Mexico Gains Competitive Edge Amid US-China Disputes

According to the US-China Tariff Framework implemented by President Donald Trump, Chinese products face a composite tariff of 55%. This rate results from adding a 10% reciprocal tariff, penalties of 20% related to fentanyl, and Section 301 measures amounting to 25%. In practice, not all Chinese products are subject to Section 301; some face only a 7.5% tariff. Nevertheless, this dynamic gives Mexican products a competitive advantage over Chinese products.

Luis de la Calle, Managing Director, CMM, emphasizes that Mexico’s comparative advantage lies in its unique ability to serve as a strong commercial hub within North America while retaining strong ties with Asia, Europe, and Latin America. “This positions Mexico to propose a new framework for international trade instead of waiting for policy decisions under Trump.”

Trump’s Tariffs

On Jan. 20, 2025, President Trump invoked the International Emergency Economic Powers Act (IEEPA), granting him authority to regulate imports in response to unusual and extraordinary financial and policy crises, in this case related to unlawful immigration and drugs. Using IEEPA, Trump placed a 25% tariff on Canada (with a 10% rate for energy-related products), Mexico (25%), and China (20%). However, these measures were removed for Mexico and Canada if their imports complied with USMCA regulations. According to Mexico’s Minister of Economy Marcelo Ebrard, nearly 86% of Mexico’s trade with the United States is not subject to additional duties.

On May 12, a temporary 90-day agreement was reached to ease reciprocal US-China tariffs, offering a window for negotiations and potential resolution of ongoing trade tensions. However, the 20% emergency tariff remained in place during this period.

Later, Trump also used IEEPA to impose a 10% tariff on all countries, alongside additional reciprocal penalties of up to 50% on 57 jurisdictions. Subsequently, following diplomatic negotiations, Trump paused these additional penalties and lowered the rate to 10% for 185 jurisdictions. Later, following a bilateral truce with China, the United States reduced its tariff on Chinese products from 145% to 30%, while Beijing lowered its own from 125% to 10%.