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Mexican President Claudia Sheinbaum hosted Canadian Prime Minister Mark Carney this week for a summit in Mexico City that likely would not have happened if not for the ongoing challenge posed by Donald Trump’s return to the White House. | |
Trump has imposed tariffs of 35 percent on Canada and 25 percent on Mexico, ostensibly as punishment for failing to address cross-border drug trafficking and illegal migration, though many goods are exempt due to the U.S.-Mexico-Canda Agreement, the free trade deal that the three countries signed during Trump’s first term as a replacement for NAFTA. | |
With the USMCA coming up for a mandatory review next year, Trump is expected to use that occasion to seek further concessions from Canada and Mexico—perhaps not only on trade but also on other issues like migration and security cooperation. Sheinbaum and Carney know that they will have more leverage in those negotiations if they forge a united front, but first they have some repair work to do in their own bilateral relationship. | |
Canadian officials were taken aback when, during negotiations over the USMCA in 2018, Mexico struck a preliminary bilateral trade deal with the U.S. that threatened to leave Canada out in the cold. And last fall, as Trump prepared to take office, Canadian officials ruffled feathers in Mexico with critical comments about Mexico’s trade with China and its ongoing struggles against drug cartels. Ontario Premier Doug Ford even said that being compared to Mexico was “the most insulting thing I have ever heard.” | |
At a joint press conference following their meetings in Mexico City, reporters pressed Carney and Sheinbaum on whether they would be able to unite against Trump without throwing each other “under the bus.” Carney bristled at the question, saying “Canada is absolutely committed to work with both our partners. Is that unequivocal enough for you?” Sheinbaum concurred that a “trade agreement for all three countries is the best thing for all three countries.” | |
As part of their bid to mend ties, Carney and Sheinbaum signed a new “comprehensive strategic partnership,” which they said would “complement” the USMCA. They also agreed to strengthen direct commercial links between the two countries, including through maritime trade that doesn’t rely on crossing U.S. territory. | |
The stakes for these trust-building efforts are high. Since the USMCA came into force in 2020, Mexico and Canada have become the United States’ top trading partners. With both countries’ economies already facing considerable headwinds, losing the preferential access and integrated supply chains of the deal would be a body blow at an inopportune time. | |
At next year’s review, the three countries will need to agree on whether to renew it—potentially with updated provisions. Failing to do so will trigger a series of annual reviews beginning in 2027 for ten years, before its scheduled expiration in 2036. | |
According to a recent report from the Center for Strategic and International Studies in Washington, the most likely scenario is that the three parties fail to resolve their differences and proceed to annual reviews. Other possibilities include early withdrawal by one of the signatories, a fallback to bilateral agreements, or a “painful withdrawal” by which Mexico and Canada agree to steep concessions. | |
Given Trump’s penchant for unpredictability and chaos, nothing can be ruled out. For Canada and Mexico, steering the talks to a mutually beneficial outcome will mean first overcoming the mistrust between them. |