In a significant move following eight months of tumultuous trade talks and tariff threats, Canada and Mexico—the United States’ two most vital trading partners—convened a summit on Thursday without their American counterpart.
Prime Minister Mark Carney of Canada and President Claudia Sheinbaum of Mexico are focusing their discussions on bolstering trade relations and exploring new investment opportunities in key sectors such as mining, agriculture, and natural gas.
A primary goal for both leaders is to safeguard their existing free trade agreement with the United States—the U.S.-Mexico-Canada Agreement (USMCA)—which has provided a buffer against President Trump’s tariffs. This meeting occurs shortly after the three nations initiated public consultations for a comprehensive review of the agreement.
Carney and Sheinbaum are also expected to share strategies for managing interactions with President Trump, whose administration’s approach to Canada and Mexico has varied, despite their strong economic interdependencies with the U.S.
The Trump administration has previously imposed steep tariffs on some exports from Canada, making Canada one of the few countries, alongside China, to retaliate against U.S. trade measures.
Unlike Britain, the European Union, and Japan, Canada and Mexico have yet to secure a dedicated U.S. trade deal. However, Mexico has consistently received extensions on trade talks, thereby avoiding the most severe tariffs and benefiting from the terms established during President Trump’s first term through the USMCA.
Consequently, Canada and Mexico have actively sought to revitalize their bilateral relationship. In August, a Canadian delegation visited Mexico City for talks, with Canada’s foreign minister, Anita Anand, describing their intensified engagement as “an all-hands-on-deck approach.”
What is the current state of Mexico-Canada relations?
Despite their shared trade agreement with the United States, Mexico and Canada have historically maintained a somewhat distant economic and cultural relationship.
Last year, Canadian exports to Mexico constituted only 1 percent of their total, while Canada represented merely 3 percent of Mexico’s export market. Geographically separated by the United States, both nations traditionally prioritized trade with their massive southern neighbor over fostering closer direct ties.
A degree of mistrust towards Mexico has also been present in Canada, particularly in Ontario, where the automotive industry has declined significantly as car manufacturers expanded operations into Mexico and the southern U.S.
Prime Minister Carney’s arrival in Mexico marks a low point in their relations. The previous Canadian government, under Justin Trudeau, strained ties by imposing visa requirements on Mexican visitors in early 2024. This measure aimed to curb asylum claims in Canada and address American complaints that Mexicans were using Canada as an entry point into the United States.
Following Mr. Trump’s election in November, some Canadian politicians even suggested that their country should consider withdrawing Mexico from the trilateral trade agreement.
The North American trade agreement has granted both Mexico and Canada a notable advantage because nearly all exports exchanged under the USMCA are exempt from U.S. tariffs on Mexican and Canadian goods. However, separate global tariffs still apply to auto, steel, and aluminum products.
What do the leaders hope to achieve?
Both Canada and Mexico aim to lessen their trade 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 past trade negotiations.
Nevertheless, Professor Trefler expressed tempered expectations for the meeting between Prime Minister Carney and President 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 wish to export. Mexico is particularly keen to increase food exports to Canada, which currently relies heavily on U.S. imports for fresh produce during winter months. Mexico is also actively seeking greater investment from Canadian companies.
Canada, in turn, seeks to expand its agricultural exports to Mexico and hopes that Mexico will pivot to Canadian natural gas, reducing its reliance on U.S. imports.
Sebastián Vallejo Vera, a political scientist at Western University in London, Ontario, suggested that Ms. Sheinbaum might offer Mr. Carney valuable insights on navigating an often antagonistic 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 observed.
The leaders might also explore strategies to build support from influential political and economic entities beyond the White House, including major corporations with cross-border ties and U.S. politicians committed to preserving regional trade stability.
What are the primary obstacles and risks?
Even if Mexico and Canada successfully coordinate an approach to maintain their trade deal, they must carefully avoid any perception of “ganging up” on the United States.
Then, of course, there’s the persistent “Trump factor.”
“There’s a lot of uncertainty when it comes to Trump and his trade policy in general,” Professor Vallejo Vera noted. “I don’t think anybody’s very certain on what his next move is going to be.”