Mexican President Claudia Sheinbaum said on August 24 that she believes a trade deal with US President Donald Trump is within reach, striking a notably upbeat tone at a moment when North American trade relations look increasingly fractured.
The optimism arrives against a rather dramatic backdrop. US-Canada trade negotiations recently collapsed, prompting Trump to announce 50% tariffs on Canadian goods set to take effect January 1, 2027. Canada, for its part, has signaled retaliatory measures beginning September 8, 2026.
Ebrard takes the lead in Washington
Economy Minister Marcelo Ebrard is currently on the ground in Washington, continuing bilateral discussions after the US-Canada talks fell apart. His presence in the capital is the latest chapter in negotiations that have stretched for over a year, focused on reducing US tariffs imposed on Mexican exports while addressing American concerns on issues including fentanyl trafficking.
Trump himself has described his communications with Sheinbaum as productive, having held multiple calls with the Mexican president since returning to office.
The USMCA framework hangs in the balance
Underneath these bilateral conversations sits the United States-Mexico-Canada Agreement, the trade pact that replaced NAFTA during Trump’s first term. The USMCA requires annual reviews leading up to a potential expiration in 2036, and its sixth anniversary review fell on July 1, 2026.
The fentanyl issue adds another layer. The US has tied trade concessions to Mexico’s willingness to address drug trafficking, particularly the flow of synthetic opioids across the southern border. Mexico has been engaging with these concerns as part of the broader negotiation package, essentially treating trade and security as two parts of the same conversation.
What a deal would mean for markets
Automotive manufacturing sits at the center of the equation. The North American auto industry has built deeply integrated cross-border production networks over decades. Tariff increases disrupt those networks, raising costs for manufacturers and ultimately for consumers.
Mexico’s peso and equity markets would also feel the effects. Trade uncertainty tends to weigh on the currency, while a clear path toward reduced tariffs could provide a boost. Investors in Mexican sovereign debt and corporate bonds are similarly attuned to these developments.