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Tariffs

Canada and Mexico Strengthen Ties Amid US Tensions

Strategic Insights

— 2 min read

As the United States continues to engage in tariffs and diplomatic spats with both Canada and Mexico, the two neighbors have found common ground in recent months. Canadian Prime Minister Mark Carney's visit to Mexico aims to smooth over ruffled feelings and strengthen trade between the two countries. This development comes as Canada looks to diversify its trade away from the United States and build economic resilience.

Key Takeaways:

  • Canada's efforts to distance itself from Mexico under the Trump administration led to miscalculation, as it failed to secure any concessions from the U.S. and was instead treated worse on the trade front.
  • The Canadian government has neglected Mexico in the past, taking it for granted and not understanding its concerns.
  • Trade between Canada and Mexico has grown since the North American Free Trade Agreement in 1994, but both countries have prioritized their relations with the United States.
  • In 2024, Canada sent more than three-quarters of its exports to the U.S. and only 1.2 percent to Mexico, while Mexico sent more than 80 percent of its exports to the U.S. and only 3 percent to Canada.
  • High-ranking Canadian cabinet ministers met with Mexican President Claudia Sheinbaum and business leaders last month in an effort to deepen ties.
  • The comments made by Canadian officials in response to Trump's tariff threats were seen as an insult by Mexico, and some analysts believe they were a mistake.
  • Diego Marroquín Bitar, an analyst at the Center for Strategic and International Studies, said that Canada must rebuild trust with Mexico and work together to negotiate with the U.S.
  • The recent visit by Canadian Prime Minister Mark Carney to Mexico is aimed at smoothing over ruffled feelings and strengthening trade between the two countries.

Statistics:

  • In 2024, Canada sent 75.3% of its exports to the U.S. and only 1.2% to Mexico.
  • Mexico sent 80.5% of its exports to the U.S. and only 3.1% to Canada.
  • The vast majority of fentanyl enters the U.S. via the southwest border, with only a small percentage coming from Canadian imports.
  • The tariffs imposed by Trump on Canadian goods not compliant with the USMCA increased from 25 to 35 percent in 2023.
  • The Bank of Canada's governor, Tiff Macklem, said that the recent tariffs have increased trade friction with the U.S., resulting in efficiency costs.

Sources:

  • The Washington Post: "Canada and Mexico: A tale of two relationships, in very different times"
  • Center for Strategic and International Studies: "Mexico's Place in the World: The Economy, Politics, and Foreign Policy"
  • Business Council of Canada: "Canada-Mexico Trade and Investment Opportunities"
  • Government of Canada: "Canada-Mexico Relations"
  • Mexico's Ministry of Foreign Affairs: "Mexico-Canada Relations"

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