US tariffs on Mexican imports paused for 30 days; both presidents seek agreement
Mexican President Claudia Sheinbaum announced on Monday February 3, that the US has paused its 25% tariff on Mexican imports for one month, following an agreement with US President Donald Trump to work together on trade issues.
“We requested a conversation with President Trump on Friday [January 31], and he called today at 8 AM,” Sheinbaum said as she opened the government press conference on Monday. “We discussed our common interests and decided to work together on border, trade and migration issues, based on protection and respect for human rights.”
During the one-month suspension, Mexico’s Minister of Economy, Marcelo Ebrard, will meet with Howard Lutnick, the US Secretary of Commerce, to develop mechanisms that preserve the competitiveness of both countries.
“Tariffs are the best way to compete with China and the rest of the world, we agree on that. For security reasons, we suggested putting both teams to work together, to lead without losing sovereignty, with respect for each territory,” Sheinbaum said. “[Trump] agreed. In the end, we had a respectful relationship as equals. There can be no relationship where one is above the other; we are both presidents.”
Later, Trump also spoke about the agreement, confirming a friendly conversation with Sheinbaum and that both will join efforts to meet the needs of both countries.
“We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico,” Trump shared on his Truth Social account on Monday. “I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries.”
According to Sheinbaum, the proposal involves a partnership to better monitor and control what crosses the border, both in terms of commercial imports and exports and illegal trafficking.
In a statement published on Saturday February 1, Trump’s administration had announced the imposition of a 25% tariff on Mexico until the country “cooperates with the United States in the fight against drugs,” arguing that drug trafficking groups pose a risk to national security and public health by smuggling illicit substances.
During the call between the two presidents, Trump expressed the US’ interest in reducing drug trafficking from Mexico, particularly fentanyl. In response, Mexico committed to reinforcing the country’s northern border with 10,000 members of the National Guard.
Likewise, Mexico’s president explained that the high-powered weapons entering Mexico illegally from the US are causing problems, compromising the country’s fight for security. As a result, the US committed to monitoring arms trafficking.
“For the first time, the US government said, ‘we will work together,’ both to prevent their weapons from entering Mexico and to stop drugs from crossing into the US,” Sheinbaum said. “This is rare, and improves our trade relationship. From now on, those tariffs are paused.”
Sheinbaum also highlighted the mutual support she received from both Mexico and the US in pushing back against tariff measures that harm both economies.
“The tariff announcement sparked a wave of public response. It was heartening to see widespread support for Mexico from businesses, communities and organizations,” Sheinbaum said. “In the US, many also opposed it, arguing the tariffs would be harmful. Their pushback led to today’s conversation.”
During last week’s press conference, Sheinbaum said Mexico would be prepared to act in response to a scenario of increased tariffs by the US.
“We have Plan A, Plan B and Plan C for whatever the US government decides, but it is very important for the people of Mexico to know that we will always defend the dignity of our people […], respect for our sovereignty and dialogue as equals […], without subordination,” she said on Friday January 31.
The Mexican government had already anticipated the possibility of retaliatory tariffs if the US government imposed its own measures.
“We are prepared for any scenario, we have a plan, but we are obviously doing everything in our power to avoid reaching a scenario [of imposing new tariffs],” said the president.
Also during the press conference on January 31, Marcelo Ebrard reiterated that the steelmakers Stellantis and General Motors, which have capital in the US, would be the main companies affected by the tariff increases between the US and Mexico, since they are the main buyers of material from Mexico for automotive production.
According to Ebrard, Mexico is the main supplier of automobiles and auto parts to the US, as well as a significant exporter of computers, televisions and refrigerators. All of the sectors mentioned depend on raw materials such as steel and base metals in their chains.
In the event of a 25% tariff on Mexican products, the secretary estimated that the US families would need to spend an additional $10 billion annually to purchase automobiles and auto parts from Mexico, $7 billion to purchase computers and more than $800 million to purchase refrigerators.
“US consumers would be affected by higher prices, reduced availability of products and disruptions in the supply chain,” he said.
“This impact will be greatest in border states and cities with high consumption of Mexican products such as California, Texas, Florida and Arizona,” he added.
However, Ebrard reiterated the need to “wait” and “not to speculate” for the effective decision to be made by the US government.
Some steel import and export inquiries have been on hold since the first weeks of the year due to uncertainty about tariffs and the exchange rate, Mexican traders told Fastmarkets.
“Some players are acting cautiously to see what will happen in the next two or three months,” a trader source said.
During the week, most sources reported that the flat steel import market in the US was also quiet, which were trying to track the potential impact of President Trump’s tariffs implementation.
In 2024, Mexico exported 3.19 million tonnes of steel products to the US, representing 12.19% of the total volume imported to the US that year, according to data from the US International Trade Administration’s steel import monitoring system.
The volume of Mexican steel imported into the US in 2024 was down by 16.05% from 3.80 million tonnes in 2023, according to the data.
In a press release on Tuesday January 28, Mexican steel association Canacero reinforced that the US influx of imports in Mexico is more representative in volumes that the opposite. Canacero once again denied US allegations that Mexico serves as a back door for China’s triangulation of Asian steel.
Canacero’s statement affirms that exports from the US, actually, represent a threat to the Mexican steel industry, not the opposite. The association reinforced its support to “proportional and immediate retaliatory measures” to US exports, if needed.
“The Mexican steel industry faces a critical challenge due to a significant surge in the exports of finished steel products from the US, which do not comply with the joint statement agreed by both countries,” Canacero said.
US steel market braces for impact
With the expectation of tariff tactic at the beginning of Trump’s term, participants in the North American steel market closely tracked the potential impacts.
The environment of retaliatory tariffs is a “lose-lose situation,” Warren Maruyama, former general counsel of the Office of the US Trade Representative (USTR) under President George W Bush, previously told Fastmarkets.
Although this might lead to the US producing more material — such as steel — domestically, the US might lose some of its “most globally competitive” industries, Maruyama added.
“Economic policy is a concern and has slowed things down, until there is some type of clear path,” a distributor said.
A trader told Fastmarkets that, “it’s still very quiet and customers concerned about Trumps future tariffs and trade policies.”
“[It] seems like everyone is waiting to see what Trump does on tariffs with Canada and Mexico,” a buyer said, adding that they believe tariffs will help prop steel prices and encourage buyers off the sidelines.
Alesha Alkaff in Boulder, Colorado, contributed to this article.
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