Understanding the Current Situation
In what moment does a “happy problem” turn into a real headache? We may not have to wait long to find out. Mexico’s trade surplus with the U.S. reached a staggering 96,213 million dollars in the first half of 2025. We sold them 264,383 million dollars’ worth of goods. In return, we purchased 168,170 million dollars’ worth.
A Brief History of U.S.-Mexico Trade Relations
How did we get here? During Donald Trump’s second term, the trade surplus has grown by 16% compared to the same period in 2024. Trump’s administration has shifted from promoting free trade to embracing protectionism, viewing trade deficits as a national security issue and blaming trading partners for exploiting the U.S.
To address these concerns, Trump has imposed higher tariffs on both allies and adversaries, resulting in the highest tariffs since the 1930s. This new scenario is chaotic and still taking shape.
Impact on Mexico
Mexico has fared relatively better than most due to the T-MEC, which exempts 85% of bilateral goods from tariffs. While there are tariffs on steel, aluminum, automobiles, auto parts, and tomatoes, the average tariff rate for Mexican exports is approximately 6.8%.
This new reality will bring a “new scoreboard.” China has faced tariffs ranging from 30% to 55%, leading to a significant reduction in imports and a notable decrease in its trade surplus. Between January and June, China’s trade deficit with the U.S. dropped from 127,000 to 111,000 million dollars.
In 2024, China had a trade surplus of 295,000 million dollars with the U.S., while Mexico reported 172,000 million dollars. If current trends continue, Mexico may soon become the U.S.’s trading partner with the largest surplus.
Future Prospects
Predicting the future with Trump is like venturing into science fiction. The USTR’s negotiations with China will determine the course. Although a broad agreement between the two largest economies seems unlikely, their interdependent relationship makes breaking ties challenging. Regardless of the outcome, Mexico will feel the impact.
The Mexican government faces an intense 90-day negotiation period, with one of the key topics being the reduction of the trade surplus, as stated by Subsecretary of Economy Luis Rosendo Gutiérrez Romano.
Potential Solutions
The most logical approach is to increase U.S. purchases, focusing on industrial input substitution. Luis Rosendo Gutiérrez explained, “We need to buy from the U.S. what we currently acquire from countries without free trade agreements.”
However, will this be enough? Trump is actively promoting U.S. arms and military equipment purchases, as demonstrated during his Middle East tour and in negotiations with the European Union. Our options are limited, making it crucial to address this issue before Trump escalates further. The only growing sector in the Mexican economy is exports to the U.S., while investment and consumption remain stagnant.
Key Questions and Answers
- When does a “happy problem” become a concern? As Mexico’s trade surplus with the U.S. grows, there are concerns that it may eventually turn into a significant issue.
- What changes have occurred in U.S.-Mexico trade relations? Under Trump’s administration, the U.S. has shifted from promoting free trade to embracing protectionism, imposing higher tariffs on trading partners.
- How has Mexico been affected by these changes? Despite the challenges, Mexico has fared relatively better than most due to the T-MEC, which exempts 85% of bilateral goods from tariffs.
- What are the potential solutions to address the growing trade surplus? Increasing U.S. purchases, particularly industrial inputs, is one proposed solution.
- Why is it crucial to resolve this issue promptly? The only growing sector in the Mexican economy is exports to the U.S., while investment and consumption remain stagnant.
