Front Burner - How is Mexico handling the Trump tariffs?

Episode Date: September 11, 2026

As the trade war between Canada and the U.S. continued to deepen this week, U.S. commerce secretary Howard Lutnick and Mexican President Claudia Sheinbaum spoke ahead of a fourth round of negotiations between the two countries later this month. Today, we look at the view from Mexico, the other partner in the CUSMA trio. What are the big table stakes in Mexico’s negotiations with the US? What kind of tightrope is Sheinbaum walking? And how could whatever happens between Mexico and the U.S. affect Canada? Alex González Ormerod is a Mexico City-based analyst and the founder and director of The Mexico Political Economist where he covers Mexican business news and policy for a global audience. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts 

Hi there, I'm Jamie Poisson, and my podcast, Front Burner, looks at the major news stories affecting Canada and the world. There is no shortage of important international news right now, but that is not the only type of news that matters. So do local stories about your municipal elections across the GTA, your safety on the TTC, your affordable housing plans, which is why they deserve their very own podcast. This is Toronto is a weekly deep dive into the lives and issues that matter to Torontonians, released every one. Wednesday and Friday and available wherever you get your podcasts. This is a CBC podcast. Hey everybody, I'm Jamie Poisson. As the trade war between Canada and the U.S. continue to deepen this week.

U.S. Commerce Secretary Howard Letnik and Mexican President Claudia Scheinbaum met to talk progress ahead of a fourth round of negotiations between the two countries later this month. Today, we're going to bring you the view from Mexico. the other partner in the Kuzma Trio. What are the big table stakes in Mexico's negotiations with the U.S.? What kind of tight rope is Shinebaum walking? And how could whatever happens between Mexico and the U.S. affect Canada? Alex Gonzalez-Ormurad is an analyst and the founder and director of the Mexico

political economist where he covers all of this for a global audience. He joins me now from Mexico City. Alex, it's great to have you. Thanks for being here. Thank you for having me. It's always exciting times talking about this trade treaty. Yes. So, of course, this week, things have gotten worse between Canada and the U.S. Canada's counter-tariffs went into effect. The U.S. responded by banning some products, expanding some tariffs, restricting Canadian products from some government contracts, is gone from bad to worse, essentially. How have people in Mexico been looking at and

discussing how things have gone with Canada, maybe since the talks fell apart the other week. Is it getting a lot of headlines? Are people talking about it? Sadly, it isn't. I think it's an expression of what this treaty has become, which is a treaty through which Mexico and Canada failed to integrate as much as they should have. We ended up integrating through the United States and not with each other. And we're paying for that now. And so the result was the headlines were pretty muted. Obviously, you know, the financial headlines are into it, but the conversation was mostly centered on, could the Americans do this to us? There's a tactic, I think, that people have started to glean from the Americans, which is they'll

negotiate quite hard and then try to slip in a bunch of stuff that is frankly unacceptable right at the end, in the hopes that you'll just wave it through. So up until now, just take me through what Mexico has been trying to achieve in their bilateral negotiating. with the US? So I always say that Mexico has done the sort of anti-Canada in the sense that we did it the other way around. There was a sort of big pushback against the Trump administration's encroachments on Mexican sovereignty, on trade. But ever since now that negotiations have really started, Mexico has taken a sort of more conciliatory approach. They call it the cool heads approach, which is don't upset the massive neighbor that we've got and sort of try to work things through. Ultimately,

of course, I think there's an issue here, which is the fact that Canada maybe probably couldn't approach it this way, because the Mexican and the Canadian economies in their relationship of the US are actually almost opposites. Mexico is very complementary to the US at this point. The US needs Mexico, more than it likes to accept. Me think he doff protest too much when Donald Trump says something like, oh, we only get tomatoes and hot tamales. Whereas Canada feels like it's increasingly competing with the US. And so the approach, necessarily. necessarily is different because of the structural nature of the relationships. And yet, I think also this sort of personal approach, especially with someone like President Trump, really does matter.

