Full Breakdown
U.S. Trade Representative Confirms Tariffs Will Persist in USMCA Negotiations with Mexico
4/21/2026, 10:51:43 PM
Tariffs on Auto and Steel Industries to Remain
U.S. Trade Representative Jamieson Greer has informed Mexican auto and steel industry leaders that they should not expect the removal of tariffs imposed by President Donald Trump during the renegotiation of the United States-Mexico-Canada Agreement (USMCA). During meetings in Mexico City, Greer emphasized that some level of tariffs will remain, marking a significant departure from the previous era of tariff-free trade that lasted over three decades under the North American Free Trade Agreement (NAFTA) and its successor, USMCA.
Greer stated, “We will never go back to a zero-tariff world,” indicating that while there may be some easing of tariffs to maintain competitiveness, a complete rollback is unlikely. This stance has raised concerns among Mexican industry leaders, particularly as over 50% of Mexico’s auto and steel exports are directed to the U.S., leaving them vulnerable to these tariffs.
Implications for the Mexican Economy
The imposition of a 25% tariff on automotive imports has already led to a decline in vehicle exports from Mexico, which fell nearly 3% in 2025. The Mexican Automotive Industry Association (AMIA) reported that U.S. buyers purchased 2.8 million of the 4 million vehicles produced in Mexico in 2024. The situation has resulted in significant job losses, with approximately 60,000 positions eliminated in the auto sector last year. AMIA President Rogelio Garza expressed that the industry cannot sustain these conditions, warning that the decline in exports will worsen if tariffs remain in place.
The steel industry is also facing challenges, with U.S. tariffs reaching as high as 50% on certain products. Mexican President Claudia Sheinbaum has expressed the urgency of reaching a preliminary agreement on steel and automotive duties before the completion of the USMCA review.
Proposed Changes to Trade Rules
In addition to the tariffs, U.S. negotiators are advocating for stricter rules of origin, proposing that 100% of key components, such as engines and major electronics, be sourced from North America. Currently, the USMCA requires that about 75% of a vehicle's value be sourced from the region. This shift aims to bolster domestic manufacturing but may increase costs for manufacturers reliant on integrated supply chains.
Official Statements & Responses
Following the meetings, Greer and Mexican Economy Minister Marcelo Ebrard announced plans to initiate formal bilateral negotiations to address U.S.-Mexico trade issues during the week of May 25. They will focus on economic security, strengthened rules of origin, and other trade irritants. Greer has defended the tariffs as essential for revitalizing U.S. manufacturing jobs, which have been lost to lower labor costs in Mexico.
Criticism & Opposition
Critics of the current trade policy argue that the tariffs disrupt established supply chains and threaten the competitiveness of the Mexican auto and steel industries. The Mexican government is seeking to mitigate the impact of these tariffs, but the latest signals from Washington suggest that while some adjustments may be possible, a full rollback is not anticipated.
What's Next
Formal negotiations are set to begin in late May, with both sides aiming to resolve key disputes before the July 1 deadline for the USMCA review. The outcome of these discussions will significantly influence the future of North American trade and the economic landscape for Mexico's export-driven industries.
