Mexico | Mexico Retains a Structural Advantage Following the IEEPA Ruling

Summary

On February 20, the U.S. Supreme Court, in a 6–3 decision, ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to unilaterally impose broad-based tariffs. The decision struck down most “reciprocal” and emergency tariffs.

Key points

• Key points:
• The International Emergency Economic Powers Act (IEEPA) tariffs affected imports from nearly every country trading with the U.S. (these were the tariffs imposed on “Liberation Day”). Mexico and Canada were in a relatively stronger position, as the IEEPA tariffs applied only to exports that were not channeled through the USMCA framework.
• Following the Supreme Court ruling, President Trump imposed a temporary 10% global import surcharge for up to 150 days, the rate could be raised to 15%. Crucially, goods that qualify for duty-free treatment under the USMCA remain exempt, preserving preferential access for most Mexican exports.
• This latter decision allows Mexico to maintain a favorable relative position compared to most countries, and only Mexico and Canada currently retain the possibility of exporting without tariffs.
• The fact that goods exported under the USMCA framework (except for those subject to Section 232 tariffs, such as steel and automobiles) can enter the United States tariff-free means that the incentive to increase domestic content in exports remains in place.
• This sends a constructive signal ahead of the USMCA review, underscoring that the agreement continues to receive preferential treatment relative to all other trade arrangements. While the decision represents a positive institutional counterbalance to the presidential authority to impose tariffs arbitrarily, the risk that President Trump may seek alternative mechanisms to reinstate them increases uncertainty for global trade.

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