What Would an Interim U.S.-Mexico Trade Deal Actually Involve?

1. Housekeeping demands are quick to implement and limited in reach. These are the irritants that the United States has already identified and that Mexico could address through administrative or relatively limited regulatory action. These include U.S. industry complaints, such as U.S. cheese producers’ objection to geographical-indication commitments Mexico made to the European Union, along with questions of agricultural market access, customs procedures, intellectual property rights, or specific regulatory barriers. Mexico can settle these without fundamentally changing the bilateral economic relationship, and it should make progress where doing so builds goodwill with the United States.
2. The Trojan horse is quick to implement but has deep reach. These demands are quickly addressed but introduce limits to Mexico’s own policies well beyond the life of an interim deal. Washington may ask Mexico to align some of its trade policies with those of the United States. These could include tariffs, investment screening, export controls, transshipment, supply chain security, or measures directed at nonmarket economies, particularly China. A request of this type can be presented as a narrow technical adjustment and enacted weeks or by decree, but could have long-term and structural consequences for Mexican trade policy.
3. Rebalancing demands are slower to implement but shallow in reach. The United States may ask Mexico to reduce the bilateral trade deficit through additional purchases of U.S. agricultural, energy, or manufactured goods; to facilitate U.S. investment; or to support U.S. positions in organizations such as the World Trade Organization and the Asia-Pacific Economic Cooperation forum. These demands could be costly economically, but they would leave the architecture of the USMCA intact. Similar proposals have been part of other agreements negotiated by the administration.
4. Structural demands are slow to implement but have deep reach. They would redraw Mexico’s long-term domestic and foreign policy. Measures could include quantitative or other limits on Mexican exports, new U.S. content thresholds, explicit restrictions on Mexico’s trade relations with third countries, or even changes that shift the trilateral nature of the USMCA toward a set of parallel bilateral deals. These proposals would outlast any interim framework negotiated between the two countries. Prime Minister Carney treated reported U.S. proposals to limit Canada’s ability to negotiate trade deals with other partners as one of his country’s red lines, blaming these demands for the collapse of the U.S.-Canada interim deal.

Mexican President Claudia Sheinbaum’s ability to move quickly is not in doubt. Article 131 of Mexico’s Constitution provides the executive with the power to increase, reduce, or eliminate import and export tariffs and to establish restrictions on imports, exports, and transit when necessary to regulate foreign trade. This authority is further reinforced in Mexico’s Foreign Trade Law, which provides the president and the economy ministry with important instruments to establish or modify tariff and nontariff measures. Consequently, some potentially significant commitments could be implemented without lengthy legislative processes. But if the result is to limit Mexico’s ability to determine its own trade policy toward China or another country, the implications are clearly much more significant. Prime Minister Carney considered structural demands as red lines and claims they caused the collapse of the U.S.-Canada interim deal.

What Mexico May Look to Secure in Return

How easily Mexico can grant concessions should not be confused with their significance or cost. Mexico’s potential for compromise will depend on what the United States offers in exchange.

Mexico’s main objective in an interim agreement is tariff relief, particularly applied to Section 232 duties on steel, aluminum, automobiles, and related products. A second priority is resolving existing Section 301 tariff actions that apply to Mexico, one on forced labor and one on excess manufacturing capacity. A third is protection against future U.S. tariff actions. An interim deal that delivers duty relief on today’s tariffs while leaving the door open for tomorrow’s would give Mexico the illusion of protection while exposing the country to additional duties on the very products it is negotiating relief for right now.

The governing principle should be proportionality. If the United States requests relatively simple, reversible concessions, Mexico may be able to accept them in exchange for specific tariff relief. However, if the United States expects Mexico to make deeper and permanent structural changes to its policies, Mexico should receive a stronger guarantee in return. Mexico should not accept permanent limitations on its trade policy in exchange for the temporary suspension of tariffs that can be imposed again a few months later under Section 232, Section 301, or another legal authority. The recurring flaw of ARTs with other countries is that the United States has been unwilling to commit against reimposing tariffs it has agreed to lift.

This does not mean that Mexico should refuse to make important concessions. There may be areas where greater alignment with the United States serves Mexico’s own interest—particularly if the objective is to strengthen North American production and secure supply chains—but the exchange needs to be balanced. The deeper and more lasting the demand, the stronger the guarantee that would be needed to justify it.

The failure of the U.S.-Canada negotiations makes this balance even more important for Mexico. Mexico may decide that some of the concessions rejected by Canada are acceptable if the benefits obtained from the United States justify them, but Canada’s decision creates an unavoidable point of comparison. If Mexico accepts significant or structural concessions that Canada rejected but obtains only limited or temporary tariff relief in return, it could end up with the worst of both worlds: bound by restrictions that Canada was unwilling to accept while still remaining exposed to the next wave of U.S. tariffs. Similarly, if trade with Mexico and Canada ends up governed by two different sets of rules, each product of a separate bilateral bargain, the trilateral nature of USMCA would survive only on paper. An agreement built on common rules does not hold when the parties operate under divergent terms.

Buy Certainty, Keep Leverage

Mexico should approach an interim deal pragmatically, with a clear hierarchy of what matters. Resolving individual irritants, facilitating additional U.S. investment, and accepting deeper North American economic security cooperation are reasonable pieces of a broader bargain. What Mexico cannot afford to do is treat any such deal as final. President Trump is a permanent negotiator and will reopen trade files as economic or political circumstances shift. If an interim deal is reached, Mexico should assume that the United States can return with new demands next year regardless of what was signed and negotiate accordingly.

The value of an interim agreement lies precisely in the fact that it does not have to resolve everything. Mexico should use that to buy certainty where certainty is available, settle what can reasonably be settled now, and preserve enough leverage for the harder USMCA conversations that will resume in 2027. But the risk runs the other way, too: Mexico could burn through its negotiating capital in the early rounds and arrive at the decisive ones with nothing left to trade. The benchmark for a good interim deal is not just tariff reduction today; it also needs to be proportional, provide stable market access to the United States, and leave cards for Mexico to negotiate in the future.

Diego Marroquín Bitar is a fellow in the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Juan Carlos Baker Pineda is resident fellow with the Georgetown Americas Institute and one of the architects of the original USMCA.