And just take me through what it is that Shinebaum has been trying to do here, right? We're trying to get out of these talks because there are tariffs on Mexico. What kind of bilateral deal is you trying to strike? They're trying to get through the negotiations, kind of as soon as they want. There's, I think, a misapprehension in Mexico, which we've inherited from the previous administration, President Scheinbaum's mentor and predecessor and there is Manuel Lopez-Mévor, clearly thought of the USMCA is something you sort of had to get over and done with to please the business community. And then you can just get on with actually governing the country and growing the economy in the way he wanted to and in the way that Claudia Scheinbaum wants to, which is domestic growth, the growth of domestic market as the main driver of growth. The great issue here is you can't do that in the way that they want to with the USMCA as it stands

and definitely not in the ways that the United States wants to push towards, which is to give United States companies increasing access and competitive advantage within Mexico. This is what I think Mark Carney found to be very unacceptable, which is not only the US encroaching on the Canadian market, they want to have a say in their other relationships across the world in order to benefit American companies. I think Mexico hasn't pushed back too openly against this, and yet it is a latent fear throughout this negotiation. Let's go through some of those potential fears more concretely,

because you mentioned before, there's also concern that the U.S. might throw in a bunch of things, like as they're kind of nearing the finish line. Maybe worth mentioning here that Howard Lutnik is the one meeting with Shepard. bomb this week. I know he was supposed to go to Mexico City, but he couldn't because of the weather, so they did this virtual meeting. I mean, there's been a lot of reporting that it was actually Lutnik who came in at the last minute in the negotiations with Canada and put forward a lot of those demands that Carney found unacceptable. So what is it exactly that the Mexicans are worried about here or where are the potential real pain points for them? So this is all unconfirmed so far

reporting that we've done at the Mexico political economist talking to negotiate, talking to Mexican officials. What we've found is specific pain points that we worry the Mexican government isn't focused enough on or doesn't have enough experience on. These are namely digital payments and AI. Now, these are two different issues that I think we understand really important, but how they're important gets really technical. But very briefly, the payments issue, we've actually seen play out before. Brazil has this wonderful payment system called PICS, and Donald Trump said, we want you to get rid of it because it's a government monopoly. It's affecting our companies. And President Lula of Brazil said, no, they sort of stood up to them.

Mexico's got a sort of inferior but similar payment system, a sort of government highway that connects private banks. And we've heard that the Mexican negotiators have already been told that the Americans find this unacceptable, that they think this is also a monopoly, basically anything that isn't very pro-American is a monopoly or is a trade barrier. And so what they've been asked to is to deal with it. How we deal with it, that's something we don't know about. But basically, they want them to get rid of what we call SPAY here, which is that sort of digital payments highway, the public option.

Apparently they were able to save the Americans off, but it's still an ongoing conversation. Another one we've heard from the other side of the equation, which is from the companies that we've spoken to. And this is something we're calling the AI annex. There's a lot of lobbying from the private sector, the Microsofts, the Amazon's, the Googles of the world, coming in to say, we want Mexico to be sort of shored up when it comes to AI so that they're forced not only to use American technology, but really are limited in how much they can develop their own, which is anathema, again, to what Clyde Schaenbaum's specific and stated intentions are when it comes to AI. So that's where you see where the treaty and the Scheinbaum policy sort of come into the conflict. Ultimately, something that we've seen play out over and over again is that USMCA wording for the trade deals made with Canada and Mexico tend to be the draft that the Americans impose onto their other negotiations with other countries across the world from Africa, Asia, and other Latin American countries. And so it's really important to, even if you don't care about Mexico, Canada, to really pay attention to the wording of these negotiations and how they turn out, because that's what's coming to your country next. And just when we're talking about the leverage that Mexico has in these talks as well,

just take me through some of what Mexico has to offer here or some levers that it might be able to pull to put pressure on the U.S. So I think this is so important to understand, not only because it affects the way that America negotiates with Mexico, but also because it has downstream effects that are really, really important to everyday Americans who might think they're completely separate from Mexico and trade with Mexico. Very clearly put, the entirety of the American economy has been growing on the basis of the AI boom for over the past two years. Everything else is stalled, mostly because of this USMCA-Kuzma debate going on, the instability that it's created. But, you know,

