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Mexico and EU revamp trade agreement days before Trump takes office with threat of tariffs

FATIMA HUSSEIN
January 17, 2025

MEXICO CITY (AP) -- Mexico and the European Union on Friday announced a revamped trade agreement that they said would substantially increase trade and investment, days before the inauguration of U.S. President-elect Donald Trump, who has threatened to slap sweeping tariffs on Mexico and other trading partners.

The new Global Trade Agreement between Mexico and the 27-nation bloc would reduce Mexican tariffs of agri-food imports from Europe, remove a number of barriers that would allow European companies to more easily invest in Mexico and boost Mexican exports of raw materials like fluorspar (used in electronics) as well as antimony, copper, zinc and lead.

The updated deal, which first entered into force 25 years ago, also seeks to facilitate "strategic cooperation on key geopolitical issues," the European Union said in a statement.

"We have entered a new era in our strategic partnership with Mexico today. Our upgraded agreement shows the E.U. and Mexico united for freer trade and an open global economy," said Kaja Kallas, vice president of the European Commission, in a statement.

The announcement comes days before the return to the White House of Trump, who has threatened to impose tariffs as high as 25% on all Mexican imports, which could deal a sharp blow to both economies.

While an updated agreement with the E.U. could mitigate some of the potential losses from disrupted U.S.-Mexico trade, trade between Mexico and the European Union still represents only a small portion of Mexico's annual trade with the United States.

U.S.-Mexico trade netted more than $800 billion in 2023. In contrast, trade between Mexico and the European Union reached $84 billion in the same year, according to the EU.

Mexico's Economy Ministry has not commented on the updated agreement with the E.U.

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Follow AP's coverage of Latin America and the Caribbean at https://apnews.com/hub/latin-america

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