Trump Tariffs Threaten North American Trade Relations
President-elect Donald Trump’s recent threat to impose a 25% tariff on all imports from neighbouring Canada and Mexico has sent ripples throughout the North American Alliance. This move, which appears to be aimed at pressuring both nations on broader issues such as migration, could significantly disrupt the carefully maintained trade agreement between the three nations. Interestingly, the strategy seems to have pitted Canada and Mexico against each other, highlighting a stark difference in their response to Trump’s proposed tariff policy.
Divisive Strategies
If Trump’s intent was to divide and conquer, early indications show the strategy might already be taking hold. Following his announcement, Canada adopted a diplomatic approach, emphasising its deep alignment with the US, both economically and politically. Mexico, on the other hand, has opted for a more assertive stance, threatening to impose retaliatory tariffs if Trump’s threats materialise.
Behind this divide lies the potential dismantling of the United States-Mexico-Canada Agreement (USMCA) in favour of either renegotiated or separate trade deals with Washington. This raises critical questions about the alliance’s future and collective strength.
Canada’s “Better Than Mexico” Approach
Even before Trump’s statement, Canada had been quietly negotiating in preparation. Canadian officials have highlighted their supposed superiority compared to their southern neighbour, targeting three key areas that resonate with Trump’s administration—borders, relations with China, and jobs.
Border Security
Canadian delegates have reassured US officials that their border management is robust. Highlighting that undocumented migration into the US from Canada is negligible compared to Mexico’s border numbers, they have sought to position themselves as a more stable and secure partner.
Prime Minister Justin Trudeau has underscored Canada’s ability to collaborate with the US, stating in the House of Commons that “the idea of going to war with the United States isn’t what anyone wants.” Trudeau has reaffirmed Canada’s commitment to ensuring smooth trade relations while downplaying reactions to Trump’s rhetoric.
Trade with China
Canada has also presented itself as aligned with the US in its approach to China. The imposition of 100% tariffs on Chinese electric vehicles earlier this year serves as an example—a move that mirrors Trump’s hawkish stance on Chinese trade. Conversely, Canadian officials have hinted that Mexico’s reluctance to fully align with US trade policies on China casts it in a less favourable light.
Jobs and Wages
Canada further asserts that it shares more equitable prosperity and wage levels with its American neighbour than Mexico does, making it less of a competitor for US jobs. The Canadian government has conveyed this narrative to Republican allies of Trump in private discussions, further attempting to differentiate itself from Mexico.
While this strategy may be designed to protect Canadian interests, it has drawn criticism from some quarters within Canada. Conservative leader Pierre Poilievre called for retaliation if tariffs were imposed but also stated, “I will do what is necessary to preserve that relationship above all others.”
Mexico’s Defiant Response
Contrasting Canada’s approach, Mexico has taken a stronger, more defiant position. President Claudia Sheinbaum has depicted the tariffs as unfair and has focused on defending Mexico’s trade relationship with the US. Addressing speculation about her counterpart in Canada, she dismissed Canadian angles as political strategy, noting Prime Minister Trudeau had reassured her of ongoing allied discussions.
Taking a swipe at Canada during her daily news conference, Sheinbaum pointed out that Canada had imported $1.6 billion worth of Chinese electric vehicles in 2023—higher than Mexico’s corresponding numbers. This remark aimed to counter Canada’s narrative of alignment with US trade priorities regarding China.
Unlike Trudeau, who faces significant domestic political challenges, President Sheinbaum enjoys widespread support at home. This bolstered confidence has allowed her to take a firm stance against potential US tariffs while maintaining faith in Mexico’s negotiating power.
The Uncertain Future of USMCA
A strong alliance between the United States, Canada, and Mexico has been the bedrock of economic stability in North America for decades. The USMCA, signed in 2020 to replace NAFTA, was a product of coordinated trilateral negotiations spearheaded during Trump’s first term.
Yet, Canada’s apparent willingness to separate its fate from Mexico’s during these new discussions harks back to previous tensions during the creation of the USMCA. Experts argue that this attempt to play into Trump’s “divide-and-conquer” strategy is bound to backfire.
Diego Marroquín Bitar, a trade scholar at the Wilson Center, views this development with scepticism. “It’s a little hypocritical that they are now trying to throw Mexico under the bus,” he noted, referencing cooperative efforts by Mexico in past years to protect Canadian interests during trade disputes with Trump’s administration.
Furthermore, Mexico’s growing trade significance with the US could bolster its position in any future trade negotiations. Already the top supplier of US imports, Mexico is also America’s largest customer for agricultural goods—a critical metric in establishing trade value.
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