Mexico ‘Optimistic’ on U.S. Trade Deal after Canada Talks Fail

• Mexican President Claudia Sheinbaum expressed optimism she can reach a trade deal with Donald Trump as her chief negotiator leads talks in Washington, just after negotiations between the United States and Canada collapsed. “As President Trump said, we hope to reach an agreement with the U.S.,” she told reporters on Monday after being asked about the escalating U.S.-Canada impasse. “I’m optimistic an agreement can be reached.”
• Economy Minister Marcelo Ebrard, Sheinbaum’s top trade negotiator, will remain in Washington for several days as he seeks to lower 50% U.S. tariffs on Mexican steel and aluminum, and 25% duties on automobiles. The six-year-old CUSMA trade pact includes the U.S., Mexico and Canada, and last month it formally entered a phase of annual reviews as separate bilateral negotiations also take place.
• Washington’s negotiations with Ottawa fell apart in recent days, prompting Trump to say he’ll double tariffs on Canadian automobiles and parts starting next year. The breakdown also triggered a 50% U.S. levy on about US$20 Bn of Canadian goods, while Prime Minister Mark Carney announced retaliatory tariffs to take effect on Sept. 8. Like with Mexico, the current import duty on Canadian cars is 25% and applied only to the vehicles’ non-U.S. content, while imported steel also faces 50% levies.
• The collapse of the U.S.-Canada talks might create an opening for Sheinbaum, according to Jimena Zúñiga, Latin America Geoeconomics Analyst with Bloomberg Economics. “The breakdown in U.S.-Canada talks could strengthen Mexico’s hand in its own negotiations with Washington. The U.S. may be reluctant to open a second major front with another key trade partner, especially given the risk of higher prices ahead of the midterm elections,” she wrote in a research note.

(Source: Financial Post)