European Commission President Ursula von der Leyen and European Council President António Costa signed a modernised trade agreement with Mexico on Friday, marking a strategic step in the EU's efforts to deepen its economic presence in Latin America. The deal, concluded at an EU–Mexico summit in Mexico City alongside President Claudia Sheinbaum, updates a 20-year-old pact and comes as both sides seek to reduce their dependence on the United States and China.
A Strategic Pivot in Uncertain Times
The agreement reflects a broader European strategy to diversify trade partners amid rising geopolitical tensions. With the return of a protectionist White House, the EU and Mexico are moving to strengthen their bilateral economic relationship. Mexico is the EU's second-largest trading partner in Latin America, and the EU is Mexico's second-largest export market. Bilateral trade in goods reached €86.8 billion in 2025, with services adding €29.7 billion in 2024.
"At a time of growing global uncertainty, the EU and Mexico are choosing openness, partnership and ambition," said EU Trade Commissioner Maroš Šefčovič, who was also present in Mexico City. He noted that more than 43,000 European companies export to Mexico, while over 11,000 EU firms operate in the country.
New Market Access and Protections
The updated deal opens new markets for European agri-food products such as pork, dairy, cereals, fruit and pasta, as well as pharmaceuticals and machinery. In return, Mexican exports like coffee, fruit, chocolate and agave syrup will gain improved access to the EU. The agreement also protects 568 European and 26 Mexican geographical indications, ensuring that products like Champagne or Tequila retain their authenticity. Public procurement markets will be opened on both sides.
The pact is part of a wider EU push to secure preferential trade relationships across Latin America. A senior EU official noted that "97% of the GDP of Latin America and the Caribbean will be covered by sophisticated preferential agreements with the European Union," adding that "there is no other region in the world that has such a dense and connected network of agreements."
Context and Challenges
The deal follows the provisional entry into force of the EU-Mercosur trade agreement on 1 May, which liberalises trade with Argentina, Brazil, Paraguay and Uruguay. However, that agreement has faced strong opposition from European farmers, who fear unfair competition from Latin American imports, and its ratification has been suspended after MEPs challenged it before the EU Court of Justice.
Mexico's trade with the United States remains far larger, exceeding $900 billion in goods and services in 2024. But the new agreement signals a deliberate effort by both the EU and Mexico to reduce their reliance on Washington and Beijing. Mexico has become a hub for Chinese electric vehicle production, adding urgency to the diversification push.
For the EU, the deal also serves as a counterweight to China's growing influence in Latin America. The bloc has been building a dense network of trade pacts across the region, and this agreement with Mexico is a key pillar of that strategy.
Von der Leyen described the partnership as "a close strategic partnership" that "sets out our shared vision of the future and will deliver many benefits for both sides." The agreement is expected to boost trade and investment, though its full impact will depend on ratification and implementation.
