U.S.-Mexico trade deal stalls over 50% metals tariff

Mexico and the United States had not announced a trade deal as of Oct. 22, with negotiators stuck on 50 per cent U.S. tariffs on steel and aluminum and a 25 per cent duty on Mexican vehicles, even as both presidents describe an agreement as close.

The outcome matters to Canada because Mexico is now the only North American partner still in formal bilateral talks with Washington, and a Mexican deal is expected to shape the review of the Canada-U.S.-Mexico Agreement (CUSMA). The U.S. trade deficit with Mexico was almost US$156 billion in the first eight months of 2026, according to Mexico News Daily.

Mexican President Claudia Sheinbaum said on Oct. 20 that a deal is “very close” but that some issues remain unresolved, Mexico News Daily reported. She said Mexico wants the lowest possible U.S. tariffs on its vehicles, steel and aluminum and wants to avoid new ones, and that it will not negotiate anything outside its constitution and laws.

U.S. President Donald Trump told a rally in Park City, Kan., on Oct. 19 that “we’re not going to lose $150 billion with Mexico,” and that the two countries were “very close to a great deal.” The Latin Post reported that the deficit through August was US$155.9 billion, up 21.2 per cent from the same period of 2025, with U.S. imports from Mexico at US$419.3 billion and exports at US$263.5 billion.

The Wall Street Journal reported on Oct. 15 that talks had stalled because Commerce Secretary Howard Lutnick opposed the tariff cuts Mexico seeks, according to Mexico News Daily’s account of that report. Officials in both countries denied the talks had stalled. U.S. Trade Representative Jamieson Greer leads the U.S. side, and Mexico’s Economy Minister Marcelo Ebrard leads Mexico’s.

Bloomberg reported on Oct. 21, in a story carried by The Edge Malaysia, that the sticking point is the Section 232 tariffs on steel, aluminum and products derived from them. Mexico’s ambassador to the U.S., Roberto Lazzeri, was quoted as saying the talks are “a little bit stuck on the details.” Ebrard said he did not get the impression from his last conversation with Lutnick that Lutnick opposed reducing those tariffs.

According to Bloomberg, Mexico has sought to cut the 25 per cent tariff on light vehicles to 15 per cent and wants a framework agreement so businesses can stop delaying investment decisions. More than 80 per cent of Mexico’s exports go to the U.S. Mexico has also agreed to suspend for five years its 10 per cent tariff on imported parts used in vehicle assembly, Mexico News Daily reported.

Bloomberg said major progress may wait until after the U.S. midterm elections on Nov. 3. The Latin Post reported that U.S. officials are growing comfortable letting an announcement slip past that date.

The Canadian angle is direct. The U.S. declined to renew CUSMA for a further 16 years at the July 1 joint review, a move Canada and Mexico had backed, and the pact remains in force until July 1, 2036, the Latin Post reported. Bloomberg reported that U.S.-Canada talks broke down in August, largely over Lutnick’s opposition to concessions on Section 232 tariffs. The Wall Street Journal, as summarized by Mexico News Daily, said Lutnick had now disrupted advanced negotiations with a North American partner for a second time, which Mexico News Daily said apparently refers to Canada.

For Canadian steel, aluminum, auto parts and lumber exporters, a Mexican settlement on metals and vehicle tariffs would be closely watched as a possible reference point for Canada’s own talks. Our earlier reporting covers the White House notice on Canada tariff changes taking effect Oct. 30, the U.S. panel hearing on CUSMA auto rules of origin and the $8.7-billion federal and Ontario plan for steel, autos and mining.

What to watch next: whether Greer and Ebrard announce a framework before or after the Nov. 3 vote, what new rate the U.S. sets for steel and aluminum, which Bloomberg said has not been decided, and whether Washington returns to a Canadian track.

Via Mexico News Daily, Bloomberg (through The Edge Malaysia) and the Latin Post. The Wall Street Journal report was not read directly.

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