Mexico and Canada strengthen their economic agenda in North America as trade pressure from Washington intensifies
The economic relationship between Mexico and Canada is entering a more pragmatic phase. With the USMCA review on the horizon and tougher messaging coming out of the White House, both governments are looking to safeguard their productive integration with an agenda that prioritizes infrastructure, energy, logistics, and trade facilitation. The shift comes at a particularly sensitive moment: the region is competing to attract investment tied to supply-chain reshoring (nearshoring) while also facing risks of trade fragmentation and politically driven tariff measures.
The new Mexico–Canada Action Plan, pushed by the administrations of Claudia Sheinbaum and Mark Carney, puts the economy at the center of the bilateral relationship. Unlike previous efforts—more heavily oriented toward social cooperation and cross-cutting agendas—this version lays out operational goals: port modernization, logistics corridors, and regulatory coordination to reduce transportation costs and customs clearance times. The aim is to build resilience against external shocks and sustain more stable supply chains in sectors where North America competes with Asia and Europe.
The numbers show both its importance and room to grow. In 2024, Mexico–Canada trade totaled around $32 billion U.S. dollars, a small fraction of Mexico’s overall trade. Even so, the balance has favored Mexico: Mexico’s trade surplus with Canada was nearly $5.9 billion in 2024 and widened in 2025. On investment, Canada remains one of the leading sources of FDI in Mexico—with a presence in manufacturing, mining, financial services, energy, and infrastructure—while Mexican investment in Canada is still comparatively smaller, leaving room for a more aggressive business strategy toward that market.
The logistics component is crucial for Mexico for an additional reason: nearshoring competitiveness depends not only on wages or proximity to the United States, but also on cargo capacity, customs processing times, rail reliability, highway security, and energy supply. In practice, an efficient corridor between ports, industrial hubs, and border crossings can determine whether a company assigns new production lines to the Bajío, northern Mexico, or other regions in Latin America. Cooperation with Canada aims to add interoperability and standards that facilitate the movement of inputs, particularly for auto parts, aerospace, agribusiness, and medical devices.
On energy, the plan calls for a more technical dialogue to strengthen supply security and move toward infrastructure compatible with climate goals without sacrificing competitiveness. For Mexico, the equation is delicate: industrial power demand is growing, while bottlenecks persist in transmission and distribution networks and requirements for firm power increase for new plants. Coordination with Canada—an important player in grid technologies, natural gas, renewables, and critical minerals—could translate into cooperation on standards, financing, and best practices, though results will depend on regulatory certainty and Mexico’s ability to execute projects on the ground.
There is also a bet on innovation. Both governments plan to sign a memorandum of understanding before March 2026 to strengthen scientific collaboration in strategic areas such as the energy transition, artificial intelligence, and health technologies. For Mexico, where potential growth has been constrained by low productivity and lagging investment, cooperation on applied research and technology transfer could be a catalyst if it connects with industrial clusters, universities, and supplier networks.
The agrifood chapter takes on special weight in North America’s political context. Mexico is a major exporter of food to the region and Canada is a significant supplier of grains and inputs; at the same time, sanitary and phytosanitary provisions often become tools of trade pressure. A joint agenda to speed up inspections, align criteria, and reduce logistical uncertainty could cushion recurring disputes and protect flows during critical seasons.
The backdrop, however, is geopolitical. Ottawa is trying to reduce tensions with China through targeted tariff adjustments, while Washington has hardened its rhetoric and has threatened punitive measures if Canada deepens agreements with Beijing. In that dynamic, Mexico is watching cautiously: any major clash between its partners could complicate the USMCA renegotiation and increase regional currency and financial volatility, especially if tariffs become a broadly used negotiating tool.
For the Mexican economy, the push to shore up alliances within North America comes at a moment of contrasts. While Canada has posted bouts of stronger-than-expected growth, Mexico has faced signs of cooling: less industrial momentum in certain stretches, business caution amid the political-regulatory cycle, and a global slowdown that is weighing on exports. In that setting, infrastructure, investment, and trade facilitation look like relatively quick levers to sustain activity—so long as they come with legal certainty, logistics security, and energy planning.
In perspective, the Mexico–Canada rapprochement could serve as “regional insurance” if it helps diversify routes, attract capital, and increase the resilience of value chains against pressure from the United States. But its effectiveness will hinge on measurable outcomes—completed projects, less regulatory friction, and deeper business integration—and on both governments’ ability to navigate the USMCA review without external disputes ending up imposing costs on investment and trade.
In sum, Mexico and Canada are looking to turn a still underutilized trade relationship into an operational alliance centered on logistics, energy, and innovation, with the USMCA review and U.S. political pressure as decisive factors. The opportunity is to raise competitiveness and resilience; the risk is that geopolitical volatility and internal bottlenecks dilute the benefits if they do not quickly translate into projects and clearer rules.
