Mexico and the European Union tighten their alliance in the face of Trump-era risks

More than 10 years of negotiations come to an end this Friday in Mexico: the European Union and the Latin American country will sign an update to the trade agreement that has been in force since the beginning of this century. The move — arguably more significant than the text of the renewed pact — signals a clear rapprochement between two parties whose commercial — and, to an extent, geopolitical — strategies have been shaken by Donald Trump’s return to the White House, based on protectionism, in barely a year and a half. For both, it is a renewed bet on multilateralism in international relations and a way to diversify alliances and risks to soften the impact of Washington’s unpredictable, unilateral decisions. The update will be signed this Friday in Mexico City by Mexico’s president, Claudia Sheinbaum, and the president of the European Commission, Ursula von der Leyen.

The document will be subject to ratification by the Mexican Senate, by European institutions, and by all member states. However, provisional entry into force for the commercial chapter does not require the approval of all 27 EU countries, so it is likely to be activated on an interim basis in the coming months.

“Diversification is a geopolitical insurance policy in today’s world, especially against those who use trade and energy as tools of pressure and coercion,” emphasizes Javi López, vice president of the European Parliament and the parliamentary rapporteur for this agreement. EU sources go further in this direction, describing the summit as “very important given the difficult geopolitical moment, in which like-minded partners such as Mexico and the EU must deepen ties.” One sign of the good relations between the two sides will be an address in the Mexican Senate by the president of the European Council, António Costa, the first time a leader of EU institutions has done so.

The logic behind these statements is similar to what Canadian Prime Minister Mark Carney set out in Davos earlier this year: middle powers, such as the EU or Mexico, building alliances to reduce the risks posed by hegemonic powers like China and the United States. In Mexico’s case, Washington remains its main trading partner. They share almost 2,000 miles of border and some $900 billion in annual trade. Yet the close relationship, sheltered by the USMCA, faces uncertainty due to Trump’s protectionist policies and his overlapping agendas on security, migration, and trade.

The updated agreement — the EU did something similar with Chile a little over a year ago — addresses three key areas, EU sources say: “Trade, investment and sectoral cooperation and security.” Under the current framework, imports and exports between the two parties have quadrupled and the EU has become Mexico’s second-largest foreign investor. Now the aim is to take a further step that, from the European perspective, not only seeks to reduce risks coming from the United States but also dependencies on China in areas such as critical raw materials.

When the EU speaks of “security” it is referring chiefly to economic security — to international value and supply chains critical for the technological revolution and the energy transition. Other components of the comprehensive agreement include cooperation on “the fight against organized crime and drugs, climate action, environmental protection, promotion of energy security and the energy transition, research and innovation, people-to-people contacts, and academic exchanges,” various sources in the EU capital stress.

López, a Spanish Socialist MEP, highlights that the agreement will eliminate almost all tariffs in bilateral trade because it represents a clear expansion of the existing framework. He believes parliamentary approval will be considerably faster than, for example, the process with Mercosur. Mexico is not a major exporter of agricultural products, which greatly facilitates the path in the European Parliament.

With a long track record in Europe–Latin America relations, López praises Mexico’s “courage” in signing this pact precisely while it is negotiating the future of the USMCA with the United States. Next July, the North American trade agreement will come under intense scrutiny by the U.S., Mexican, and Canadian governments. “The easy option for them would have been to do nothing while they were talking to Washington. The EU accounts for barely 10% of their exports.”

Although more than 80% of Mexican exports go to the United States, Latin America’s second-largest economy is opening new commercial opportunities. In 2025, the European Union was Mexico’s third-largest trading partner after the United States and China. Last year, Mexico exported about €33.9 billion to the EU, mainly machinery, appliances, minerals, and transport equipment. In return, the European bloc sent goods to Mexico worth more than €53 billion.

After more than 20 years of trade relations, the trade balance has so far tilted in Europe’s favor; however, the Sheinbaum administration expects Mexican shipments to the EU to rise by 50% by 2030 following the signing of this agreement. The Mexican government’s roadmap aims to bolster exports to the region of automobiles, medical devices, manufactured goods, machinery, and technological components, as well as agri-food products such as coffee, beer, berries, oils, cocoa, and pulses, among others.

On the foreign direct investment front, the EU was Mexico’s second-largest investor after the United States. Investments from these countries amounted to €206.6 billion in 2024, while Mexican investment in Europe reached €24.6 billion that year. Under the new framework, Mexico says there will be greater access for small and medium-sized enterprises to the European market and more certainty for European investments on Mexican soil.

The update to the agreement will also establish a new mechanism for resolving trade disputes, mutual recognition of geographical indications (both European and Mexican), and specific rules on digital trade. During the summit, which begins this week with visits to historic sites and meetings with business leaders, two key documents are expected to be signed: an interim trade agreement to speed up the launch of the partnership and a commitment to dialogue between the EU and Mexico on global issues.

Armando García, coordinator of the Center for European Studies at the Faculty of Political and Social Sciences at the National Autonomous University of Mexico (UNAM), acknowledges that the agreement goes beyond eliminating tariffs on more than 500 products; it represents a long-term commitment. The expert points out that the alliance with the EU, less than two months before the USMCA review, instead of being a disadvantage, can play to Mexico’s benefit. “This agreement allows us to present ourselves as an economy integrated into other value chains, which becomes an attraction mechanism,” he concludes. In a global environment marked by trade uncertainty and unilateral decisions by major powers, other countries are accelerating their strategic alliances.

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