Mexico in strong position to renegotiate USMCA, tariff panic premature – Braskem Idesa exec

SAO PAULO (ICIS)–A potential US import tariff of 10% on Mexican goods is looming large on the country’s export and petrochemicals-intensive manufacturing sectors, but it is early days and the worries are premature, according to the head of institutional relations at polyethylene (PE) producer Braskem Idesa.

Sergio Plata, who is also the president of the Association of Industrialists of Veracruz State (Aievac), home to a large petrochemicals hub, added that Mexico is not only a supplier to the US – the country exports around 80% of what it produces to the US – but it is also a key consumer of US goods.

Plata said this will be a crucial factor that will allow Mexico to renegotiate the United States-Mexico-Canada Agreement (USMCA) from a position of strength when it is up for renewal in 2026.

Although the focus in the past week has been on how Mexico could be hit by tariffs when Trump becomes US president – with some analysts forecasting a negative impact of 0.5-1% of GDP in a full year – Plata made a call to stay calm and carry on – for now.

He argues that the tariffs will not be imposed overnight, saying that such topics are likely to be addressed within the context of the USMCA renegotiation, in more than a year’s time.

Moreover said Plata, in Donald Trump’s first term, he ended up dropping some campaign promises under pressure from different lobby groups, not least businesses which could see input costs spike if new tariffs are implemented.

“These [proposals would be] important challenges for Mexico, and I believe 2026’s USMCA renegotiation will be key for the entire North America so we can continue being and become more competitive,” said Plata.

“Regarding tariffs, at this time we can only wait until the parties sit at the negotiating table, so we can have a dialogue with the US government. What I can certainly say is that NAFTA first and now USCMA have greatly served the three countries, a success which we should not measure only based on the trade balance.”

The US trade balance – or deficit – is a key theme running through Trump’s tariff proposals as he wants to re-invigorate the US manufacturing sector, and produce as much as possible domestically. Indeed, the US consistently runs a large trade deficit with China and Mexico, its two main sources of manufactured goods.

In 2022, Mexico exported goods worth $452 billion to the US, according to data from Comtrade via Trading Economics; the US, in turn, exported goods worth $323 billion to Mexico – a difference of nearly $130 billion.

According to Plata, nothing is written about tariffs, at least within the USMCA, and issued a reminder of what happened when the USCMA was first signed, as a successor to NAFTA after Trump’s first administration demanded changes to a free trade deal it deemed disadvantageous.

Despite the furore, tariffs were kept off the table because the US government eventually saw that tariffs within the USCMA would also negatively affect its own companies.

Whether an emboldened Trump, with a clear popular mandate to implement his promises, will also give in this time remains to be seen.

“We would be going too far ahead of ourselves if we already think a 10% tariff on Mexico will be imposed. We Mexicans must now make it clear to the US that the commercial relationship should not only be measured on the trade deficit, but rather on what Mexico gives to the US as well, and not just the other way around,” said Plata.

“Because Mexico also generates North America-wide economic development. I can speak for what I know best and only in this region, only in the south of the state of Veracruz, we import from the US around 1.3 million tonnes/year of chemicals and petrochemicals, resulting in billions of imports. The figures are important both ways and this will be brought to a potential negotiating table.”

SHEINBAUM AND TRUMP
A fascinating aspect for the years to come will be the personal relationship between the US and Mexican presidents, if any – Trump and Claudia Sheinbaum could not be more different ideologically.

Sheinbaum’s backing of a supermajority in parliament of two-thirds may cause further friction going forward on top of that caused by the approval on 11 September of a controversial judicial reform which is opposed from many fronts.

The US ambassador to Mexico has publicly sounded the alarm about Morena’s judicial reform (see statement here), as did the US chemicals trade group the American Chemistry Council (ACC) and nine other industrial peers who wrote to the US cabinet to “convey their concern” about the proposals.

“Regarding the judicial reform, we have the basis for the state of law in the Constitution, and that is a framework that provides certainty,” said Plata.

“The devil is in the details, and in coming weeks and months we’ll evidently have to pay attention in the secondary stages of the reform’s debate in parliament, which must be open to listen to the specialists,” said Plata.

The Braskem Idesa executive preferred to bring the conversation back to Mexico’s 2026 challenge. One-party Morena reforms allowing, Plata said the current Mexican cabinet would head into a potential USMCA renegotiation in a strong position.

“We are in a good position to negotiate, now more than ever, and this is because as a country we are in much better place than we were at in 1994, when Mexico signed NAFTA. At the time, the US and Mexico did not have the solid trade relationship they have today,” he said.

“On the Mexican side, many things have changed for the better. Since the 1990s, we have signed more than 50 free trade agreements (FTAs) and the state has now excellent trade negotiators. As an industry and as a country, we are well prepared to sit at the table and reach a good outcome in 2026.”

– ICIS will publish on Wednesday (13 November) the second part of this interview, focusing on Sheinbaum’s domestic policies towards chemicals. As President-Elect, she approached the industry and travelled to its Veracruz hub, gaining praise from Plata as well as other industrial groups. As President, is she keeping up that focus on fostering chemicals? Plata said she is

– Read this Insight article for wider analysis on how new trade policies in the US could hit the Mexican economy

Interview article by Jonathan Lopez