Mexico-US Trade Agreement Faces Growing Uncertainties Amid Trump's Tariff Threats

Claudia Sheinbaum, the President of Mexico, cautioned that the country intends to take strong action against the US if Trump’s new tariff on Mexican imports is not suspended.

She emphasized that a suitable trade agreement must be reached by the August 1 deadline. The announcement came after it pledged to impose a 30% tariff threat on the country’s imports to the US, that is, if it failed to succeed in its mission to put an end to drug cartels.

In a statement, Sheinbaum clarified their motive, stating that they only need a fair agreement with the US. According to her, if it fails to provide one by August 1, they will be forced to take steps that they will inform them about.

Mexico-US trade agreement faces growing uncertainties amid Trump’s tariff threats

Washington had earlier announced plans to impose a 17% duty on fresh tomatoes imported to the US from Mexico. This did not please Mexico’s president. Respondingly, Sheinbaum hoped to make known the measures the country would take, including for tomato farmers, to counter the tariff threat.

Sheibaum stated that they believed they could reach an agreement with the US. However, based on her argument, it was essential to have a backup plan since they needed to get ready for all possibilities.

Notably, Mexico is pivotal in importing fresh tomatoes to the US. According to data from sources, the country imports approximately two-thirds of the fresh tomatoes consumed in the US.

In the meantime, the US Commerce Department announced a cancellation of a 2019 trade agreement with Mexico that ended an investigation on Mexico’s countervailing duty. This amounted to a valuation of $3 billion of Mexican exports to the US annually.

Mexico’s tomato export agreement was first made in 1996, whereby the two governments vowed to control it and resolve US allegations against Mexico concerning “unfair trade” practices. The agreement was updated six years ago to stop an investigation into dumping and settle tariff issues.

On the other hand, Trump is still focused on striking as many trade deals as possible, and he pledges to impose his threatening tariffs on nearly all of his trading partners.

Mexico vows that no other country can substitute Mexican tomatoes in the US market

Following the US’s assertion to withdraw from the tomato agreement with Mexico, Mexico demonstrated strong confidence in renewing the agreement.

The economy and agriculture ministries considered the 17.09% duty on Mexican tomatoes imported to the United States unfairly “underpriced.” Based on their argument, it did not favour Mexican producers and the US industry’s interests.

To curb this, the Mexican government intends to support its tomato farmers and expand its market overseas as it negotiates a deal to strip out the tomato duty.

A coalition of five Mexican agriculture associations, including representatives from Baja California and Sinaloa states, said they would work with the Mexican government to develop more solutions to the problem.

They acknowledged that no other country can substitute Mexican tomatoes in the market, which they have developed through hard work and creativity over the last 120 years.

US Commerce Secretary Howard Lutnick shared his view on the topic of discussion. According to Lutnick, unfair trade practices have hurt their farmers by lowering the prices of their crops, such as tomatoes.

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