US will issue trade warning to neighbour, reports media

The US has reportedly made plans to demand that Mexico open its energy markets or face a formal dispute and possible tariffs. This is due to Mexican President Andres Manuel Lopez Obrador's decision to roll back reforms aimed at opening Mexican energy markets to outside competitors, allegedly in violation of the 2018 US-Mexico-Canada Agreement (USCMA). The US and Canada last July requested settlement talks with Mexico, but the Biden administration has decided to ratchet up the issue by making a so-called "final offer" requiring Mexican officials to eliminate trade barriers and agree to increased oversight. If they refuse, the US will request that the row be settled by an independent panel, as called for under the USCMA. The US and Canada could impose billions of dollars in punitive tariffs on Mexican goods if Mexico fails to take corrective action.

Relations between the two governments have deteriorated in recent months, with Lopez Obrador blasting US officials as "liars" after Biden's administration accused Mexico of human rights abuses. US trade officials have claimed that Mexico's government has given unfair advantages to state-owned utility CFE and state-owned oil company Pemex, to the detriment of American power producers and oil companies. The US posted a record trade deficit with Mexico last year, as the value of exports to the country fell more than $130 billion short of imports. Mexico accounted for 14% of Washington's worldwide trade deficit, which also hit an all-time high.