In the first two weeks of his second term, President Donald Trump issued a flurry of executive orders that put North America on the brink of a trade war. A phone call with Mexican President Claudia Sheinbaum temporarily halted a proposed 25% tariff on Mexican goods, but Mexico must prepare for challenging times ahead.
Mexico’s Strong Bargaining Position
Sheinbaum’s successful negotiation with Trump demonstrates Mexico’s strong bargaining position and its ability to resist Trump’s demands fully. Trump has signaled significant changes in policies on trade, migration, and drug trafficking, affecting the US-Mexico relationship and North America’s status as the world’s second-largest trade bloc.
Complex Trade Relationship
Under Trump, the US-Mexico trade relationship now has two layers: the threat of tariffs used as leverage for concessions in migration and drug trafficking, and the traditional trade relationship culminating in the upcoming renegotiation of the United States-Mexico-Canada Agreement (USMCA).
Effective Communication
Sheinbaum’s call with Trump shows that Mexico has found a productive way to communicate with the US administration. This cooperation could help both countries achieve shared goals on migration and drugs, avoiding future tariffs. Additionally, addressing arms flowing into Mexico from the US is crucial for Mexico.
Reassessing the Tariff Threat
To avoid future tariffs, Mexico must assess the threat and ensure effective collaboration with the US. This includes new levels of intelligence sharing and a clear stance against drug cartels, which Trump has designated as foreign terrorist organizations (FTOs).
Progress in Combating Drug Trafficking and Migration
Mexico has made significant progress in combating illegal migration and drug-related issues. Strengthening its southern border and increasing migrant interceptions have led to a 60% drop in migrant encounters at the US-Mexico border between December 2023 and December 2024. Sheinbaum’s government has launched the “México te abraza” repatriation strategy to support deported Mexicans and agreed to accept deportees from other countries.
Sheinbaum’s Security Policies
Sheinbaum has shifted away from her predecessor AMLO’s “hugs not bullets” strategy. Homicides have decreased by 16% from September to December 2024, and increased intelligence coordination has resulted in over 10,000 new detentions and more than 90 tonnes of drugs seized.
Bilateral Trust and Transparency
To address drug cartels effectively, Mexico and the US must establish a relationship based on trust and transparency, with increased intelligence sharing and cartel extraditions. The US must also address its domestic drug demand and the epidemic of gun trafficking to Mexico, with over 70% of guns at Mexican crime scenes traced back to the US.
Mexico’s strategic importance to the US economy cannot be overstated. Despite the challenges ahead, Mexico’s strong bargaining position and efforts to combat drug trafficking and illegal migration will be crucial in maintaining a stable and productive relationship with the US.
Source: Chatham House