AI is really grown. The issue is the United States is almost completely reliant on Mexico for that growth. Why is that? Because Mexico's where all these computers, these servers, these AI proximate GPUs, as they call them, get assembled. And you say, well, just bring them over to America. They've actually tried that. They actually tried to start a few of these assembly plants in Florida and stuff like that. And they realized that Mexico isn't only cheaper. They're actually better. They've got better standards. Mexico, it turns out, is very good at assembling. We've done it with cars. We do it with electronics. Of course, we can do it with computers. And so what you've ended up getting is more or less a two-way division in terms of where the

United States sources its servers for AI. And that's mostly from Taiwan. This is where all these sort of like very fancy chips come from. And then Mexico, where a lot of the chips and parts are funneled from Taiwan and assembled in Mexico and then sent on into the United States. Now, of course, these companies have trillions of dollars, but they're spending hundreds of billions of dollars, too. They're not making a dollar of profit.

And so they can't afford to lose any more money, which is why Mexico is an essential part of that particular supply chain. And as we all know, Donald Trump seems to take the AI race very, very seriously. And so ultimately, this is where Mexico has a bit of leverage to a certain extent. And we've reproduced that across the American industry. And you can start to see that Mexico pops up everywhere. So even if you said, well, we just buy American beer. Well, it turns out you probably don't want to just buy American. American beer because a lot of those brands are made in Mexico with American agricultural products.

And so that's the whole, that turns out that's Cosmo working at its best. And it's what makes dismantling it's so detrimental to Americans, even if the whole plan is to bring everything back to the US, which you can't because it's too expensive. burner looks at the major news stories affecting Canada and the world. There is no shortage of important international news right now, but that is not the only type of news that matters. So do local stories about your municipal elections across the GTA, your safety on the TTC, your affordable housing plans, which is why they deserve their very own podcast. This is Toronto is a weekly deep dive into the lives and issues that matter to Torontoians. Released every

Wednesday and Friday and available wherever you get your podcasts. You know, you mentioned earlier in the conversation that the nationalism in Mexico really erupted around the beginning of the Trump presidency and then calm down somewhat. You know, Mark Carney has enormous support here in Canada for his decision to walk away from the deal. I'm just curious what kind of public sentiment, Chinemam, is, is navigated. Does she also have the public behind her in these negotiations if she were to do something similar? So we've got a sort of opposite situation here as well because really there is such a push towards the status quo from the Mexican government that everyone's behind shine bomb in the sense that people who care are really behind her

and people who don't care about the minutiae of this treaty are behind her for different reasons, for domestic reasons. A really crucial thing about the Morena government, this is the party that Shyenbaum belongs to, and Shyenbaum's government specifically, is that the popularity comes very specifically from the redistributive measures that she's taken. And not so much the sort of like handouts and stuff like that, but the regulations and pressure towards the business sector to pay their lowest paid workers more. They've raised the minimum wages. They've stopped a lot of this sort of most pernicious forms of outsourcing from happening. And so what you've had is, Mexicans feeling richer. And funny enough, Mexican spending more and therefore Mexican companies

and American companies and Canadian companies doing very well in Mexico because people are spending more in Mexico. The issue is, of course, if the USMCA, Kuzma, falls apart, that makes it very difficult for Klaude of Scha and Bond because Mexico is struggling when it comes to new investment. The economy has stalled. And so what you're getting right now is a sort of very difficult situation in which very few people are investing in Mexico because they're waiting to see what happens to the USMCA and other things. But if that fell apart, I don't know what would happen to investment. If people would panic, if actually Mexico would be better off. But that sort of weird horizon in the distance threatens to undermine the very economic foundations on which Claudia

Scheinbaum's popularity is built. I want to ask you more about the relationship between the U.S. administration and the Mexican administration right now. I've read there have been some recent tensions over security issues, including Trump's indictment of the governor of Sinaloa. The charges allege that Ruben Rocha Moya assisted the notorious Sinaloa cartel in distributing drugs to the United States in exchange for bribes and political support. Rocha is a member of Mexico's governing political party, Morena, and a political ally of the president. Well, Shyamom has pushed to have him taken out of office and investigated. She's refused to extradite him to the U.S.

