With Canada Trade On The Rocks, Lutnick Heads To Mexico

Commerce Secretary Howard Lutnick is traveling to Mexico for trade talks with President Claudia Sheinbaum and other top Mexican officials, as the tariff stalemate with the United States’ other North American neighbor deepens.

Lutnick is expected to meet with Sheinbaum and Mexican Economy Secretary Marcelo Ebrard Wednesday to discuss U.S. tariffs on Mexican autos and metals among other trade matters, according to four people familiar with the matter who were granted anonymity to discuss plans that have not been publicly announced.

Mexico City has remained on the sidelines as the Washington and Ottawa, the two other parties to the 2020 free trade deal known as the U.S.-Mexico-Canada-Agreement, continue to slap an escalating series of tariffs on one another. But Mexico is directly affected by its neighbors’ trade war — as well as any potential resolution, which is likely to shape the future of the USMCA and a six-year review of the trade pact that is currently underway.

That review is being led by U.S. Trade Representative Jamieson Greer. But Lutnick has sought to maintain the Commerce Department’s jurisdiction over U.S. auto, steel and aluminum tariffs, which are a central concern for both Mexico and Canada. Lutnick resisted Canada’s push for concessions on the metal and auto duties last month, which led Canadian negotiators to walk away from the talks and triggered a 50 percent U.S. tariff. Canada imposed counter-tariffs that went into effect on Tuesday.

Spokespeople for the White House and the Commerce Department did not immediately respond to a request for comment.

While talks with Canada have floundered, the negotiations with Mexico on the trade pact’s six-year review have been quietly progressing. One of the people familiar with the discussions suggested that the two sides could secure an interim agreement within weeks, adding that such an agreement could also address U.S. tariffs on metals and autos, hiked last year over national security concerns.

“There's a lot of substantial progress on a lot of the things that the U.S. wants,” the person said.

In late August, for example, Sheinbaum sent a proposal to the Mexican legislature to stand up a foreign investment screening mechanism, which U.S. officials have been calling for to prevent foreign adversaries from making sensitive investments in industries on the U.S. doorstep.

Ebrard met with Lutnick earlier this month on the sidelines of the G20 Innovation Ministerial in Chapel Hill, North Carolina, for talks covering trade and regional technological innovation, the economic official confirmed.

The two sides are expected to hold a fourth bilateral negotiating round on the USMCA review in Washington, D.C., later this month, but no date for the talks has been announced.