Mexico and Canada: Hot-and-Cold or Ready to Move Forward?

As published in Policy Magazine

As Prime Minister Mark Carney embarks on his first official visit to Mexico, the bilateral relationship between the two countries sits at an unprecedented juncture.

Canada and Mexico, two unique and dynamic countries, have been growing steadily on opposite flanks of our shared neighbour for more than a generation. We have each evolved to fit a vision for North America, centered around the United States, of a powerful trade and economic bloc that has become the envy of the world.

Yet, when American attention wanes or its commitment to North America is seen to falter, Canada and Mexico drift apart, defaulting to closer engagement with countries that better reflect our cultural and linguistic histories.

Without solid and consistent U.S. leadership, this strong and vibrant trilateral project stalls and we revert to three separate bilateral relationships — Canada-U.S., U.S.-Mexico, and Mexico-Canada — each with its own set of challenges.

In the past, such pauses and regressions were temporary. The world was a more predictable place, where we could count on a resilient, rules-based order and long-standing alliances with broadly like-minded partners. That is not the world that surrounds us today and it’s unclear what will take its place.

When it became apparent earlier this year that Canada and Mexico could no longer rely on the United States, we were ill-prepared to step up together. At a time when our respective economic and security interests were most threatened, we lacked the instinct to turn towards each other. Understandably, we find ourselves questioning the concept of a North America without a clear commitment to its future from the United States.

In response, Canada and Mexico rightly reacted quickly and independently by assessing what lies within our control and what leverage we have with our common neighbour.

In Canada, these internal-facing exercises have produced valuable domestic initiatives, including a push to remove interprovincial trade barriers and press forward with major projects and infrastructure investment. In Mexico, this included a new national development and industrial policy called “Plan Mexico” and efforts to re-establish domestic manufacturing in sectors that are increasingly dominated by imports from Asia.

This week’s meeting of Canadian and Mexican business and government leaders in Mexico City presents a significant opportunity to reimagine our vast bilateral relationship.

The work Canadians do at home this year will strengthen the foundation on which we can build with Mexico and vice versa. Facing new U.S. tariffs and a looming affordability crisis, the incentives are now in place to drive a bilateral strategy that will allow our relationship and our economies to thrive.

We can work together to enhance complementary infrastructure, bolster channels for bilateral tariff-free trade, and maximize the advantages of two highly complementary economies.

Fortunately, the business communities in both Canada and Mexico are already there.

Canadian investors have more than tripled their weight in Mexico over the past 10 years to reach $46 billion in direct investment in 2024. Canadian-owned rail networks have consolidated and expanded links across North America that carry bonded products down to Mexico free of U.S. tariffs, and the push is on to increase these volumes in both directions.

Canada and Mexico have an opportunity today to focus on facilitating trade in sectors impacted by recent changes. By prioritizing interregional trade, we can substitute imports from less reliable or distant trading partners. This will fortify our regional competitiveness and reinforce supply chain security.

Critical to our success will be stable bilateral commitments in the absence of well-functioning trilateral rules. We must deepen cooperation in traditional industries, such as energy, mining and agrifood, but also incorporate the elements of the future economy by upskilling our workforces, facilitating labour mobility, encouraging early adoption of AI tools, and collaborating more on research and innovation.

This week’s meeting of Canadian and Mexican business and government leaders in Mexico City presents a significant opportunity to reimagine our vast bilateral relationship based on two North American countries that have grown and matured over 30 years of increasing integration.

While we cannot control the degree of commitment from our common neighbour going forward, we can maximize the potential of the Canada-Mexico pillar within North America.

Whether we capitalize on this moment depends on our ability to sustain a clear, consistent and reliable partnership in the face of great disruption and a volatile global economy.