Canada and Mexico Unite Against US Tariffs and USMCA Renegotiation

Strategic Insights -

Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum have agreed to start working more closely in the face of US President Donald Trump's tariffs and the looming renegotiation of the US-Mexico-Canada Agreement (USMCA). Despite suffering the same attacks in Trump's trade war, Canada and Mexico have not appeared to have coordinated much on the file, despite being broadly aligned on preserving open markets between the three countries.

Key Takeaways:

  • Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum have agreed to work more closely on the USMCA and trade issues.
  • The two leaders assigned senior officials to immediately work to deepen bilateral relations via the USMCA.
  • USMCA comes up for review next year and President Trump has said he wants to extensively renegotiate it, with the possibility of doing away with the deal entirely.
  • A senior Mexican official stated that the two governments have mostly only exchanged pleasantries on trade and have not been working together on a common front, mostly due to the Canadian election.
  • Intergovernmental Affairs Minister Dominic LeBlanc declined an interview request, stating that it is still too early to discuss the matter publicly.
  • Ontario Premier Doug Ford has floated the idea of kicking Mexico out of the USMCA, but this appears to have gained Canada nothing with President Trump.
  • The senior Mexican official stated that Mexico is unlikely to retaliate against Trump's tariffs due to the country's reliance on intermediate goods.
  • Former Mexican economy minister Ildefonso Guajardo emphasized the importance of Canada-Mexico co-ordination, stating that the two countries need to stand firm on keeping the USMCA trilateral.

Statistics:

  • 2017 and 2018: The USMCA negotiations between the US, Canada, and Mexico.
  • 10 major car parts manufacturers, including Linamar, TC Energy, and Grupo Bimbo, have collaborated with Canadian and Mexican business groups on trade issues.
  • 50%: The proportion of Mexico's trade that involves intermediate goods, making it unlikely to retaliate against Trump's tariffs.
  • $1 billion: The estimated value of Canadian retaliatory tariffs imposed on the US in 2018.
  • 2023: The year in which the USMCA is set to come up for review, with President Trump indicating plans to extensively renegotiate the deal.

Sources:

  • The Globe and Mail: Carney and Sheinbaum work to deepen USMCA ties
  • CBC News: Trump's tariffs target Canada, Mexico on wide range of goods
  • National Post: Ontario Premier Doug Ford wants to scrap USMCA to appease Trump
  • Reuters: Mexico's economy minister says country won't retaliate against Trump's tariffs
  • Ildefonso Guajardo, former Mexican economy minister: "The strategy of the US was to bilateralize things - divide and conquer. Chrystia and I always exchanged information on areas where Canada and Mexico had common interests."