The US-Mexico Tariff Deal on Cars and Steel: Where It Stands and How to Plan

There is no US-Mexico tariff deal yet. On the morning of 26 October, President Claudia Sheinbaum put it plainly: "Aún no llegamos a un acuerdo, estamos muy cerca pero aún no llegamos al acuerdo" (Agencia Reforma). Three days earlier Donald Trump told reporters, "We're very close to a deal with Mexico" (EFE). Until a text is published, the US charges what it charged in September: 50 percent on Mexican steel and aluminum and 25 percent on cars.

If you are pricing a plant in Mexico, or a supply contract that runs through one, the deal belongs in your model as an upside case, set beside the rates in force today. This note covers where the talks stand, what is reportedly on the table, what applies at the border now, and how to plan around both.

Where the talks stand

Date	What happened
30 September	Bloomberg reports Mexican officials expect the US light-vehicle tariff to fall from 25 to 15 percent, charged on non-US content
30 September to 1 October	Ebrard meets US Trade Representative Jamieson Greer at the G20 trade ministers' meeting in Milwaukee
5 October	USTR opens public comments for the 2027 USMCA joint review, due 12 January 2027
15 October	The Wall Street Journal reports progress has stalled, with Commerce Secretary Howard Lutnick resisting large cuts; officials in both countries say talks are progressing
16 October	Ebrard tells Mexican legislators he expects a reduction "entre las próximas semanas o meses"
19 October	Mexico's ambassador in Washington, Roberto Lazzeri: "I think the sticking point is the 232 tariffs"
20 October	Sheinbaum: "Pues ya estamos muy cerca; todavía hay algunos temas"
22 October	Canada's chief negotiator on resuming detailed talks with Washington: "We don't know exactly when that's going to happen"
23 October	Trump: "We're very close to a deal with Mexico." Ebrard is in Washington
26 October	Sheinbaum: no agreement yet

Sources: Bloomberg via Transport Topics, 30 September and 21 October; Mexico Business News; Federal Register, 5 October 2026; the WSJ via Reuters; Expansión; the Presidencia transcript of 20 October; The Globe and Mail.

Mexico's stated aim, in Sheinbaum's words of 20 October, is to "reducir al máximo ... los aranceles que pesan hoy sobre vehículos, acero y aluminio," and "que no haya más aranceles." She set two limits in the same answer: "nada que esté fuera de nuestra Constitución, de nuestras leyes," and nothing known to hurt the national economy or the number of jobs. Bloomberg reported on 21 October that the talks had cooled over metals and that major progress was likely to come after the 3 November US midterm elections.

What is reportedly on the table

None of these terms appears in a published text. They come from officials speaking to the press.

• Light vehicles. The US rate falls from 25 to 15 percent, still charged only on non-US content, which Mexican officials estimate at an effective 10 to 12 percent. Mexico is asking for the rate Japanese and Korean cars pay, and argues that sector-specific rates give both countries an edge.
• Steel, aluminum and downstream metal goods. A cut from 50 percent, with no rate agreed. Mexico wants relief on derivative products, which reach a large part of its economy, and Bloomberg reports Mexican leaders have said they do not want a deal without it.
• What the US asks in return. Not published. Policy analysts expect requests on transshipment, export controls, supply-chain security and measures aimed at non-market economies, which in practice means China (Mexico Business News).

Mexico is moving on its own side as well. A decree published on 13 October removes, for five years, the 10 percent Mexican duty on parts and components for vehicle assembly, for automakers holding a bonded-warehouse authorization for assembly and manufacturing (DOF). Its stated purpose is to bring new light-vehicle lines into Mexico, starting with semi- and completely-knocked-down (SKD and CKD) assembly.

