The relationship between the United States and Mexico has long been marked by a mix of cooperation and conflict, shaped by geography, history, and mutual dependence. Though they share a 1,954-mile border, the two nations are often described as “distant neighbors” because of their distinct cultures and political priorities. Today, tensions are rising again as President Donald Trump signals a sharp policy shift on three key cross-border issues: trade, migration, and drug trafficking. These issues threaten to destabilize relations with America’s top trading partner and weaken North America’s standing as the world’s second-largest trade bloc.
Trade has traditionally been a cornerstone of U.S.-Mexico relations, particularly since the 1994 implementation of the North American Free Trade Agreement (NAFTA), now updated as the U.S.-Mexico-Canada Agreement (USMCA). This trade relationship generates millions of jobs and provides beneficial supply chains, particularly in the automotive, agriculture, and manufacturing sectors. However, Trump’s threats of tariffs and demands for new trade concessions have rattled business leaders on both sides of the border. Such measures risk not only economic disruption but also the erosion of trust between the two nations.
Immigration has been the biggest flashpoint. The U.S. has long pressured Mexico to crack down on the northward movement of migrants from Central America and beyond, and Trump has intensified that pressure. Mexican President Claudia Sheinbaum recently revealed that Trump proposed sending American troops into Mexico to combat drug trafficking, an offer she firmly rejected. This followed a tense phone call in which Trump reportedly pressed for a greater U.S. military role in fighting Mexican drug cartels. For Mexico, the prospect of foreign troops operating on its soil touches a deep historical nerve, recalling the multiple U.S. invasions of Mexico in the 19th and early 20th centuries.
Drug trafficking and organized crime remain a central challenge. The U.S. demand for narcotics fuels the power of Mexico’s cartels, while the flow of firearms from the U.S. into Mexico exacerbates violence. Both countries have tried cooperative strategies in the past, such as the Mérida Initiative, but trust has frayed in recent years as Washington has leaned toward more unilateral actions.
Adding to the strain are cross-border water disputes in the drought-stricken border regions, where treaty obligations on river flows are increasingly hard to meet.
It’s not clear where the U.S. and Mexico are heading in their relationship. Trump recently escalated trade tensions with Mexico by threatening to raise tariffs on its imports, only to pull back and grant an additional 90‑day negotiation period. The proposed tariff hike was to increase from 25% to 30% on non‑USMCA Mexican imports, and 50% on metals.
However, just before the August 1 deadline, Trump agreed to delay the increase. After discussions with Mexican President Sheinbaum, the administration acknowledged that the border situation is complex and requires a more measured approach. By granting 90 more days for negotiations, Trump signaled that the U.S. and Mexico must work through the challenges of migration enforcement, trade flows, and shared economic interests without destabilizing North America’s supply chains.
This temporary reprieve reflects the delicate balance between Trump’s aggressive trade posture and the economic realities of U.S.–Mexico relations. While tariffs remain in place, the pause allows both nations to pursue a compromise, highlighting that even in Trump’s high‑pressure trade tactics, the realities of the border demand thoughtful, step‑by‑step solutions.
Guest:
Karthik Sankaran is a senior research fellow in geoeconomics in the Global South program at the Quincy Institute for Responsible Statecraft.
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This episode will be recorded on Tuesday, August 5 2025.
