Background on Key Figures and Relevance
Kenneth Smith, an international trade specialist and partner at AGON, has been closely monitoring the recent EU-China trade agreement. His expertise in international commerce positions him as a reliable source on the implications of this agreement for Mexico.
Antonio Ortiz-Mena, president of AOM Advisors, also contributes valuable insights regarding the complexities and potential changes in tariffs. His understanding of Section 232 tariffs and the International Emergency Economic Powers Act (IEEPA) tariffs provides context for the ongoing discussions.
The EU-China Trade Agreement and Its Impact
On Thursday, the United States and China reached a trade agreement that includes the non-imposition of export controls on rare earths, no additional 100% tariff on Chinese products, and a 10 percentage point reduction in tariffs concerning U.S. concerns about fentanyl.
Smith believes this agreement puts pressure on the U.S. to lower tariffs on Mexico, specifically referencing the 20% tariff on Chinese goods related to fentanyl. He argues that Mexico should demand the preservation of free trade to enable North America to better compete with China and Asia, countering President Donald Trump’s intentions to impose a base tariff and quotas, as well as curb offshoring.
Key Dates and Upcoming Developments
Smith highlighted the significance of January 2026 during the 31st Mexican External Trade Congress. The U.S. Representative for Trade (USTR) will then publish a report on consultations regarding the USMCA and specify objectives for reviewing this trade agreement by July 2026.
Before that, on November 5, the U.S. Supreme Court will hold a hearing on Trump’s tariffs under the International Emergency Economic Powers Act (IEEPA), including those related to fentanyl.
The IEEPA grants the president authority to regulate imports in response to declared national security, foreign policy, or economic emergencies.
Comparing Tariff Regimes: IEEPA vs. Section 232
Ortiz-Mena explained that IEEPA tariffs can be more easily removed or limited compared to Section 232 tariffs, which apply broadly across all countries with exceptions and involve greater technical complexity.
Currently, the U.S. imposes a 25% tariff on Mexico and a 35% tariff on Canada for products that do not meet T-MEC origin rules due to IEEPA concerns.
Ortiz-Mena pointed out that Section 232 tariffs have been applied inconsistently, such as imposing tariffs on Mexico for steel despite a trade surplus in that metal, while exempting Australia.
“Section 232 is a complex mechanism for companies to navigate… it’s quite challenging,” Ortiz-Mena commented.
Unfulfilled Tariff Expectations
During Marco Rubio’s recent visit to Mexico as the U.S. Secretary of State, there was anticipation that tariffs on migration and fentanyl-related products from Mexico would be eliminated. However, this de-escalation has not yet occurred.
Smith suggested that the U.S. might maintain some tariff levels as a strategic pressure tactic in T-MEC revision negotiations.
Key Questions and Answers
- What is the EU-China trade agreement and why does it matter? The recent agreement between the U.S. and China includes concessions on export controls, additional tariffs, and fentanyl-related concerns. This agreement puts pressure on the U.S. to reconsider its tariffs on Mexico, as argued by Kenneth Smith.
- Who are Kenneth Smith and Antonio Ortiz-Mena, and why are their opinions relevant? Kenneth Smith is an international trade specialist with expertise in Mexico’s trade dynamics. Antonio Ortiz-Mena, president of AOM Advisors, offers insights into tariff complexities, including Section 232 and IEEPA tariffs.
- What are the key dates to watch regarding U.S.-Mexico tariffs? The USTR will publish a report on consultations about the USMCA by January 2026, and the U.S. Supreme Court will hear arguments on IEEPA tariffs on November 5.
- How do IEEPA and Section 232 tariffs differ, and which is more flexible? IEEPA tariffs can be adjusted more easily than Section 232 tariffs, which apply broadly and involve greater technical complexity.
- Why haven’t the expected tariff reductions on migration and fentanyl occurred? There is speculation that the U.S. may maintain some tariff levels strategically to exert pressure during T-MEC revision negotiations.
