Trade & Customs Oct 18, 2026 · 8 min read

US–Mexico tariff deal stalls over Lutnick’s objections

The Mexico tariff deal has stalled. Plan on 25% and 50% through year-end. On 15 October the Wall Street Journal reported that a US–Mexico deal to cut the 25% tariff on Mexican cars and the 50% tariff on steel and aluminium had stalled. Commerce Secretary Howard Lutnick reportedly objects to big cuts. Both governments deny the talks have stalled. Our view: don’t price northbound freight on the hope of relief. The USMCA review is already on a year-by-year footing. Since 14 October, how you prove US content decides what your clients pay. Our prediction: no signed tariff-cut deal before 31 December 2026.

The US–Mexico tariff deal has stalled. Forwarders should plan for 25% and 50% into 2027.
A deal to cut US tariffs on Mexican cars, steel and aluminium has run into a wall. On Thursday 15 October, the Wall Street Journal reported that progress had stalled, citing people familiar with the talks. The obstacle is Commerce Secretary Howard Lutnick. He reportedly opposes significant cuts to the 25% tariff on Mexican cars and the 50% tariff on Mexican steel and aluminium. He also objects to cutting the tariff on “derivative” products, meaning goods made from those metals. That is according to summaries of the Journal’s report by Investing.com and Mexico News Daily.
Our view is simple. The relief that cross-border shippers have been waiting for is not close. Forwarders should quote, budget and advise on the basis that today’s rates stay in place. The deal itself is no longer what decides most landed costs on this lane. The paperwork is. Since 14 October, the way a shipper proves “US content” in a metal product can cut its duty bill by thousands of dollars per entry. Overstating it on purpose carries a penalty risk.

What was on the table

The outline was a classic swap. The US would lower its tariffs on Mexican steel, aluminium and vehicles. In return, Mexico would make a series of concessions, Investing.com reports. Finishing that bilateral deal would also open the way to talks on renewing the USMCA, the US–Mexico–Canada trade agreement.
Mexico had already moved. Mexico News Daily reports that Mexico has agreed to suspend its 10% tariff on imported vehicle parts and components for five years. Mexico lists tariff relief as its top priority.
Optimism had been building. Mexican officials and many company executives had said a deal looked close, Investing.com reports. About two weeks before the Journal story, Economy Minister Marcelo Ebrard said after meeting Trade Representative Jamieson Greer that “Mexico is ever closer to reaching new trade agreements with the United States,” as quoted by Mexico News Daily.
Then progress slowed over the vehicle and metals duties. These are Section 232 tariffs. Section 232 is a US law that lets the president impose tariffs on national-security grounds, and Lutnick’s department administers them. Mexico News Daily says the Journal links his stance to pressure from US domestic industry, which warned that lower tariffs would mean lost business and layoffs.
Both governments deny the talks have stalled, Mexico News Daily reports. Ebrard briefed committees of Mexico’s Chamber of Deputies on Wednesday 14 October. He was due back before the same committees on Friday.

Why we think the denials don’t change much

Three things make us doubt a quick fix.
First, there is a pattern. The Journal calls this the second time Lutnick has disrupted advanced talks with a North American partner, according to Investing.com. Mexico News Daily says this apparently refers to Canada. The official in charge of the duties Mexico most wants cut is the one resisting.
Second, the talks have two US leads pulling in different directions. Greer and Ebrard are running the negotiations, not Lutnick. Mexico News Daily reports tension between Lutnick and Greer. Investing.com notes that Lutnick had been largely sidelined in 2026 as Greer gained prominence. A deal that Greer can agree to but Commerce won’t carry out is not a deal a shipper can bank on.
Third, Mexico has been asking for this for months without success. On 2 September, Ebrard pressed Lutnick on car and steel tariffs at a G20 meeting in Chapel Hill, North Carolina, Reuters reported via GV Wire. Mexico argues the steel and aluminium tariffs are unjustified. Six weeks later, the rates have not moved.
The stakes for Mexico are large, which is why it keeps pushing. Mexico Business News reported in June that Mexico’s steel exports to the US fell 36.6% in 2025. Mexican auto exports fell 5.1% year on year in January to April 2026, to US$48.6 billion. The same report says about 85% of Mexico’s US-bound exports still enter tariff-free. That means the damage is concentrated in metals and vehicles, the very sectors now stuck.

