Mexico and EU sign stalled trade deal, aiming to reduce dependence on the US

(Patria) - Mexico and the European Union signed a long-delayed free trade agreement on Friday in an effort to reduce dependence on the United States and partially isolate themselves from US President Donald Trump's tariffs, Reuters reported.

The agreement, which they reached in 2025 but postponed signing, expands the 2000 trade agreement between Mexico and the EU, which only covered industrial goods.

The new pact adds services, public procurement, digital trade, investment, and agricultural products.

Mexican President Claudia Sheinbaum, European Commission President Ursula von der Leyen, and European Council President Antonio Costa signed the agreement in Mexico City at the first summit in more than a decade.

"This agreement is a real geopolitical statement," Costa said shortly after signing the agreement. "With a modernized global agreement, we are better prepared to face the challenges of our time."

"This agreement opens up huge opportunities for both regions, enabling expanded trade," said Sheinbaum, highlighting the pharmaceutical industry, agriculture, technological development, and electric mobility.

Both sides aim to diversify their exports away from the United States.

The EU was hit by comprehensive new tariffs under Trump's tariffs for "Liberation Day" in April 2025 and prepared countermeasures, although they were paused as both sides sought talks. While tensions have somewhat eased with a tariff truce and a July agreement, US tariffs on EU exports remain elevated.

Mexico has also been affected by US tariffs on automotive industry exports, steel, and aluminum, and trade relations between the two countries have been volatile during Trump's second term.

The Mexican Ministry of Economy estimates that the new agreement could increase Mexican exports to the European Union from about $24 billion annually to $36 billion by 2030. The EU exports goods worth about $65 billion annually to Mexico.

Trade between Mexico and the European Union has increased by 75% in the last ten years, dominated by transport equipment, machinery, chemicals, fuels, and mining products.

The new agreement means duty-free access for almost all goods, including agricultural products such as chicken and asparagus from Mexico and milk powder, cheese, and pork from the EU, with some quotas.

Although the updated trade agreement is ready, it took more than a year to sign. The EU prioritized a free trade agreement with the South American bloc Mercosur and has 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 trade agreement between the US, Mexico, and Canada. More than 80% of Mexico's exports currently go to the US.

In the European Union, the trade agreement will be voted on by the European Parliament, which is likely to approve it within a few months.