Canada, U.S. Share Concerns Over Mexico-China Trade Relations

By aligning its policies with the U.S., Canada is reinforcing its commitment to fair trade practices and protecting its domestic industries from unfair competition. However, Mexico’s role in North American trade remains controversial.

Canada and the United States share growing concerns about Mexico-China trade relations, with Mexico becoming a potential avenue for China to access the North American market.

During a press conference, Canadian Deputy Prime Minister Chrystia Freeland emphasized Canada’s agreement with the U.S. regarding trade policies, stating, “We are perfectly aligned with the United States, and that means we are not a back door to unfair Chinese traded goods.”

Meanwhile, Mexico’s stance raises red flags about the integrity of regional trade under the Canada-United States-Mexico Agreement (CUSMA). 

Mexico might serve as a “back door” for Chinese goods

Both Canada and the U.S. accuse China of leveraging subsidies and overcapacity to undercut domestic industries.

To counter this, Canada has introduced aggressive tariffs, including a 100% tariff on Chinese electric vehicles (EVs) and a 25% tariff on steel and aluminum imports. 

These tariffs, mirrored by the U.S., were designed to protect jobs and industries from what Freeland described as China’s “intentional overcapacity.”

In contrast, Mexico has not imposed similar tariffs, leading to concerns that the country may become a transit point for Chinese goods, circumventing the stringent measures in Canada and the U.S.

Freeland expressed concern over Mexico’s lack of tariffs on Chinese imports, a key issue in the broader Mexico-China trade dynamic.

She cautioned that this policy inconsistency risks making Mexico a channel for subsidized Chinese goods to flood North America, which ultimately undermines fair trade.

Canadian premiers want Mexico out of the North American trade pact

Canadian premiers have amplified this concern, calling for a re-evaluation of Mexico’s role in CUSMA and a look into alternative trade strategies.

Ontario Premier Doug Ford suggested a bilateral trade deal with the U.S. that excludes Mexico, arguing that Mexico’s trade policies create an uneven playing field that harms Canadian industries, particularly in automotive manufacturing.

Ford stated that all provincial and territorial premiers were united in his call for the federal government to pursue a bilateral trade agreement with the United States.

As chair of the Council of the Federation, representing Canada’s 13 premiers, Ford emphasized a strong consensus during a Wednesday conference call that separate trade agreements with the U.S. and Mexico are necessary to protect Canadian industries.

"All the premiers, we know Mexico is bringing in cheap Chinese parts, slapping made-in-Mexico stickers on, shipping it up through the U.S. and Canada, causing American jobs to be lost, and Canadian jobs," he said following the call.  

"We want fair trade."

Pushback from Mexico

Mexico’s President Claudia Sheinbaum dismissed the idea of excluding Mexico from CUSMA as unrealistic. Speaking at the G20 summit, Sheinbaum reminded reporters that Mexico originally advocated for Canada’s inclusion in the trilateral agreement.

Meanwhile, Kenneth Smith Ramos, Mexico’s former NAFTA negotiator, accused Canadian leaders of deflecting.

“Throwing Mexico under the bus distracts from Canada’s own trade vulnerabilities,” Ramos said.

He called for unity between Canada and Mexico to address shared challenges in the upcoming U.S. administration under President-elect Donald Trump.

What are the economic stakes for Canada?

Canada’s reliance on trade with the U.S., where 75% of its exports are destined, highlights the urgency of addressing Mexico-China trade concerns.

The automotive sector, in particular, could be disrupted if subsidized Chinese goods continue to find their way into North America through Mexico.

Freeland emphasized that the situation requires immediate action, warning that Mexico-China trade practices could destabilize Canadian industries.

“This is a critical time for Canada,” she said. “We must work to ensure that North America remains a level playing field for trade.”

Looking ahead to CUSMA’s 2026 review

As the 2026 review of the CUSMA approaches, it is unclear how the current trade tensions will unfold.

Freeland, who chairs a special cabinet committee on U.S.-Canada relations, described the upcoming CUSMA review as a pivotal opportunity to address trade disparities.

She urged Canadian leaders to rally together and present a unified front to tackle challenges posed by China’s trade practices and Mexico’s lack of alignment with Canadian and U.S. policies.

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