirmed the fears in Mexico City over Trump’s resolve to reassert U.S. dominance in global trade and eradicate the structural trade deficit — even at the expense of its closest trading partners.
“The Mexican government does not want to announce or celebrate it because of potential U.S. tariffs. Here in Mexico, European diplomats are very puzzled about this,” Mota, a columnist for El Heraldo de Mexico, told POLITICO before Trump’s weekend tariff order.
There’s more to the puzzle. President Claudia Sheinbaum told her daily press conference on Jan. 22 that “the work continues, and there is still no final agreement; everything must align with our plan, the Mexico Plan, which focuses on strengthening production within Mexico.”
Sheinbaum won election last year as Mexico’s first woman president on a progressive ticket. Her Mexico Plan aims to create 1.5 million jobs — putting national development ahead of opening up to foreign investment. So, while the EU stands to gain greater access to the Mexican market in the modernized trade deal, the country’s nationalized energy sector remains out of bounds.
Her comments caused confusion on both sides of the Atlantic, but European Commission trade spokesperson Olof Gill confirmed afterwards that official deal documents would be published within days.
Guerra also believes that the texts are indeed ready, “but it’s difficult to be published when the other party is taking some time to assess the implications. The Mexican government has not made any announcement about concluding the negotiations.”
Borja Giménez Larraz, an MEP overseeing the deal on behalf of the European Parliament, acknowledged the uncertainty surrounding Mexico’s position but emphasized the European Commission’s confirmation that the deal has been finalized.
“It is understandable that Mexico faces this situation with caution. But, at the same time, I believe that finalizing the agreement just three days before Trump’s inauguration reflects the urgency of diversification,” Larraz, from the European People’s Party, told POLITICO.
Diversifying its trading relationships won’t come easy for Mexico, whose free-trade agreement with the U.S. and Canada Trump has just blown up. Its economy is deeply intertwined with that of its northern neighbor, with bilateral trade reaching nearly $800 billion in 2023, according to U.S. Census Bureau figures.
Still, on the EU side, Larraz is confident that formalities will go smoothly. With negotiations officially closed, according to the Commission, the agreement should now undergo legal scrubbing. A vote by the 27 EU countries is expected in late spring, with the Parliament’s green light in September.
