As of May 9, 2025, the trade relationship between Mexico and the United States is complex and subject to recent changes. Here's a breakdown of the current situation:   USMCA Status: The United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA, remains in force. It generally maintains zero tariffs on most goods traded between the three countries.   The first joint review of the USMCA is scheduled for July 1, 2026, to determine whether the agreement will be extended.   Recent Tariff Developments Involving the US and Mexico: New US Tariffs Imposed: Effective March 4, 2025, the United States imposed a 25% tariff on most imports from Mexico, citing national security concerns related to illegal immigration and fentanyl trafficking. Energy products from Mexico are also subject to this 25% tariff.   USMCA Exemptions Initially Delayed, Now Indefinite: Tariffs on goods qualifying under the USMCA rules of origin were initially delayed but, as of March 7, 2025, are exempt from these additional tariffs. This covers a significant portion of trade, including automobiles and parts, and produce.   Mexico's Response: Initially, Mexico indicated it would delay its retaliatory measures. However, President Sheinbaum announced that if the US tariffs remained, Mexico would implement countermeasures, including retaliatory tariffs. The details of "Plan B," Mexico's potential response, have not been fully disclosed.   Reciprocal Tariffs by the US: President Trump announced that reciprocal tariffs would go into effect on April 2, 2025. These tariffs aim to counter what the US perceives as non-reciprocal trade practices. However, as of the latest updates, goods from Canada and Mexico that comply with USMCA are not subject to these reciprocal tariffs. Non-USMCA compliant goods from Mexico face a baseline tariff. Steel and Aluminum Tariffs: As of March 12, 2025, a 25% tariff is also in effect on global steel and aluminum imports, which would include those from Mexico not qualifying under USMCA.   Temporary Pause on Some Tariffs: As of April 9, 2025, the US has temporarily suspended most new import duties for 90 days, with the pause set to expire on July 8, 2025. However, the 25% tariffs on some Canadian and Mexican goods (those not USMCA compliant), automobiles, and imported steel and aluminum remain in place.   Key Points to Consider: Ongoing Trade War: The imposition of tariffs by the US and the potential for Mexican retaliation indicate an ongoing trade conflict despite the existence of the USMCA. USMCA as a Partial Shield: The USMCA provides a significant level of tariff-free trade for goods meeting its rules of origin, offering some protection against the broader tariffs.   Monitoring Government Policies: Given the dynamic nature of the situation, it is crucial to closely monitor policy changes and announcements from both the US and Mexican governments that could impact trade. Potential for Further Changes: The trade relationship remains fluid, and further tariffs or changes in policy are possible. The reciprocal tariffs announced by the US could evolve, and Mexico's response may materialize. Other Trade Agreements: Mexico and the European Union concluded negotiations for a modernized Global Agreement on January 17, 2025. This agreement aims to boost trade and investment opportunities, securing sustainable access to raw materials and offering benefits for EU and Mexican businesses, including in agriculture, services, and public procurement.   In summary, while the USMCA is in place, a trade conflict initiated by new US tariffs on Mexican imports is ongoing. Goods qualifying under USMCA are currently exempt from these tariffs, but the situation remains subject to change, with potential for Mexican retaliation and further adjustments in US trade policy. Mexico is also actively pursuing trade diversification through agreements like the updated deal with the EU.