Mexico, EU to sign stalled trade deal as they aim to diversify from US

MEXICO CITY, May 22 - Mexico and the European Union are set to sign a long-stalled free trade agreement on Friday as they seek to decrease dependence on the U.S. and partially insulate themselves from U.S. President Donald Trump's tariffs.

The accord, which they reached broad agreement on in 2025 but have delayed signing, expands a Mexico-EU trade accord from 2000, which covered only industrial goods. The new pact adds services, government procurement, digital trade, investment and farm produce.

Mexico’s President Claudia Sheinbaum, European Commission President Ursula von der Leyen and European Council President Antonio Costa are to sign the deal in Mexico City in their first summit in over a decade.

"This summit means more than trade; it's a geopolitical statement," Kaja Kallas, the EU's foreign policy chief, said on Thursday in Mexico City ahead of the signing.

Both sides want to diversify their exports away from the U.S.

The EU was hit with sweeping new duties in Trump’s “Liberation Day” tariffs in April 2025 and prepared countermeasures, though these were paused as both sides sought talks. While tensions eased somewhat with a tariff truce and a July deal, U.S. tariffs on EU exports remain elevated.

Mexico has also been hit with stiff U.S. tariffs on automotive, steel and aluminum exports, and trade relations between the two countries have been volatile throughout Trump's second term.

Mexico's economy ministry estimates the new agreement could increase Mexican exports to the EU from around $24 billion a year to $36 billion by 2030. The EU exports around $65 billion in goods annually to Mexico.

Trade between Mexico and the EU has increased 75% in a decade, dominated by transport equipment, machinery, chemicals, fuels and mining products.

The new deal provides duty-free access for almost all goods including farm products such as Mexican chicken and asparagus and European milk powder, cheese and pork, albeit with some quotas.

While the updated trade deal has been ready, it has taken over a year to sign. The EU prioritized a free-trade agreement with the South American bloc Mercosur and it concluded free-trade negotiations with Indonesia, India and Australia in the past eight months.

Mexico, meanwhile, has been cautious about taking steps that could anger the Trump administration during sensitive negotiations to extend the U.S.-Mexico-Canada trade pact. More than 80% of Mexico's exports currently go to the U.S.

In the EU, the trade deal will be voted on by the European Parliament, which is likely to approve it within a few months. REUTERS