Mexico and Canada Double Down on Partnership as U.S. Raises the Bar on Trade

Mexico and Canada have just formed a closer partnership to protect themselves as the United States sharpens its trade demands.

This new agreement comes as leaders from both countries, President Claudia Sheinbaum of Mexico and Prime Minister Mark Carney of Canada, prepare for the big 2026 renegotiation of the USMCA, the regional trade deal covering over a quarter of the world’s economy.

Trade between Mexico and Canada reached about $56 billion last year, with vehicles and machinery as the main products.

Both countries depend heavily on the U.S. market, but tensions have risen as the U.S. government increases import tariffs and demands more of their high-value exports contain North American-made parts.

Most recently, the U.S. started charging a 25% tariff on many goods from Canada and Mexico that don’t meet USMCA requirements.

Meanwhile, Canadian officials and some American lawmakers accuse China of using Mexico as a loophole to send goods into North America without paying full tariffs. Ontario’s premier openly claimed that China’s carmakers and parts suppliers find a way in through Mexico.

Because of such suspicions, the U.S. and Canada now push for stricter trade rules, especially for the auto industry where USMCA already requires 75% North American content per car, much higher than before.

Mexico faces another challenge with Canadian mining firms. These companies represent most of the foreign investors in Mexican mining, but new rules make it harder to get permits over environmental concerns, slowing business and raising complaints.

The real story is not just about rules or tariffs—it’s about power and position. With the U.S. acting tough and unpredictable, Mexico and Canada need each other more than ever to keep their industries stable and bargaining strength solid.

Both have learned that going alone means risking weaker deals and more political risks from Washington.

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