Mexican President Claudia Sheinbaum said on Oct. 28 that trade talks with the US are ongoing, and both sides are weighing whether a deal is possible before the Nov. 3 midterm elections.
Mexico wants a significant cut to tariffs on its automotive, steel, and aluminum industries, she said at her daily press conference.
The sticking point is Section 232, the trade law behind a 50% import tax on steel and aluminum and a 25% duty on non-US content in USMCA-compliant cars.
Mexico has asked Washington to drop the light vehicle tariff to 15% and to cut or eliminate the metals tariffs. No replacement rate has been agreed.
Duties on downstream products made from steel and aluminum now cover a large slice of Mexico's economy, and Mexican leaders have said no deal works without relief there.
Metals tariffs stall the talks
Talks cooled after Commerce Secretary Howard Lutnick took issue with Mexico's demands and sent a counterproposal that missed their concerns, people familiar with the matter said. US officials have since grown comfortable kicking a potential deal past the midterms.
US Trade Representative Jamieson Greer's office had led the negotiations before Lutnick pushed for more influence. Economy Minister Marcelo Ebrard, Mexico's lead negotiator, rejected the idea that Lutnick is blocking anything.
The stakes are large in dollar terms. The US goods deficit with Mexico hit $155.9B through August, up 21.2% from the same period of 2025, with imports at $419.3B and exports at $263.5B.
Bar chart. Billions (USD). Imports from Mexico: Value ($B) $419. Exports to Mexico: Value ($B) $264. Trade deficit: Value ($B) $156.
Canada is watching
US-Canada talks collapsed in August, hours before Washington imposed Section 338 tariffs of 50% on more than 500 Canadian imports.
Canada retaliated on Sept. 8 with tariffs of 15%, 25%, or 50% on hundreds of US exports. The US responded by barring imports of select Canadian goods including larger motorcycles, whey, molasses, and alcohol.
That fallout pushed Mexico toward cooperation over confrontation, with more than 80% of its exports going north.
For US investors, the read-through lands on automakers and metals processors with cross-border supply chains. A framework deal would give manufacturers a cost baseline, something they have lacked while investment decisions sit on hold.
Still unsettled are the new metals rate and whether Greer and Ebrard announce anything before Tuesday's vote.
