Mexico, EU Sign Stalled Trade Deal as they Aim to Diversify from US

Mexico and the European Union signed a long-stalled free trade agreement on Friday as they seek to decrease dependence on the US and partially insulate themselves from US President Donald Trump’s tariffs. The accord, which they reached broad agreement on in 2025 but have delayed signing, expands a Mexico-EU trade accord from 2000, which covered only industrial goods. The new pact adds services, government procurement, digital trade, investment and farm produce. Mexico’s President Claudia Sheinbaum, European Commission President Ursula von der Leyen and European Council President Antonio Costa signed the deal in Mexico City in their first summit in ⁠over a decade. “This ⁠agreement is a true geopolitical statement,” Costa said on Friday, shortly after signing the agreement. “With the modernized global agreement, we are better prepared to face the challenges of our time.” “This agreement opens up enormous opportunities for both regions, allowing for expanded trade,” Sheinbaum said, highlighting the pharmaceutical industry, agriculture, technological development and electric mobility. Both sides want to diversify their exports away from the US. The EU was hit with sweeping new duties in Trump’s “Liberation Day” tariffs in April 2025 and ⁠prepared countermeasures, though these were paused as both sides sought talks. While tensions eased somewhat with a tariff truce and a July deal, US tariffs on EU exports remain elevated. Mexico has also been hit with stiff US tariffs on automotive, steel and aluminum exports, and trade relations between the two countries have been volatile throughout Trump’s second term. According to Reuters, Mexico’s economy ministry estimates the new agreement could increase Mexican exports to the EU from around $24 billion a year to $36 billion by 2030. The EU exports around $65 billion in goods annually to Mexico. Trade between Mexico and the EU has increased 75% in a decade, dominated by transport equipment, machinery, chemicals, fuels and mining products. The new deal provides duty-free access for almost all goods including farm products such ⁠as Mexican chicken and ⁠asparagus and European milk powder, cheese and pork, albeit with some quotas. While the updated trade deal has been ready, it has taken over a year to sign. The EU prioritized a free-trade agreement with the South American bloc Mercosur and it concluded free-trade negotiations with Indonesia, India and Australia in the past eight months. Mexico, meanwhile, has been cautious about taking steps that could anger the Trump administration during sensitive negotiations to extend the US-Mexico-Canada trade pact. More than 80% of Mexico’s exports currently go to the US. In the EU, the trade deal will be voted on by the European Parliament, which is likely to approve it within a few months. “The goal here is very simple: we want to create more jobs and more value on both sides of the Atlantic,” von der Leyen said. “This agreement gives us great wings to fly very high.”