US and Mexico Pursue Bilateral Trade Deal Amid USMCA Review

The United States and Mexico are negotiating a preliminary bilateral trade arrangement, often called a skinny deal, to secure tariff relief and policy concessions ahead of the 2027 review of the Canada-U.S.-Mexico Agreement (CUSMA/USMCA). Under the proposed terms, Mexico would receive tariff relief in exchange for domestic policy concessions and alignment with U.S. trade policy toward non-market economies.

Mexican President Claudia Sheinbaum Pardo confirmed that the trade agreement remains valid and in effect, despite suggestions from U.S. President Donald Trump that the deal could be scrapped or replaced. The mandatory periodic review began on July 1 after the United States declined an automatic extension. While Mexico and Canada have requested a 16-year extension, the U.S. has proposed a 10-year framework featuring annual reviews.

Mexico's primary objectives include lowering U.S. tariffs on automobile exports, steel, and aluminum. Economy Minister Marcelo Ebrard expressed optimism about the bilateral progress, stating that the two nations are getting closer on many issues. Meanwhile, formal trade talks between the U.S. and Canada have remained stalled since August. Trade experts warn that any concessions Mexico makes regarding sectoral tariffs in the automotive industry could establish a baseline that the U.S. will expect Canada to match when formal negotiations resume.