Mexico’s Trade Talks With Washington Snag on Cheese Names as Tax Revenue Stalls

MEXICO · ECONOMY

Mexico ended August under pressure on two fronts: a dispute over what cheese may be called is complicating trade talks with Washington, and fresh figures show tax revenue stalling because income tax collection keeps shrinking.

The cheese problem, explained for non-specialists

A geographical indication, or GI, is a legal label that ties a product name to a place. Champagne is the famous example; in cheese, think of feta or gorgonzola.

Mexico’s modernised trade deal with the European Union protects 55 European product names under this system. European cheesemakers gain exclusive rights to those names in the Mexican market.

That is where Washington’s problem starts. American dairy producers sell cheeses they call feta, asiago, gruyère, gorgonzola and fontina, and they fear losing that access.

According to Expansión, US dairy groups are pressing Mexico over the issue as part of the review of the USMCA, the trade pact between the United States, Mexico and Canada. The review is scheduled for 2026.

Why Washington made cheese a negotiating chip

The US Trade Representative’s office flagged the issue formally in December 2025. Jamieson Greer, who heads that office, told Congress the joint review depends on resolving a list of grievances.

Among them, he cited Mexico’s “unfair” protection of numerous meat and cheese terms for the European Union. He said it threatens market access for US producers.

The United States does hold a side letter in the USMCA that shields 33 names, including cheddar, mozzarella and brie. US exporters say the list does not cover every variety they actually ship to Mexico.

Names like gruyère, comté, beaufort and gorgonzola sit outside it. Mexican newspaper Zócalo described the three-way naming dispute as a fresh source of tension inside the review this week.

Why the EU deal protects those names at all

The GI system is Europe’s favourite trade tool, and it has a real economic logic. A protected name lets a small producer in France or Italy charge for reputation rather than volume.

Brussels trades that protection hard in every negotiation. Mexico granted it as part of a wider package that also cut tariffs on blue cheese from up to 45 percent to zero.

For Mexican shoppers the effect is subtle but real. The European product keeps its name on the shelf, while an American or domestic rival may need a new label.

Mexican dairy producers watch the fight quietly and with interest. Any restriction on imported names tends to favour the local versions sold beside them.

The numbers underneath the tax stall

The second front is fiscal, and El Economista reported the figures on Thursday. Tax collection fell 1 percent in real terms between January and July, against the same months of 2025.

The total was 3.41 trillion pesos (US$200.3 billion), according to preliminary data from the SAT, Mexico’s tax authority. The drag came from the income tax, known in Mexico as the ISR.

ISR receipts fell 7 percent in real terms, to 1.78 trillion pesos (US$104.5 billion). The income tax is the federation’s single biggest source of revenue, so its weakness decides the overall result.

The Finance Ministry attributes the decline to lower payments tied to companies’ annual tax returns. A slower economy means smaller declared profits, and smaller declared profits mean smaller cheques.

The trend is not new, only more visible. Income tax receipts had already fallen in the first quarter, and July’s report confirms the weakness was not a one-off.

The World Cup hid part of the weakness

The counterweight was the value-added tax, or VAT, a sales tax charged on most goods and services. It grew 9 percent in real terms, to 1.04 trillion pesos (US$61.2 billion).

Santiago Vélez, of the fiscal research commission at Mexico’s college of public accountants, credits consumer spending. June and July brought the FIFA World Cup, which Mexico co-hosted, and consumption surged with it.

Heavier enforcement against large taxpayers also helped, he said. The IEPS, an excise tax on fuel, tobacco and other goods, grew just 1 percent in real terms to 401.7 billion pesos (US$23.6 billion).

That figure is depressed by design. Since March the government has subsidised petrol and diesel to soften the oil-price shock from the war in Iran, and the subsidy comes straight out of excise receipts.

What the two fronts have in common

Both stories land on the same desk in Mexico City. The naming dispute tests Mexico’s room to manoeuvre between its two biggest trading relationships, Washington and Brussels. Neither relationship is one Mexico can afford to lose.

The tax numbers test its room to spend. Total government revenues, including oil and fees, reached 3.83 trillion pesos (US$225.2 billion) through July, down 1.6 percent in real terms.

Europe is no small prize either. EU agri-food exports to Mexico were worth 2.7 billion euros (US$3.1 billion) in 2024, and Brussels expects the modernised deal to grow them.

What to watch from here

The immediate date is Tuesday 8 September, when the government sends its 2027 budget package to Congress. No new taxes are expected, but enforcement is expected to tighten further.

On trade, watch whether the USMCA review produces a side deal that widens the list of protected US cheese names. That would defuse the dispute without reopening Mexico’s agreement with Brussels.

If neither front moves, the autumn gets harder. A treasury short of income tax has less patience for trade fights, and a trade fight makes the economy that pays those taxes weaker.

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