And just talk to me a little bit more about how that and the Trump administration, this kind of redirection from going after drug bosses to politicians have been adding to these tensions between Mexico and the U.S. lately and how significant it is. The Morena party that Claudio Scheinbaum belongs to made it monumental mistake. in the past election, the one that got her elected on a landslide, which was, and a few elections before, actually, which was basically they knew they were going to win, but they wanted to win by a lot. They realized that they needed sort of supermajorities to get their reforms through. And it worked out, right? They got those votes. Claudia Seymbaum stepped into Mexico City's main plaza. Cheered as the country's first female president-elect, Sean.

bomb swept into office 30 percentage points ahead of her closest challenger. The issue was, of course, they made a deal with devil. And they decided to opt for less than savory characters in order to get through sort of locally very problematic people, including the governor of Silla Loa, Ruin Rochamoya. And so he's been linked to cartel operations in the state by the United States. But this isn't news to Mexicans. Mexicans have for a long time sort of on the great fine understood that there was something very problematic about this man. And there were other much better options that Morda could

have gone through. But they didn't feel they had the apparatus. By the way, open brackets, apparatus here sometimes means drug cartels in certain states. What's funny is Mexico and the United States actually have a very good security relationship. I always tell people, if you're in any doubt, just listen to Marco Rubia, who isn't known for being gushing or sort of hyperbolic in the sense that he wants to obfuscate the truth. It was interesting to hear him say that Mexico is the country with which they have the best security relationship on Earth. I will say this, in fairness, the Mexicans have done more than they've ever done before to go after these groups, but it is still not nearly enough. They know that we've expressed...

And I believe them, because ultimately Mexico and the US have aligned priorities when it comes to security. They both want to get rid of. of organized crime. How you approach it is different. And so the Americans want to deal with anyone and everyone involved with the cartels. Obviously now, annoyingly from Morena, they've got a bunch of problematic people inside their party. And if you get rid of them, you sort of open up a can of worms about whether or not you feel safe within the party. But it also opens up another can of worms, which is the sovereignist wing of not only the Morena party, but of Mexico as a whole. Mexico has historically been very keen to protect its sovereignty from the United States.

A lot of what we hear from Mark Carney right now, which sounds very new to Canadians, has historically been the narrative coming from Mexico. Sure, cool heads and stuff, but sovereignty is almost every other word that the Mexican government uses when they talk to the United States. And so to actually, basically, what the sort of middle of the way solution that Cloud of Shame on has come up with is say, don't worry Americans, will prosecute these bad guys for you. And it looks like, you know, the gears of justice seem to be very slowly moving along. But they won't extradite him because that sets a terrible precedent. Is your sense that the U.S. administration is, you know, relatively aligned when it comes to their views on Mexico?

You know, I say this in part. You mentioned Rubio. But if you look at it through White House Deputy Chief of Staff Stephen Miller's lens, Mexico's government is captured by the cartels, hasn't done enough to curb drug trafficking and illegal immigration. Those organizations not only export massive death in the form of narcotics to our country, but they also export sophisticated criminal enterprises whose objective is to destabilize our democracy. and to end the rule of law in our country. I know your focus is on Mexico, not the inner workings of the Trump White House, but I'm just curious to get your take on this kind of duality that we hear and then how that could affect kind of negotiations moving forward.

Because, of course, these negotiations are never just about trade. What we've seen is, I think, a matrix of four different quadrants, two different ways of splitting the White House. There's on one side, the division that you've, mentioned, which I think puts people like Rubio on one side and then sort of the hardcore mega nationalist like Stephen Miller on the other. And basically the division there is between sort of the, a lot of the racism, a lot of the nationalism, a lot of the people who feel that they were left behind by globalization. And I wouldn't even necessarily put all those people

in the same camp. And what we've seen is they sort of just want to pack their bags and return to the US and sort of to a different version in which they sort of isolate. Then you got the sort of more globally-minded technocrats who understand they have to work with the rest of the world. And so that's why you've got Marco Rubio being joked about as the Viceroy of Cuba, of Venezuela, which is almost half true at this point when it comes to Venezuela. And so it's interesting to see that Marco Rubio from the State Department is far more interested in terms of security with Mexico. And they cooperate quite closely on that front. A lot of US intelligence, a lot of US kit, is used in Mexico. Very recently, U.S. military and military drone technology and anti-drone technology

was signed to east to Mexico to use against the truck cartel. So there's a lot of cooperation there. And then on the other side, you've got the Lutniks who are working on trade. And they have a different approach, of course, because they're a different set of people. They're far less sort of technocratic and more on the Magaside. But also, it does feel to be more of a bone to pick by the administration with Mexico because they feel they have this massive trade deficit, which they seem as bad. And that's sort of the point of contention there. You know, we've been talking about the relationship between the U.S. and Mexico, but one strategy that Canada has been employing is to look elsewhere, right? For relationships, diversify with other countries, Carney has made deals with China,