What applies at the border today

For goods made in Mexico and entering the United States:

Good	US duty today	What USMCA qualification does
Steel, aluminum and most copper articles (Annex I-A)	50% on full value (Section 232)	Nothing, apart from a narrow Commerce program for producers that commit to new US capacity
Other listed steel and aluminum derivatives (Annex I-B)	25% on full value (Section 232)	Nothing
Mobile industrial equipment on Annex I-C, such as forklifts, bulldozers and mobile cranes	25% on full value (Section 232), through 31 December 2027	Qualifying goods pay 25% on non-US content, with a total effective duty of at least 15%
Light vehicles	25% (Section 232)	Charged only on non-US content, once Commerce approves the importer's filing for the model line
Medium and heavy trucks	25% (Section 232)	Charged only on non-US content, once Commerce approves the model
Auto parts	25% if they do not qualify	Qualifying parts pay none until Commerce sets up a process to tax their non-US content
Most other goods	Normal duty plus 10% under Section 301	Duty-free

Sources: Proclamation 10908 for vehicles and parts; Proclamation 11021 and Proclamation 11032 for metals; KPMG's summary of the truck proclamation and Commerce's truck procedures notice; the USTR notice of 28 July 2026 for Section 301.

Ebrard puts the share of Mexican exports to the US that pay no tariff at about 80 percent, and the average effective tariff on them at 3 to 3.2 percent (Expansión). For most products made in Mexico, USMCA qualification already settles the duty. The deal reaches the rows of this table that carry a Section 232 rate.

What a deal would change, and what stays

Take a light vehicle with a customs value of US$30,000 and 30 percent US content. Today the duty is 25 percent of the US$21,000 in non-US content, or US$5,250, an effective 17.5 percent. At the reported 15 percent it is US$3,150, an effective 10.5 percent, inside the range Mexican officials cite. That arithmetic depends on an approved filing. Without one, the rate applies to the full value: US$7,500 today.

Four things hold whichever way the talks go:

1. USMCA qualification is the gate. Every preference in the table starts there, and the rules of origin are reviewed every year to 2036, as our note on the July outcome explains.
2. The US-content filing sets your rate. Commerce's notice of 19 August ends the existing approvals for cars imported from 1 December 2026. Replacement filings were due 30 September and cover imports until 30 November 2027, and they decide the effective rate under any deal, as our note on the December deadline walks through.
3. The parts exposure. Qualifying parts pay no Section 232 duty today because Commerce has not yet published a process to tax their non-US content. The day it does, your landed cost changes, deal or no deal.
4. Section 301. Goods that do not enter duty-free under the USMCA, and carry no Section 232 tariff, keep paying 10 percent.

How to plan a Mexico decision around it

1. Price on today's rates. A plant you decide on now ships its first product after these talks resolve, one way or the other. Run the reported terms as an upside case beside the base case, and the decision holds in both.
2. Find the lines the deal touches. If your products qualify under the USMCA and sit outside vehicles and metals, the deal changes little for you. If they are finished vehicles, steel, aluminum or downstream metal goods, it can decide the margin, and our Mexico vs US cost comparison shows where it sits against labor, power and rent.
3. Build US content where it is cheap. At today's rate and the reported one, the vehicle duty falls on the value of parts not made in the United States, so a US-made part lowers it either way. For qualifying mobile industrial equipment on Annex I-C, US-melted steel and US-smelted aluminum and copper count as US content since 14 October (BIS notice), down to the 15 percent floor.
4. Keep the filings current. Existing car approvals lapse for imports from 1 December 2026, and the replacement filings were due 30 September. An importer that missed the date can still file, and the approval is the paperwork that turns a headline rate into the rate you pay.
5. Put your view on record. USTR is taking written comments on the USMCA review until 12 January 2027, and any company with a stake in the rules of origin can file one.

If you are a Canadian manufacturer

Canada's formal talks with Washington have no date. If Mexico secures lower vehicle and metals rates first, the same product made in Mexico enters the US at a lower duty than one made in Ontario or Quebec. No Section 338 action names Mexico, and a good that becomes a product of Mexico through substantial transformation leaves that duty behind; a binding ruling per part number settles it before the capital moves. Our Mexico or US decision page works through when each footprint wins, and our guide to tariffs on Canadian goods sets out what applies at the border today.

The bottom line

The US-Mexico tariff deal is close and unsigned, and both governments say so. As reported, it lowers the duty on finished light vehicles and, by an amount still unsettled, on steel, aluminum and the metal goods made from them. Most of what Mexico ships to the US already crosses duty-free under the USMCA, and that holds whichever way the talks go.

A Mexico decision priced on today's rates stands up in either outcome. Carry the deal as an upside case, raise US content where it costs little, keep the Commerce filings current, and the day a text is published, you update one line of the model.