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Brazil and Mexico have begun preliminary talks to deepen their trade agreement as Latin America’s two largest economies seek to boost commercial partnerships beyond China and Donald Trump’s US.
Diplomats from the two nations have held ongoing informal talks since Mexico’s President Claudia Sheinbaum took office in October to try to set the terms for formal negotiations, three people with knowledge of the matter said.
In that time, left-wing leaders Sheinbaum and President Luiz Inácio Lula da Silva have met on four separate occasions. Both have publicly stated an intention to deepen economic ties. Brazil’s trade secretary is set to travel to Mexico City in August to look into it in greater detail, Sheinbaum said this month.
“We can supply what Brazil doesn’t have and they can supply what Brazil has that we don’t, not only in terms of the trade agreement but also in terms of investments,” she said.
Brazil and Mexico are Latin America’s two largest countries but have historically been distant because of rivalry over regional leadership, differing levels of economic openness and Mexico’s focus on the US, which is by far its largest trading partner.
But President Donald Trump’s new trade tariffs and the Latin American countries’ ideologically compatible leftist governments made this an auspicious moment for closer ties, the people said.
“There is a lot of enthusiasm from both countries, a lot of will from both,” one person involved in the talks said. “There is a deep political, programmatic and ideological affinity . . . the dialogue is at all levels.”
Only 14 per cent of Latin America’s goods trade takes place within the region, a lower proportion than anywhere else in the world. Lula has long championed closer integration, believing that improving the region’s poor trade and infrastructure links is key to boosting prosperity.
The two countries already have a limited trade agreement from the early 2000s that lowers or exempts import fees on about 800 product categories.
Their bilateral trade has a lot of room for growth. It totalled just $13.6bn in 2024, according to official figures from Brazil, which recorded a $2bn surplus. The figure was a tiny fraction of the $840bn of goods traded between the US and Mexico last year — and the $161.8bn in 2024 exchanged between Brazil and China in 2024.
For Mexico, which is gearing up for a tense renegotiation of its USMCA deal with the US and Canada, Brazil could offer investment opportunities in sectors such as aerospace and pharmaceuticals, while helping ease its dependence on the US for imports of grains including yellow corn.
Brazilian officials say its industrial and agribusiness sectors are interested in increasing exports to Mexico.
Both sides are treading cautiously to avoid upsetting the US or China, Brazil’s top trade partner and the biggest buyer of its commodities, saying the talks fall into their efforts to diversify their trading relationships.
The two sides are yet to decide whether to simply expand their existing deal to reduce tariff barriers — possibly including an investment protection agreement — or embark on a bigger negotiation for a full trade agreement, one official said.
Yet officials caution about the pace of proceedings with both governments’ resources limited — Mexico’s by USMCA talks and Brazil’s by elections next year. This could make an upgrade to the existing trade deal more realistic than fully negotiating a new one.
Both sides were allowed to negotiate agreements with each other under their regional trade deals, officials said. Mexico’s automotive sector agreement with South America’s Mercosur customs bloc could also come into the bilateral negotiations, said two officials.
Brazil’s trade ministry said conversations with Mexico were ongoing. Mexico’s foreign ministry did not respond to a request for comment.
