The leaders of Canada and Mexico, two of the United States’ largest trading partners, recently convened for a summit that conspicuously excluded their U.S. counterpart. Despite Washington’s absence, the lingering shadow of President Trump’s tariff policies cast a long influence over the discussions.
The talks, led by Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum, centered on strengthening trade and investment. Key sectors highlighted for collaboration included mining, agriculture, and natural gas.
Both leaders also prioritized discussions on how to safeguard their existing free trade partnership with the United States. This partnership has, to date, partially shielded their economies from the full brunt of President Trump’s tariffs. Just prior to the summit, the three North American nations initiated public consultations concerning the U.S.-Mexico-Canada Free Trade Agreement, or USMCA, marking the initial phase of the agreement’s review.
It is anticipated that Prime Minister Carney and President Sheinbaum utilized the meeting to share strategies for handling Mr. Trump. His approach to Canada and Mexico has varied, even though both countries maintain profound economic connections with the United States.
The Trump administration previously imposed significant tariffs on certain Canadian exports. Canada, much like China, was among the few nations to levy retaliatory measures against these U.S. trade actions.
Historically, Canada and Mexico have struggled to secure a comprehensive U.S. trade agreement akin to those achieved by Britain, the European Union, and Japan. However, Mexico has benefited from repeated extensions on trade negotiations, effectively avoiding the harshest tariffs and leveraging the terms of the USMCA, which was initially brokered during Mr. Trump’s first term.
Consequently, Canada and Mexico have begun actively revitalizing their bilateral relationship. This initiative saw a Canadian delegation visit Mexico City in August for discussions, with Canada’s foreign minister, Anita Anand, describing it as an “all-hands-on-deck approach.”
What is the state of Mexico-Canada relations?
Despite their shared trade agreement with the United States, Mexico and Canada’s independent economic and cultural ties have historically been limited.
Last year, Mexico accounted for merely 1 percent of Canadian exports, while Canada represented approximately 3 percent of Mexico’s export market. Geographically separated by the United States, both countries traditionally focused their trade efforts on their colossal neighbor, rather than cultivating stronger direct connections with each other.
Some Canadians have even harbored reservations about Mexico, particularly in Ontario, where the automotive industry has experienced significant decline as car manufacturers shifted operations to Mexico and the southern United States.
Prime Minister Carney’s visit occurs during a period of strained relations. Early in 2024, the previous Canadian government, under Justin Trudeau, upset Mexico by reinstating visa requirements for Mexican visitors. This policy aimed to curb asylum claims in Canada and address American concerns that Mexicans were using Canada as an entry point into the United States.
Following Mr. Trump’s election in November, certain Canadian politicians even proposed that their country should exclude Mexico from the three-nation trade arrangement.
The existing North American trade deal has afforded Mexico and Canada a comparatively favorable position. This is because nearly all goods exchanged under the USMCA are exempt from U.S. tariffs that have been applied to other Mexican and Canadian products. However, distinct global tariffs still affect sectors such as auto, steel, and aluminum.
What do the leaders hope to gain from talks?
Both Canada and Mexico share a common goal: to reduce their economic dependence on the United States.
“When the U.S. treats its partners like adversaries, its partners start acting like allies,” commented Daniel Trefler, a trade economist at the University of Toronto who has previously advised the Canadian government on trade negotiations.
Nonetheless, Professor Trefler expressed tempered expectations for the specific outcomes of the meeting between Mr. Carney and Ms. Sheinbaum.
“Is it going to be of huge economic import, fundamentally changing the North American economic space? No,” he stated.
Industries in both nations have ambitious lists of products they aim to export. Mexico seeks to increase its food exports to Canada, which currently imports much of its fresh produce from the United States during the winter months. Mexico is also actively seeking greater investment from Canadian enterprises.
Canada, in turn, is keen to expand its agricultural exports to Mexico and hopes Mexico will pivot from importing natural gas from the United States to Canadian sources instead.
Sebastián Vallejo Vera, a political scientist at Western University in London, Ontario, suggested that President Sheinbaum could offer Prime Minister Carney valuable insights on navigating an adversarial U.S. administration.
“The relationship between Mexico and America has been more fraught and for longer than the relationship between Canada and America,” Professor Vallejo Vera noted.
The leaders might also explore strategies to build support beyond the White House, engaging major corporations with cross-border interests and U.S. politicians who are keen on preserving the region’s trade equilibrium.
What are the obstacles and risks?
Even if Mexico and Canada successfully agree on a unified strategy to maintain their trade deal, they face the delicate task of avoiding the perception that they are collectively aligning against the United States.
Then, there’s the ever-present “Trump factor.”
“There’s a lot of uncertainty when it comes to Trump and his trade policy in general,” Professor Vallejo Vera concluded. “I don’t think anybody’s very certain on what his next move is going to be.”