Spring is definitely in the air. Rory’s got his green jacket, and the jacarandas have been in bloom here in Mexico City for weeks now. Rather than try and provide a tic-toc on the shifting dynamics in the overall US-Mexico relationship, I wanted to get a note out to you with some thoughts on the current state of play on tariffs and a proposal for addressing US food security.
For a look at the reciprocal tariff order and its potential impact on North America, there is no one more knowledgeable than Francisco de Rosenzweig, our executive partner here at White & Case Mexico. Francisco is amongst Mexico’s most respected attorneys. He formerly served as the country’s lead negotiator on trade and represented private sector interests in the renegotiation of NAFTA, and he continues to do so under the USMCA.
I recently posed three questions to Francisco, asking him for his “quick take” on the United States’ and Mexico’s most important trading relationship.
Francisco, this has been a big moment for trade, the largest shift in trade dynamics in decades. What do you make of president Trump’s recent tariff announcements?
What we’re seeing is a major shift in U.S. trade policy, one that goes beyond any single country or product—signaling a widespread, more assertive approach to the use of tariffs to achieve both economic and non-economic objectives. Trump’s order included a baseline 10% tariff across the board in addition to a scale of reciprocal tariffs for countries with which the U.S. has large trade deficits. We’re no longer talking about targeted measures. This is a structural pivot that will have lasting implications for how the U.S. globally engages.
What does this mean to our clients and those operating in Mexico?
For our clients operating in or sourcing from Mexico things are not yet entirely clear. Mexico and Canada are currently excluded from the new tariffs as they are already covered by a separate IEEPA tariff. However, if that current tariff is lifted, a 12% tax would automatically apply to all non-USMCA goods. Meanwhile, energy and energy resources in Mexico would be excluded from this tariff. Overall, the environment will be one of lingering uncertainty.
So, given the dramatic pace of change, what do you see in the short to intermediate term?
It is clear to me that the Trump administration is seeking to dramatically reconfigure established trade relationships. We’ve already seen some trading partners respond in kind to the tariff announcements, while others have gone to the negotiating table. In the coming weeks and months, we can expect to see a series of tariff amendments both on a country basis and on specific goods. In short, the world has changed and the idea of moving towards a system of free trade is being cast aside. While the full extent of these tariff impacts is still unknown, what we’ve been doing here at White & Case is assessing client exposure and table-topping mitigation and response strategies.
Okay Francisco, I said three but can’t help but ask for your quick take on China as well.
This appears to me to be where the geopolitical stakes are highest, with both sides announcing tariffs over 100% just last week. One could argue that this was the first step towards a decoupling of the world’s two largest economies. However, the electronics tariff exception for China announced by the White House suggests a small step back from the brink in this increasingly tense economic war. I have no doubt that in the weeks, months, and years to come we’ll be talking about the economic risk and uncertainty prompted by China’s efforts to unseat the United States as the world’s economic leader.
Thank you, Francisco.
If you’d like to see the executive order and accompanying CBP guidance, you can find them here. For analysis from White & Case, we have published a client alert on the general tariff EO.
While all eyes are seemingly on tariffs right now, they are not the only threat to the American economy. With an estimated 40% of America’s farm workers currently undocumented, the Trump administration’s efforts to ramp up immigration enforcement and deportations could also have lasting impacts on America’s economy and its food security.
Dr. Caitlyn Yates and I recently wrote a piece which ran in the Dallas Morning News and a number of other U.S. newspapers. In it, we point out that the single largest issue facing American farmers are labor shortages. While we focused on agriculture, the same could also be said of the energy, construction, and hospitality sectors. To remedy these labor challenges, we suggest the expansion of the H-2A temporary labor visa. To avoid paywalls, you can find our piece re-published here.
Lastly, we are now closing in on president Trump’s first 100 days in office. From China to Russia to domestic issues, the direction and pace of change has been profound. In Ukraine, despite ongoing peace talks, Russia continues to be on the attack. At the same time, president Trump has repeatedly accused Ukrainian president Zelensky of ‘starting wars’. Meanwhile, fissures seem to be forming in the Trump administration as some aides push for a more aggressive approach with Moscow, and concerns remain about the United States’ commitment to NATO.
President Trump has also been busy over the last few months on the domestic front issuing dozens of executive orders, announcing spending freezes, creating a new agency, and even raising concerns about a constitutional crisis. The combination of international economic protectionism, coupled with a flurry of domestic policy announcements, has resulted in plummeting consumer confidence. As these policy initiatives by the Trump administration continue to mount, Ian Bremmer recently asked the question: “can the US win by undoing globalization?”
The challenges facing North America and the world in the coming months are complex, and here at White & Case Mexico we continue to track these issues closely for our friends and clients. I wish you the very best this coming weekend, and I’ll be back at you shortly in my regular newsletter format.
In the meantime, I look forward to staying in touch via Facebook, X, or LinkedIn.
Sincerely,