Mexico has entered the formal review of the USMCA trade agreement at one of the tensest moments in its relationship with Washington in years, with the negotiation that will shape the future of North American commerce unfolding alongside a deepening dispute over how to confront the country's drug cartels. The review, built into the pact at its signing, was always going to be consequential; the climate in which it now begins has made it fraught.
The friction is most visible on security. The US Justice Department has charged the governor of Sinaloa, Ruben Rocha Moya, along with nine other current and former state officials, with conspiring with a faction of the Sinaloa Cartel to move fentanyl, heroin, cocaine and methamphetamine into the United States. Rocha Moya, who denies the accusations, stepped aside and the state legislature installed an interim governor, but the case — and reports of an expanded CIA presence in Mexico — has inflamed a long-running argument over sovereignty and American reach.
President Claudia Sheinbaum approaches the trade talks from a position that is, paradoxically, both strengthened and exposed. Her approval rating rose two points to 53% in May, recovering from the low point of her term, and her government has touted record foreign direct investment, a minimum wage lifted to 315 pesos a day and a labour-poverty rate at its lowest on record at 30.7%. Yet concern about corruption has climbed to the highest level of her presidency, with 62% of Mexicans naming it the country's biggest problem.
The economic backdrop complicates her hand. Output contracted 0.6% in the first quarter, and Moody's cut Mexico's credit rating to Baa3, the lowest rung of investment grade, citing weak growth. A trade review that reassured investors about the durability of tariff-free access to the US market could steady that picture; one that descended into recrimination over cartels and migration could deepen it, raising the cost of capital for an economy already losing momentum.
For Sheinbaum, the negotiation is inseparable from the management of Donald Trump. The American president has used tariffs and the threat of unilateral action against cartels as instruments of pressure, and the USMCA review hands both governments a formal venue in which those pressures will be tested. Mexican officials have sought to keep the trade and security tracks distinct; Washington has shown little inclination to oblige.
What emerges from the review will set the terms of trade for a continent whose supply chains have grown tightly interwoven over three decades, from car plants to electronics to agriculture. For Mexico, where the United States is overwhelmingly the largest market, the stakes are existential in a way they are not for its northern neighbours — a reality that frames every concession the talks may demand.