EU and Mexico update trade deal ahead of Trump’s presidency

The European Union and Mexico concluded talks on Friday to revise their trade agreement, bolstering a partnership that is vital for European automakers, just three days before Donald Trump, who campaigned on a protectionist platform, is set to be sworn in as U.S. president, News.az reports citing Politico.

The announcement represents a pre-emptive move to link arms after Trump threatened to hit U.S. neighbors Mexico and Canada with tariffs of 25 percent on taking office. The EU meanwhile faces U.S. tariffs of 10 percent to 20 percent — with analysts saying its car industry is at particular risk.

The modernization of the “global agreement” between the 27-nation bloc and Mexico will expand opportunities in services, strengthen supply chains and bolster investment protections, the European Commission said in a statement after talks between EU trade chief Maroš Šefčovič and Mexican Economy Minister Marcelo Ebrard.

“This landmark deal proves that open, rules-based trade can deliver for our prosperity and economic security,” European Commission President Ursula von der Leyen said. The bilateral trading relationship is worth more than €100 billion a year — four-fifths in the form of goods and one-fifth in services.

Echoing the apprehension around Trump’s tariff ideas, the German car lobby VDA said “the conclusion of a modernization of the agreement is also an important political signal —especially in times of increasing protectionism.” Cars and spare parts are one of the largest export categories from Europe to Mexico. In 2022, Germany alone sold €2.5 billion worth of these products to Mexican importers.

EU car exporters will be at an advantage over their Mexican counterparts in this deal, because they will qualify for certain lower tariffs in Mexico under less strict rules than the other way around.

News.Az