Water rights under an 80-year-old treaty have sparked the latest tariff talk from the White House.

On Monday, President Donald Trump threatened to slap an added 5% tariff on imports from Mexico if the country doesn’t release 200,000 acre-feet of water before December 31, with more than triple that amount to follow soon after.

  • At issue is a 1944 treaty between the U.S. and Mexico to share water from the Rio Grande and Colorado and Tijuana rivers.
  • Mexican imports that do not comply with the U.S.-Mexico-Canada Agreement currently face a 25% tariff. (Trump negotiated the USMCA, which is up for review in 2026, during his first term.)

The move escalates the ongoing fight with the United States’ largest trading partner – and a nearshoring hub for some promotional products companies.

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Mexican and U.S. officials met virtually on Tuesday to discuss the water dispute. Trump says the lack of water is harming communities in Texas along the U.S.-Mexico border, and Mexico says there is simply not enough water to comply due to ongoing drought conditions.

“We need to reach an understanding, we need to coordinate,” said Mexico’s President Claudia Sheinbaum Tuesday during a daily news conference broadcast on YouTube. “… We want to comply with the treaty but taking into account the current conditions.”

Sheinbaum met with Trump at the World Cup draw in Washington – their first in-person meeting – earlier this month to personally lobby for an agreement to lower the current import duties.

“I take comfort in the fact that, as of [Tuesday] night, the Mexican government struck a conciliatory tone on this matter, which, if history is any indicator with the current U.S. presidential administration, will lead to a productive outcome on the tariff front,” says Chris Anderson, CEO of HPG, PPAI 100’s No. 4 supplier, which has operations in Mexico.

“In the meantime, it is business as usual in the USA – and Mexico,” he says, “even if against a backdrop of a threatened, but unlikely, increased tariff.”

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Please contact Rachel Zoch, PPAI’s public affairs manager, at rachelz@ppai.org if you have any questions about regulatory issues or government affairs.