As U.S. trade tensions escalate, Canada looks to strengthen economic ties with Mexico — a key partner long overlooked, experts say.
Leaders Meet to Reset Bilateral Focus
Prime Minister Mark Carney and Mexican President Claudia Sheinbaum met privately at the G7 summit in Kananaskis, Alberta in June, launching a renewed diplomatic effort between Canada and Mexico. Foreign Affairs Minister Anita Anand and Finance Minister François-Philippe Champagne are currently in Mexico City to build a stronger economic relationship. The timing coincides with rising uncertainty in Canada’s trade negotiations with the United States.
Mexico: An Overlooked Economic Ally
Despite Mexico being a larger trading partner than France or the UK, Canada has historically under-prioritized the relationship. Carleton University political science professor Laura Macdonald noted a “reluctance by Canada to engage seriously with Mexico,” often defaulting to U.S. trade partnerships instead. Trade experts say it’s time Canada treated Mexico as a modern, diversifying economy rather than a low-wage production site.
No New Trade Deal, but Opportunity Remains
President Sheinbaum confirmed that there’s “no need” for a separate bilateral trade deal beyond the existing Canada-U.S.-Mexico Agreement (CUSMA). However, both countries agreed to explore new areas for cooperation, including supply chains, agri-food, AI, and energy. Champagne called the discussions “quite extraordinary,” while Anand emphasized the importance of deepening partnerships with Mexican business leaders.
Trade Volume Far Below Potential
Only 3% of Canada’s two-way merchandise trade involves Mexico, according to Export Development Canada. In contrast, 70% is with the United States. Canadian investment in Mexico has surged since 2010, but Mexican investment in Canada remains modest at just $3.1 billion USD as of 2023. Experts argue that mutual underestimation has hindered more ambitious collaboration.
Cultural and Structural Barriers Persist
Language and cultural differences have played a role in the weak trade ties. Macdonald noted that Canadian firms have made little effort to adapt — including learning Spanish — while many Mexicans see Canada as merely a cold extension of the U.S. Addressing these gaps will be essential to strengthening economic and diplomatic connections.
Debunking the ‘Northern Corridor’ Rumour
Speculation has swirled online about a so-called “Northern Corridor” — a $120-billion Canada-Mexico trade route bypassing the U.S. via rail and sea. The claim, which originated from a dubious YouTube video, is riddled with inaccuracies and lacks credible sources. Trade law expert Debra Steger dismissed the idea as logistically and economically unfeasible.
Coordinating U.S. Strategy Behind Closed Doors
Despite public comments, Canadian ministers have not disclosed whether they’re aligning with Mexico on U.S. tariff negotiations. Mexico recently received a 90-day exemption from new U.S. tariffs on non-CUSMA-compliant goods, prompting questions about Canada’s strategy. Carney suggested he would speak to former President Trump “when it makes sense.”
Outlook: Time to Rethink the North American Equation
Economists and trade councils agree: Canada and Mexico have room to grow beyond the shadow of the U.S. While policy differences and geography have slowed progress, the shifting global landscape may finally push Ottawa to reimagine its southern neighbour as a strategic partner — not just a secondary option.
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