The leaders of Canada and Mexico, the two largest trading partners of the United States, are set to meet on Thursday. This summit will proceed without their U.S. counterpart, following eight months of tumultuous trade discussions and the looming threat of tariffs.
Discussions between Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum are expected to center on trade, alongside strategic investments in key sectors such as mining, agriculture, and natural gas.
A critical item on their agenda is preserving their existing free trade partnership with the United States. This agreement, the U.S.-Mexico-Canada Agreement (USMCA), has, until now, mitigated the impact of former President Trump’s tariffs on their economies. The three nations recently initiated public consultations on the USMCA, marking the initial phase of a comprehensive review of the pact.
Prime Minister Carney and President Sheinbaum will likely also share insights on their approaches to dealing with Mr. Trump. His policies have affected Canada and Mexico differently, despite their profound economic interdependence with the United States.
The Trump administration previously imposed steep tariffs on some Canadian exports. Canada, much like China, has been among the few countries to retaliate against these U.S. trade measures.
Unlike Britain, the European Union, and Japan, Canada and Mexico have yet to secure a new trade deal with the U.S. However, Mexico has received several extensions on trade talks, allowing it to largely avoid the harshest tariffs and benefit from the existing USMCA terms, which were originally negotiated during Mr. Trump’s first term.
Consequently, Canada and Mexico have begun actively revitalizing their bilateral relationship. In August, a Canadian delegation traveled to Mexico City for discussions, with Canada’s foreign minister, Anita Anand, emphasizing 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 have historically maintained somewhat distant economic and cultural ties.
Last year, Mexico accounted for only 1 percent of Canadian exports, while Canada represented around 3 percent of Mexico’s export market. With the vast United States separating them, both nations have traditionally prioritized trade with their powerful southern/northern neighbor over cultivating stronger direct ties with each other.
Some voices in Canada have even viewed Mexico with a degree of apprehension, particularly in Ontario, where the automotive industry has declined significantly as car manufacturers expanded operations in Mexico and the southern U.S.
Prime Minister Carney’s arrival coincides with a low point in their relations. The previous Canadian government, under Justin Trudeau, strained relations by imposing visas on Mexican visitors in early 2024. This measure aimed to curb asylum claims in Canada and address U.S. concerns about Mexicans using Canada as an entry point into the United States.
Following Mr. Trump’s election in November, some Canadian politicians even floated the idea of excluding Mexico from the trilateral trade agreement.
Despite these challenges, the North American trade deal has positioned Mexico and Canada advantageously. Nearly all exports traded under the USMCA are exempt from U.S. tariffs on Mexican and Canadian goods, though separate global tariffs apply to sectors like auto, steel, and aluminum.
What do the leaders hope to gain from talks?
Both Canada and Mexico aim to reduce their trade reliance 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.
However, Professor Trefler expressed tempered expectations for 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 countries have identified products they wish to export more. Mexico seeks to increase food exports to Canada, which currently relies heavily on U.S. produce during winter months. Mexico is also looking to attract more investments from Canadian companies.
Canada, conversely, hopes to expand its agricultural exports to Mexico and is pushing for Mexico to replace its current U.S. natural gas imports with Canadian alternatives.
Sebastián Vallejo Vera, a political scientist at Western University in London, Ontario, suggested that Ms. Sheinbaum might offer Mr. Carney guidance on navigating an 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 consider rallying support from political and economic forces beyond the White House, such as major corporations with ties across their countries and U.S. politicians keen on safeguarding the region’s trade balance.
What are the obstacles and risks?
Even if Mexico and Canada successfully coordinate an approach to maintain their trade deal, they must carefully manage the perception that they are ganging up on 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 noted. “I don’t think anybody’s very certain on what his next move is going to be.”