The tariff “storm” initiated by the United States will lead to product shortages, higher prices, layoffs, and a direct impact on consumers , all in anticipation of the revision of the United States-Mexico-Canada Agreement (USMCA) scheduled for 2026.
“We’re seeing temporary situations like Stellantis plants shutting down, and we’ll continue to see that. It ultimately impacts all of our pockets, so it’s necessary to organize the people who benefit from trade, raise awareness, and make them understand that employment in their sector and community depends on this activity in Mexico. We also need to demand that the government continue to diversify and present the country as open to the international economy,” said Kenneth Smith, former chief negotiator of the USMCA and partner at AGON .
He considered that Mexico faces a serious problem in resolving the tariff “storm” and how to address the treaty revision in 2026, which is expected to be more of a renegotiation.
“In fact, Trump is already negotiating, meaning he’s establishing tariffs, moving the goalposts and setting unacceptable conditions, even for me, but I feel I can hold out longer, in this case, with Mexico and Canada, otherwise it’s going to hurt them more,” he explained.
He stated that these actions violate the USMCA, with respect to the automotive and auto parts sector , with “a particularly toxic clause,” since the treaty does not allow them to be implemented; there are only parallel letters that exclude these industries from any national
“There are other parallel letters in which any national security measure taken by the United States in any sector, Mexico and Canada have preferential treatment over any other country in the world. This consists of the fact that, if a Section 232 national security measure is imposed by the United States, they have 60 days to negotiate a solution, while for the rest of the world, these measures would take effect immediately,” he explained.
He asserted that in the automotive, steel, and aluminum sectors, “there are direct violations of the treaty. In this sector, it was established that if the United States at any time increases the most-favored-nation tariff on light vehicles, which was 2.5% before Trump’s arrival and is now 25%, it must respect the quota of 2.6 million vehicles and up to $108 billion worth of auto parts with the 2.5%.”
“You have a clear violation with the tariffs. The moment is critical to continue working to eliminate them. This supposed exclusion of reciprocal tariffs is not based on an agreement, a free trade agreement, or a document that allows for enforcement. It depends on which side of the bed Donald Trump woke up on,” he said.
During the webinar Deciphering the Challenges, Tariffs: A New Era for International Trade, organized by the Mexican Institute for Competitiveness (IMCO) , he stated that as a region, North America must contain unfair practices not only from China , but also from Brazil, India and other regions, through a comprehensive and joint strategy among the three countries.
But, equally, we must also build competitive capacity, eliminate barriers and transaction costs between Mexico, Canada, and the United States. “There are barriers at the borders, phytosanitary, services, non-tariff barriers of all kinds, and uneven regulation. All these chapters of the treaties must be addressed to fully integrate them into the North American economy.”
For her part, Valeria Moy, director general of IMCO, stated that Mexico has not done the long-overdue work to boost its economy, in areas such as energy, the electricity market, and public infrastructure.
“Mexico is late in reviving the technical capacity, education, and real capabilities to adapt to a more competitive market, and the rule of law has been forgotten or overtaken by reality,” he said.
He considered that the Mexico Plan, proposed by the federal government, may gain importance in relative terms; however, if decisions are not made on the aforementioned issues, “it won’t matter.”
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