Deepening Trade Relationships: Canada bolsters commerce with Mexico in response to US tariff pressures
In the face of escalating trade tensions, Canada and Mexico are working to strengthen their direct trade relationships and build collaborative plans outside the pressures of US tariff actions.
Despite former U.S. President Donald Trump's imposition of 35% tariffs on certain Canadian goods on August 1, 2025, Mexico was granted a 90-day reprieve while negotiations continue. Both Canada and Mexico continue trading heavily under the USMCA framework, which keeps most trade tariff-free.
Recent meetings between Canadian and Mexican officials focused on developing a bilateral work plan. This plan aims to enhance resilient supply chains, improve port-to-port trade, and collaborate on artificial intelligence, digital economy cooperation, energy security, and security matters.
Mexican President Claudia Sheinbaum has ruled out establishing a separate bilateral trade agreement with Canada, emphasizing that the existing USMCA agreement is sufficient. However, she supports deepening their direct trade relationship within that framework.
Canada and Mexico maintain strong economic ties. Mexico is Canada’s third-largest merchandise trading partner, and Canadian direct investment in Mexico has grown steadily. Both nations view expanding bilateral trade as important to diversify away from reliance on the U.S. market under the pressures of U.S. tariff actions.
At the provincial level, Alberta has recently sought to bolster Canada-Mexico energy ties, leveraging its ability to export oil and natural gas by sea to benefit Mexico. This sector-specific cooperation indicates ongoing efforts despite U.S. trade disruptions.
The U.S. tariffs imposed on Mexico, Canada, and China have been moved forward. However, it's important to note that Canada's outreach to reset its trade relationship with Mexico was not motivated by these tariffs. Instead, it reflects a need for continental coordination ahead of next year's USMCA review.
Prime Minister Mark Carney has dispatched his top diplomat and finance minister to Mexico City for these discussions. The meetings explored infrastructure investments in ports and railways to facilitate trade, with executives from Canadian Pacific Kansas City Ltd., TC Energy Corp., and Caisse de Depot et Placement du Québec participating.
Global Logistics reported on Mexico celebrating its exclusion from the new US tariffs, marking a significant development in the ongoing trade relations between the two nations.
Despite the tensions, both Canada and Mexico continue to prioritize strengthening their trade relations directly and working through USMCA mechanisms to mitigate the impacts from U.S. trade policies.
The ongoing trade tensions between multiple nations, including the US, have led Canada and Mexico to prioritize strengthening their direct trade relationships and collaborative plans, focusing on sectors like artificial intelligence, digital economy, energy security, and security matters, beyond the pressures of US tariff actions in global finance. Canadian Prime Minister Mark Carney, in an effort to diversify trade away from US reliance and mitigate the impacts from US trade policies, has sent top diplomats and finance ministers to Mexico City for discussions, focusing on infrastructure investments in ports and railways for business growth.