The USMCA is already on a one-year leash

This stall comes on top of an uncertain trade pact. The USMCA had its first six-year joint review on 1 July 2026. Canada and Mexico both backed a 16-year extension. The US did not. Greer said the United States “did not agree to renew the USMCA in its current form,” according to law firm White & Case.
That decision triggered a clause in the treaty, Article 34.7. Instead of a clean 16-year renewal, the three countries must now hold a joint review every year. The International Institute for Sustainable Development (IISD) summarised it this way: “The agreement remains fully in force until July 1, 2036.” The parties can still agree to an extension at any time, White & Case notes.
So the USMCA’s preferential tariffs and rules of origin still apply today. But nobody can promise a shipper what they will look like in two or three years. In June, Greer said Trump “has made clear that he is dissatisfied with many of the outcomes of the USMCA,” pointing to higher US imports of vehicles, steel and aluminium from Mexico, according to Mexico Business News. The same outlet reported that Mexico faces 52 US demands in the review, about double the number put to Canada.
The US opted for separate bilateral negotiations, IISD reports. Three US–Mexico rounds had been completed by late July, with a fourth scheduled for September. The tariff deal now stalled was meant to be the gateway to the bigger renewal. If the gateway is shut, the renewal waits too.

The rule that actually changed this week

While the headline deal stalled, a technical rule went live. On 14 October, the Bureau of Industry and Security (BIS), part of the Commerce Department, published guidance to US Customs and Border Protection (CBP) in the Federal Register. It sets out how to measure “U.S. content” in Canadian and Mexican products that qualify for USMCA preference. It applies to goods entered from 12:01 a.m. Eastern Time on the day of publication.
The guidance puts flesh on Proclamation 11032, signed on 1 June 2026. Under that proclamation, for qualifying Canadian and Mexican goods on its covered list (Annex I-C), “a duty of 25 percent shall apply only to the non-U.S. content of the product.” There is a floor: the total effective duty “shall not be less than 15 percent ad valorem.” Ad valorem means a percentage of the goods’ value. These rates run until 31 December 2027.
The BIS notice says what counts as US content. It covers parts wholly obtained, entirely produced or substantially transformed in the US. On top of that, it counts the value of steel melted and poured in the US, aluminium smelted and cast in the US, and copper smelted and cast in the US.
Here is what that means in money, using the proclamation’s formula. Take a US$100,000 shipment. - With US$20,000 of proven US content, the duty is 25% of US$80,000: US$20,000. - With US$70,000 of proven US content, the formula gives US$7,500. The 15% floor lifts that to US$15,000. - With no proof, the importer pays 25% on the full value: US$25,000.
The proclamation also cut the threshold for treating a product as made entirely of American metal. US metal must now make up “at least 85 percent of weight of the aluminum, steel, and copper of the product,” down from 95%. And there is a warning. If CBP finds fraud or deliberate misstatement of US content, “CBP shall impose penalties to the extent permitted by law.”

What forwarders and brokers should do now

Our read: the stall moves the work from waiting to documenting.
For customs brokers on northbound entries, melt-and-pour and smelt-and-cast records are now part of the duty calculation. Shippers who can’t produce them pay more. Shippers who overstate them risk penalties. Trade adviser GHY’s advice is that “Importers should work with their customs brokers to review product valuations, verify U.S.-content calculations,” and to confirm USMCA eligibility. We would go further. Ask for mill certificates at booking, not after the truck reaches Laredo.
For forwarders quoting landed costs, build quotes on today’s 25% and 50% rates. Do not discount for a deal that has no date. Where a client’s product uses US-melted steel, show the US-content saving as a separate line. It is real money, and it does not depend on politics.
For shippers weighing nearshoring to Mexico, the case still rests on the 85% of trade that flows duty-free. Metals and autos are the exceptions. With yearly USMCA reviews, contracts on those flows should include tariff-change clauses.
Watch the auto and metals supply chains closest. They are the ones that cross the border several times before a finished product ships. Each crossing of a covered part is another chance to pay duty on the full value without proof of US content.

Our call

We expect no signed US–Mexico agreement cutting the 25% auto tariff or the 50% steel and aluminium tariffs before 31 December 2026. We expect both rates to still apply to northbound Mexican goods on 1 January 2027. We also expect the US-content rules to become the main way importers cut their metals duty in that time. If we are wrong and a deal lands, it will most likely cover autos and parts first, with metals left for later.

Sources