India, the Saudis. The other day, Bloomberg reported that Canada and the European Union are planning a far-reaching deal that would include everything from security to trade. This strategy also comes with risks of running afoul of the Americans. Could this strategy be something that could work for Mexico too? Are they doing this? I think the answer is Mexico is trying to do this, but probably not as effective these candidates. The main example being the fact that Canada has been far more active at reaching out to Mexico than vice versa. That's not to say that Mexico isn't putting its back into it. I've been really impressed by what seemed to be very sort of early days talking shop rhetoric from Mark Carney when he visited Mexico City before the World Cup. And it all sort of felt sort of touchy-feely, you know, it will be a talking shop and then they'll go home and nothing happened.

But ever since, we've seen massive investments and massive trade delegations going from Canada to Mexico and from Mexico to Canada. I think one of the biggest investments this year in Mexico has been from a Canadian company, a pharmaceutical company. And so that shows real progress and that real desire to integrate properly. Now, Mexico is doing the same across the world, right? Mexico already has a very good trade relationship with Europe, for example. They've just updated their comprehensive trade agreement. As is Canada, Mexico is part of what used to be called the Trans-Pacific Partnership, this sort of broad Pacific trade agreement in which, for some reason, the United Kingdom has just joined.

And of course, then there's other relationships with like-minded countries, sort of the progressive government of Lula in Brazil, where it's less of a trade relationship and more of a sort of strategic relationship when it comes to oil, when it comes to different sorts of diplomatic issues. And I think that's been really interesting. I want to end this conversation by coming back to QSMA. In June, ahead of the QSma deadline, Claudia Scheinbaum said that Canada and Mexico had formed a comment. front on the future of trade between the three countries, both Canada and Mexico want the 16-year extension of QSMA. The U.S., of course, has opted out of that extension in its current form. And so while the deal remains in place for now, they're now in this annual review process, and who knows where that review is headed now, considering the trade war between Canada and the U.S.

You talked earlier about how Mexico and the U.S. have a more complementary situation where maybe there is more competition between Canada and Mexico. Is it possible that Mexico could cut a deal with the U.S. that would be a real problem for Canada and for QS. Do you see that as a possibility? I think that Mexico and Canada are just as complementary as Mexico and the U.S. I think ultimately this is what's interesting about the evolution of our economies, over the past 30 years of the North American project, that it seems like a waste that Mexico and Canada haven't integrated more because we are so complementary. Canadian goods could be really boosted by Mexican inputs and vice versa, right? It's just we haven't put the effort into sort of jumping

that boogeyman in the middle. This is a perfect excuse to do it. Now, could Mexico sign a treaty that could alienate Canada with the US. I mean, everything is possible, but I think at this point, it seems unlikely simply because of the fact that the United States has done so much to alienate Canada, that Canada, I don't think can afford to avoid potential partners around the world,

and that's the same to Mexico. So I think both countries will do as much as possible to avoid alienating each other. And I think there's a lot more to be gained from working together than trying to throw the other party out of the bus. Alex, this was really interesting. Thank you so much. Thanks a lot.

All right, that is all for today. Front burner was produced this week by Joytha Schengupta, Matthew Amha, Kevin Sexton, Sam McNulty, Mitchell Stewart, and Mackenzie Cameron. Our YouTube producer is John Lee. Our music is by Joseph Shabison. Our senior producer is Imogen Burchard.

Our executive producer is Nick McCabe-Blocos, and I'm Jamie Poisson. Thanks so much for listening. Talk to you next week. For more CBC podcasts, go to cBC.ca slash podcasts.