Canada Increases Auto Parts Imports From Mexico

Canada is importing more auto parts from Mexico than from the United States, marking a shift in North American trade dynamics. According to data from Statistics Canada, Canadian imports from Mexico reached US$784 million, exceeding the US$690 million imported from the United States. The change reflects Canada’s growing interest in deepening industrial integration with Mexico, particularly in the automotive sector.

Flavio Volpe, President, Automotive Parts Manufacturers’ Association of Canada, says that Canadian policymakers underestimated the importance of the Mexico-Canada relationship. “Those who downplayed this partnership fell into the trap set by US President Donald Trump, who sought to separate the two nations,” he adds.

Volpe says that the automotive industry exemplifies the long-standing integration of the three North American economies. “The truth is we need Mexico to remain as prosperous as it has been,” he adds, noting that Canadian auto parts manufacturers operating in Mexico “have been consolidating for decades, and the commitment to continue investing will not change.”

Canada has 82 automotive companies with investments exceeding US$608 billion in Mexico. About 120 Canadian plants operate in the Mexican automotive and auto parts industry, generating approximately 58,000 direct jobs, in addition to thousands of indirect ones. Several other Canadian firms in Mexico supply the automotive value chain even if they do not belong directly to the sector.

Trade data from June 2025 show that Canada imported more vehicles from Mexico than from the United States, illustrating a significant shift driven by tariffs and changing trade relations. Alejandro Meyemberg, CEO of Meyemberg International Group, says that the United States-Mexico-Canada Agreement (USMCA) remains “a key instrument for maintaining competitiveness and strengthening trade ties.” He adds that “the agreement not only guarantees commercial stability but also promotes collaboration and mutual development.”

Meyemberg says that Canadian firms see Mexico as a strategic partner due to its location, skilled workforce, and favorable conditions for innovation, though he pointed out that “greater certainty is still needed in fiscal and legal matters.” He identified the main challenge ahead as “maintaining joint competitiveness amid global economic changes and new trade regulations.”

Ongoing talks about a new trade corridor between Canada and Mexico remain in early stages, following discussions involving Prime Minister Mark Carney. However, the upcoming USMCA review presents risks. Analysts warn of stricter rules of origin and higher scrutiny over Asian content in components. Canadian industry experts say that tariffs of 25% on steel and aluminum imposed in March 2025 have disrupted supply chains and reshaped the market.

Trade tensions between Washington and Ottawa continue to escalate. The commercial relationship between the two countries reached a breaking point after Donald Trump abruptly announced the suspension of all trade negotiations with Canada. The decision, posted on his Truth Social account on Oct. 23, came days after a meeting with Canadian Prime Minister Mark Carney at the White House. Trump cited a Canadian campaign that used a Ronald Reagan speech to criticize his tariff policies as the reason for the suspension, accusing Ottawa of trying to influence the US Supreme Court’s review of his trade measures.