Donald Trump has pressed Mexico to ink energy deals with US companies as trade talks between Washington and its largest trading partner stall, triggering alarm in Mexico City where foreign investment in the sector is highly sensitive.
The US president insisted in a call with his counterpart Claudia Sheinbaum last month that there should be more deals and tie-ups between Mexican and US energy companies, according to three people familiar with the call.
One person with knowledge of the call said that Trump initially asked about a deal to sell Mexican assets to the US. The leaders also discussed a deal similar to the one signed last year with South Korea, in which Seoul agreed to buy $100bn of US energy products and invest billions more in the US, according to two of the people.
A US official said the leaders discussed the prospect of Mexico increasing purchases of US natural gas, on which it already depends for about three-quarters of its demand. The official added that the talks were focused on reducing Mexico’s trade surplus with the US.
Since taking office last year, Trump has put placed tariffs on countries around the world to try to reduce the US trade deficit. Most Mexican goods imported into the US go tariff-free under the USMCA trade deal, but Mexico City is now hoping to secure a discount on autos, steel and aluminium duties.
The call, which took place in mid-September, came two weeks after the US took control of a chunk of Venezuela’s oil reserves and after years of Mexico’s government heavily restricting private investment in the sensitive sector.
Mexico expropriated British and American oil industry assets in the 1930s and formed state oil firm Pemex, in an episode that became foundational for the country’s modern political identity.
Sheinbaum’s party has put state control of energy at the heart of its agenda, and new private investment collapsed under her predecessor, who built a massive new government oil refinery.
The US in 2022, under president Joe Biden, complained that Mexico’s rules were “undermining” American companies but did not take the next step of requesting a dispute panel.
Sheinbaum is cautiously trying to restart pockets of private investment in the ailing sector as oil production hits record lows and cities have experienced blackouts due to strain on the electric electricity grid.
State companies Pemex and CFE, however, will remain dominant. Sheinbaum’s team is actively exploring allowing fracking and has been trying to reduce dependence on US natural gas.
Mexico and the US had planned to hold a formal round of trade talks in Washington in September, which was postponed and then called off. The new request on energy contributed to the delay, two people said, and the round has yet to be rescheduled.
A US official said the latest round of negotiations had been delayed because US trade representative Jamieson Greer and his counterpart, Marcelo Ebrard, were in Milwaukee, Wisconsin, for the G20 trade ministers meeting last week.
The US official said the talks were “very positive” and that the two negotiating teams remained “in constant contact”. The Mexican government declined to comment.
The US-Mexico trade relationship is the largest in the world by value, and the nations’ three-way deal with Canada is in a highly uncertain process of annual reviews after Trump declined to renew it.
Negotiations so far have been bilateral, with Washington icing Canada out of talks after Ottawa placed retaliatory tariffs on the US. Compared with America’s northern neighbour, Mexico has been less confrontational, at least in part due to dire economic consequences should it lose tariff-free access.
Trump has tied a trade deal with Mexico to the nation’s action against drug cartels. He has called Sheinbaum a “wonderful woman” but also said she is “scared” of the criminal groups that control swaths of Mexican territory.
A White House official said the US and Mexico have “a longstanding energy relationship that can thrive within the bounds of US law and the Mexican Constitution”.
“Following President Trump and President Sheinbaum’s call, the United States and Mexico remain engaged in productive discussions related to the USMCA review,” the official said.