On December 8, United States President Donald Trump threatened to raise tariffs on Mexico by 5% at an unspecified date if the country does not increase its water deliveries to the U.S. Both nations are facing severe shortages along the Rio Grande River, which forms part of the U.S.–Mexico border. Under the 1944 water treaty, Mexico is required to send 1.75 million acre-feet of water to the U.S. annually. U.S. officials are now demanding that at least 200,000 acre-feet be delivered by December 31, or tariffs will be raised by an additional 5%.
The U.S. Trade Representative, Jamieson Greer, has recently indicated that the U.S. government is considering withdrawing from the U.S.–Mexico–Canada Agreement (U.S.M.C.A.) in 2026. Officials have suggested that the U.S. could allow the agreement to expire or pursue separate negotiations with Canada and Mexico, effectively splitting the pact into two parts. No additional details have been confirmed at the time of writing.
U.S. reaches sector-specific tariff reductions with Brazil and the U.K.
On November 20, U.S. officials removed the remaining 40% tariffs on several Brazilian food products, including beef, coffee, cocoa, and various fruits. These changes are part of the recent decision to lower the cost of living in the U.S. by reducing reciprocal tariffs on key imported food goods, which had previously resulted in decreased tariffs on certain Brazilian food products by 10%. However, the total 50% tariff on imports from Brazil will remain in effect for other categories of goods.
Additionally, the U.S. and the U.K. have announced a finalized deal to mutually eliminate all tariffs on pharmaceutical products. As part of the deal, the U.K. agreed to pay around 25% more on new and effective pharmaceutical treatments from the U.S. by 2035, while British pharmaceutical companies committed to making further investments in the U.S. The terms of the deal will remain valid for three years.
E.U. rejects U.S. calls to reduce digital services regulations and considers tariffs on China
On November 24, the U.S. Commerce Secretary Howard Lutnick stated in an interview that the U.S. would consider lowering its steel and aluminum tariffs on the E.U. from the current rate of 50% if the E.U. agreed to reduce or eliminate its regulations on U.S. digital services providers. However, E.U. officials have categorically rejected this proposal and affirmed plans to uphold E.U. sovereignty over digital services regulations.
In separate comments, French President Emmanuel Macron argued that the E.U. should consider imposing tariffs or other trade restrictions on China to address the bloc’s large trade deficit. He acknowledged that Germany does not support this approach, underscoring divisions within the E.U. on how to manage trade relations with Beijing. While no timeline exists and any such proposal would likely face significant debate from E.U. lawmakers, Macron’s remarks signal growing concern about China’s trade surplus within the bloc and a greater willingness to contemplate new trade restrictions targeting goods from China.
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