Canada, Mexico look to strengthen trade partnership

Canada and Mexico have pledged closer cooperation after high-level talks, aiming to present a united front to Washington on trade disputes.

Canada and Mexico could gain leverage with Washington by working more closely, but their heavy reliance on the US market will limit the impact, said Julian Castro-Rea, a professor of political science at the University of Alberta.

"There's no doubt about it," Castro-Rea said. "Mexico and Canada are formal trade partners within the CUSMA (the Canada-United States-Mexico Agreement). Both countries have an advantage in teaming up to strengthen their bargaining positions vis-a-vis the US."

Mexico and Canada ended two days of high-level diplomatic and trade talks on Wednesday in Mexico City.

Both sides said the meetings were an effort to shore up bilateral relations between the two North American trade partners. The talks followed intense negotiations over trade, especially efforts to avoid further tariffs from the Trump administration.

Canada, however, has yet to secure any exemptions from the 35 percent tariffs Washington imposed starting Aug 1, while Mexico negotiated a 90-day reprieve after direct engagement between Mexican President Claudia Sheinbaum and US President Donald Trump.

"Mexico, specifically the Mexican president, has been more successful in bargaining and taming President Donald Trump's destructive instincts," said Castro-Rea.

He cited a lengthy phone call in which Sheinbaum "made him (Trump) realize the important efforts Mexico is deploying for curbing drug smuggling to the United States, and overall how important Mexico is for the US economy".

In contrast, Castro-Rea said, Canada became "embroiled in a complex, multilevel negotiation" and Canadian Prime Minister Mark Carney's decision to impose retaliatory tariffs and signal recognition of a Palestinian state "certainly didn't help his bargaining position".

"The official reason offered by the US government to impose extra tariffs of 35 percent on Canada was the lack of progress in stopping fentanyl traffic to the US.

"But that is certainly just an excuse given the small amounts of that drug smuggled into the US from Canada," he said.

Trade between Canada and Mexico is modest compared with their exchanges with the United States, he said. "This is understandable given the size of the US economy, which offers an attractive market."

Still, there is some momentum. Mexico's exports to Canada reached $18.61 billion in 2024, while Canada's exports to Mexico were $6.33 billion, according to the United Nations COMTRADE database on international trade.

On whether stronger bilateral trade could offset US tariffs, Castro-Rea said: "In theory, yes. That is one of the goals of the Canadian ministerial visit to Mexico.

"However, unfortunately, both the Mexican and Canadian economies are extremely dependent on the US market, so creating an alternative to it would take years of consistent effort," he said.

Sheinbaum on Wednesday ruled out a bilateral trade agreement with Canada when asked about the possibility.

"We have the treaty, obviously, but we also want Canadian companies to continue investing … to expand direct trade between Canada and Mexico," Sheinbaum said.

"It is unlikely that either Mexican or Canadian exporters will engage in that effort, because they are obsessed with the immediate profits that the low-hanging fruit of the US market offers," Castro-Rea said.

He identified several sectors where bilateral cooperation has potential, including joint manufacturing of train and subway wagons, mining partnerships, and technologies for oil and gas processing.

However, Castro-Rea cautioned that "cooperation in the areas of clean energy and critical minerals is constrained by Mexico's current policies of managing strategic economic sectors without the interference of foreign investors".

gaoyang@chinadailyusa.com