With incoming President Donald Trump talking about levying 25% tariffs on Mexican goods, many are concerned that manufacturing in Mexico may be a risky move. But what they don’t understand is just how embedded the Latin American country is on a global scale. And this brings up the important question, just how many free trade agreements (FTAs) does Mexico have?
While Trump is unlikely to start a trade war with the United States’ top trade partner, it’s nevertheless quite noteworthy just how extensive the country’s trade network extends and how many free trade agreements Mexico has.
Mexico trades with many countries, and not just North America. In fact, Mexico holds the crown for the most FTAs of any other nation in the world, giving manufacturers access to a vast global market. If you’re thinking about nearshoring your production to Mexico, here’s why its trade network is a game-changer – in spite of the chatter about US tariffs.
Let’s start with the big one: the United States-Mexico-Canada Agreement (USMCA). This updated version of NAFTA modernized trade rules for the 21st century. It’s absolutely packed with provisions that incentivize North American manufacturing while offering strong protections for workers and intellectual property. For example:
The result? A robust agreement that fuels regional trade while giving US businesses an incentive to operate just across the border.
While USMCA simplifies trade within the region, Mexico’s global network of FTAs is what truly sets it apart. Indeed, Mexico holds the crown for the most FTAs of any nation, with 13 free trade agreements (FTAs) spanning at least 50 countries, giving manufacturers access to a vast global market.
No other country in the world has this many FTAs. And these agreements open doors to major markets across Europe, Asia, and Latin America, offering businesses flexibility and resilience in their supply chains. Mexico is a signatory to most of the major FTAs of the world. But let’s break down every one of the free trade agreements Mexico has signed.
When the U.S. opted out of the Trans-Pacific Partnership (TPP), Mexico stepped up to join. This agreement slashes tariffs across all sectors, creating lucrative opportunities for businesses targeting the Asia-Pacific region. This agreement gives Mexico preferential access to:
Europe is another powerhouse market Mexico has tapped into. The EU-Mexico FTA eliminates duties on 99% of traded goods, excluding a handful of categories like dairy and some auto products. Plus, the agreement aligns with the Paris Climate Agreement, ensuring sustainable trade practices. This agreement grants trade access to all European Union countries:
This FTA progressively removes tariffs between Mexico and all the northern European member states of the EFTA:
Mexico’s ties to its southern neighbors are just as impressive as any others. The Pacific Alliance has eliminated 90% of tariffs among member states. This makes it easier for manufacturers to source materials and export finished goods across the Americas. This agreement opens up Mexican free trade to 35% of Latin America’s GDP with member states:
This FTA creates an economic zone and reduces tariffs for all of Central America, giving free-trade access to:
But it’s not just these major conventions and alliances that give manufacturers in Mexico such a leg up. The country also boasts a number of bilateral agreements with major nations of the world, which include:
Even though both countries are part of the CPTPP, this bilateral FTA adds another layer of cooperation between Mexico and Japan. It’s particularly beneficial for reducing barriers on agricultural and industrial products, though it includes quotas on items like vehicles.
Mexico’s free trade agreements are about more than just lower tariffs. They create streamlined processes for importing raw materials, exporting finished goods, safeguarding intellectual property, and maximizing profitability. For businesses, this means:
Even with the US occasionally hinting at tariffs on Mexican imports, the sheer number of free trade agreements Mexico has ensures its manufacturing base remains globally competitive. Businesses operating in Mexico don’t just gain access to the US; they tap into an entire world of opportunity for export manufacturing success.
For US companies looking to nearshore, Mexico’s FTAs are a golden ticket. By establishing operations in Mexico, these businesses can enjoy the benefits of affordable labor, geographic proximity, and unparalleled market access. And with a framework that includes robust protections for intellectual property and sustainable trade practices, Mexico isn’t just a cost-saving alternative—it’s a gateway to innovation and growth.
