Canada and Mexico: A Strategic Partnership for Resilience

One of the key economic challenges the global economy faces today is the uncertainty and vulnerability caused by disruptions in global supply chains, whether due to natural disasters, political and social conflicts, or escalating trade tensions, particularly tariff threats from the US administration. These risks are increasingly affecting national economies and businesses of all sizes worldwide. Canada and Mexico are not exempt from these pressures. Their relationship with the United States has been marked by periods of uncertainty and tariff threats under the current US administration, which has contributed to a cautious economic outlook. For 2025, GDP growth is projected at just 0.2% for Mexico and 1.6% for Canada. Against this backdrop, a critical question arises: How can they deepen their strategic partnership to strengthen economic resilience and reinforce the stability of North American supply chains?

The economic integration both countries have developed with the United States over the past few decades presents unique opportunities, but also creates vulnerabilities, especially in strategic sectors closely tied to the US market. For example, Mexico’s economy is facing added pressure due to declining remittances, driven by a stricter US immigration policy. Additionally, Mexico’s modest economic forecast reflects limited fiscal flexibility and a heavy dependence on automotive exports. On the other hand, Canada’s economy is also heavily reliant on US demand, particularly in energy, machinery, and equipment manufacturing. This dependence leaves Canadian industries exposed to US trade policies and tariff risks.

While the solution — closer cooperation between Canada and Mexico — may seem obvious, its implementation requires deliberate strategy and shared political will. Both nations must capitalize on their experience, knowledge, and capabilities to address common trade and diplomatic challenges. Tariff threats from the United States pose a serious risk to millions of North American small and medium-sized enterprises, potentially jeopardizing their survival.

Why Canada–Mexico Partnership Matters More Than Ever

In today’s environment of economic uncertainty and geopolitical instability, collaboration with like-minded nations is not optional, it is essential. Canada and Mexico, as long-standing and trusted trade partners, must prioritize their bilateral relationship. They already have robust frameworks in place: the Canada–United States–Mexico Agreement (CUSMA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), along with shared membership in key multilateral institutions such as the WTO, OECD, APEC, G20, and the United Nations. These platforms offer significant opportunities to pursue common goals, such as greater economic integration and supply chain resilience.

However, achieving real progress requires more than simply holding membership in various agreements and multilateral frameworks. It calls for a coordinated agenda that combines top-down leadership from national governments with bottom-up engagement from industry, businesses, and key stakeholders. Advancing the Canada–Mexico partnership is no longer a diplomatic formality, it is an economic imperative to safeguard North America's leadership in critical supply chains such as automotive, aerospace, energy, electronics, agrifood, and pharmaceuticals.

From Potential to Action

For decades, experts have acknowledged the untapped potential of the Canada–Mexico relationship. Despite more than 80 years of diplomatic ties, the partnership has yet to reach its full potential. The recent visit of senior Canadian officials to Mexico City is a positive step, but what is now required is a clear, actionable agenda and sustained collaboration. This must go beyond the federal level to actively involve provincial and state governments, industry leaders, and underrepresented groups that have traditionally been excluded from trade and policy discussions, such as young entrepreneurs, women, Indigenous communities, small and medium-sized enterprises (SMEs), and migrant-owned businesses. Broadening participation in this way will not only enrich the partnership but also help ensure that its benefits are more equitably shared.

Years ago, trade leaders Andrés Rozental and Perrin Beatty emphasized the strategic importance of this relationship, not just to strengthen bilateral ties, but to enhance cooperation with the United States and build a more integrated and competitive North America. A recent publication by CGAI, COMEXI, and UNAM reaffirmed this view, highlighting that the Canada–Mexico partnership is crucial to stimulating regional trade, investment, and shared prosperity. Now is the time to transform this long-standing potential into tangible results. The window of opportunity is open, but it will only be realized if both countries actively collaborate with each other and their broader networks to shape a more inclusive, resilient, and competitive future for North America.

Recalibrating the Canada–Mexico Agenda

Despite growing cooperation under NAFTA and now CUSMA, the Canada–Mexico relationship has yet to reach its full economic potential. Bilateral trade remains relatively modest. As of 2024, Mexico accounted for only 1.1% of Canada’s total exports, while Canadian imports represented just 3.2% of Mexico’s exports. These figures highlight not only the unrealized opportunities between the two nations but also the urgency of strengthening this strategic partnership to foster deeper integration and shared prosperity.

Understandably, both countries have historically focused their efforts on managing relations with the United States, their largest trading partner. However, this has come at the expense of investing more fully in their own bilateral relationship. Canada and Mexico must now intentionally deepen cooperation, not just as a way to work with the United States but as a buffer against disruptions that can ripple across North American supply chains. These disruptions threaten millions of jobs, from manufacturing and logistics to retail, warehousing, and services. 

It is time for both countries to take accountability for strengthening their bilateral ties across all levels of government and business. Former Canadian diplomat Shauna Hemingway recently posed two critical questions that remain highly relevant: What is our shared vision for the future of North America? And are Mexicans and Canadians doing all they can to champion that vision and strengthen our deeply integrated trade relationship? These questions serve as a call to action. The strength of this relationship will not only shape the economic future of both nations but also define North America's role in an increasingly interconnected and competitive global economy.

Legal Uncertainty and the Role of Leadership

A recent US appeals court ruling that struck down tariffs imposed by the US government has added a new layer of legal and trade uncertainty, not only within the United States but around the globe. Countries previously targeted by US tariff threats are now questioning the legitimacy of such measures, potentially creating a deadlock in international trade with the United States, which could significantly impact North American supply chains. At this critical juncture, Canada and Mexico must step forward as joint leaders in shaping a more stable and predictable North American trade environment. 

Mexico and Canada are well-positioned to guide the region by facilitating smoother cross-border trade, investing in shared infrastructure and connectivity (by air, rail, and sea), collaborating on critical goods such as minerals and energy, and updating trade agreements to reflect emerging global challenges. Equally important is the need to fully implement the Canada–Mexico Action Plan, with a particular focus on its trade and investment pillar, while jointly advocating for open, inclusive trade and a transparent, rules-based system that promotes resilience, sustainability, and long-term competitiveness.

Bringing the United States on board with the vision for a more integrated and resilient North American region won’t be easy, but it will be essential for Mexico and Canada to engage in direct dialogue with the US administration, emphasizing the shared benefits of deeper integration and collaboration for the entire region, where each party has different priorities, yet all concerns can be heard and discussed to find common ground for a mutually beneficial future.

Looking Ahead: The CUSMA Renewal in 2026

Building a stronger and more resilient supply chain for North America will require a multifaceted approach that integrates efforts across different levels, prioritizing technological innovation, workforce development, sustainability, trade facilitation, and collaboration between the private and public sectors. 

As CUSMA approaches its first review in 2026, Canada and Mexico must be prepared to defend the gains achieved in North American supply chains while addressing evolving challenges. The renewal process will test the strength of their bilateral relationship and their ability to work constructively, respecting sovereignty and national interests. Maintaining open communication, building on shared values, and ensuring that the agreement continues to serve as a model of regional cooperation and economic integration will be essential. 

By leveraging their complementary assets, diverse experiences, and long-standing ties, Canada and Mexico have a unique opportunity to build resilient supply chains that not only benefit both nations but also strengthen North America's economic foundation and help maintain the region's leadership on the global stage.