Clash between US and Canada puts Mexico on high alert on the eve of USMCA review

Mexico is waiting expectantly on decisions from its two most important trade partners, the United States and Canada. At odds over their positions on global trade, the countries are navigating the fine line between cooperation and rupture. The future of the free trade agreement between them, the United States-Mexico-Canada Agreement (USMCA), is currently the subject of much dialogue and debate from their leaders. U.S. President Donald Trump has declared that he considers the agreement “irrelevant” to his country’s industry. Meanwhile, Canadian Prime Minister Mark Carney has begun to look to China to diversify his own nation’s trade balance, and Mexican President Claudia Sheinbaum is calling for calm, insisting that the USMCA will not be broken under any circumstances.

This year’s review of the USMCA has not yet formally begun, though some conversations between its members have already kicked off. Decisions as to its future are expected to be announced by July 1. Conditions that Trump has imposed on world trade during the last year were mentioned by Carney in a forceful speech at the Davos forum this week. “Great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited,” said the Canadian, in clear reference to Trump’s tariffs.

Canada’s unease with the trade shifts imposed by the United States is calling into question its resolution to remain in the USCMA. Last week, Carney traveled to China to sign onto new trade conditions that, among other things, will allow for the entry of Chinese electric vehicles into his country. That agreement, and the prime minister’s remarks at Davos, have been seen as an affront to Trump. “Canada lives because of the United States,” said the Republican leader on Wednesday. The tension between the neighboring countries has been constant since Trump’s return to the White House a year ago, but in recent weeks, has escalated.

Sheinbaum has once again opted to remain on the sidelines of the debate between her peers. On Wednesday, the Mexican president described Carney’s speech as “very good” and “very much in tune with the current times”. But she has insisted that the USMCA is not at risk, and that this year’s negotiations will not result in the end of the agreement. “It is in the United States’ interest,” she said. “The treaty will remain in place. There may be some changes, but the wording will remain the same, because it is mutually beneficial. Obviously, we have to seek out relationships with other regions of the world.”

The Mexican president and the Canadian prime minister met in September in Mexico City. At the time, they made it clear that both countries would work to maintain the agreement, with the goal of supporting North America’s strength as a commercial block able to compete with other regions. The meeting between Ottawa and Mexico City also strengthened a push to bolster their bilateral relationship running up to the review of the USMCA. Sheinbaum received Mary Simon, the governor general of Canada, at the National Palace this week. Simon, an official appointed by the king of England whose duties include summoning the Canadian Parliament and supporting the country’s Armed Forces, spoke with the president about Indigenous communities and the relationship between the two countries. Sheinbaum has also announced that a delegation of Canadian business leaders will travel to Mexico in February to examine possibilities for new investments in the country.

Sheinbaum has acknowledged that while the future of the USMCA is undefined, her administration has been concentrating its attention on other trade matters, such as its agreements with the European Union, Brazil, Singapore, South Korea, France and China. This month, Mexico began to charge tariffs on 1,400 products from Asia, largely from China, a move billed as defense of national production. The measure has also been seen as an opportunity for the Latin American country to align itself with Trump’s protectionist policies.

According to the Foundation for Defense of Democracies’ Center on Economic and Financial Power, ending the USMCA in exchange for bilateral agreements between its members would threaten 17 million jobs that depend on the production chains it has formed over the last three decades. “Canada’s deal with Beijing disrupts what appeared to be a path toward a smoother USMCA renegotiation process. Mexican President Claudia Sheibaum had signaled a willingness to stabilize the trade relationship with the U.S. and make needed tariff concessions on China-related concerns,” states the Washington-based think tank.

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