In a move aimed at bolstering trade and investment ties, Mexico and the European Union unveiled a revamped trade agreement on Friday. The agreement, known as the Global Trade Agreement, is set to bring significant benefits to both parties and comes at a crucial time, just days before the inauguration of U.S. President-elect Donald Trump, who has threatened to impose tariffs on Mexico and other trading partners.

The new agreement includes provisions to reduce Mexican tariffs on agri-food imports from Europe, eliminate barriers to European investment in Mexico, and enhance Mexican exports of raw materials such as fluorspar, antimony, copper, zinc, and lead. Additionally, the updated deal aims to foster strategic cooperation on key geopolitical issues, according to the European Union.

“We have entered a new era in our strategic partnership with Mexico today. Our upgraded agreement shows the E.U. and Mexico united for freer trade and an open global economy,” said Kaja Kallas, vice president of the European Commission.

With the specter of potential tariffs looming from the U.S., the enhanced trade agreement with the E.U. offers Mexico a valuable opportunity to diversify its export markets and reduce its dependence on the United States. While trade between Mexico and the European Union remains relatively modest compared to U.S.-Mexico trade, the agreement is seen as a positive step towards balancing Mexico’s trade relationships.

Gabriela Siller, director of economic analysis at Banco Base, highlighted the significance of the updated agreement in reducing U.S. dominance over Mexican exports. “This is very positive for Mexico, because it needs to diversify its exports,” Siller noted, emphasizing the importance of reducing reliance on a single trading partner.

As Mexico looks to strengthen its economic ties with other regions, Economy Secretary Marcelo Ebrard announced that he was engaging with representatives of Detroit’s automotive sector to enhance bilateral cooperation. This move underscores Mexico’s commitment to expanding its trade relationships beyond traditional markets.