The grocery store frozen aisle offers a telling snapshot of Canada-Mexico trade relations. Those avocados from Mexico sitting next to Canadian maple syrup create a practical illustration of cross-border commerce that generates $50 billion annually between the two nations. But as the threat of U.S. tariffs looms on the horizon, that relatively quiet partnership is suddenly thrust into the spotlight.
“It’s always been a stable but under-discussed relationship,” says Patricia Goff, international political economy professor at Wilfrid Laurier University. “Now we’re seeing both countries recognize they need stronger direct ties as insurance against American trade volatility.”
Recent diplomatic signals suggest both Ottawa and Mexico City are working to deepen connections. Last month’s meeting between Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum resulted in a joint announcement to explore new transportation corridors connecting Mexican ports with Canadian rail networks. This comes alongside a notable 27% increase in two-way investment between the countries since 2020.
The timing is hardly coincidental. Donald Trump’s electoral victory has revived concerns about potential tariffs that could disrupt North American supply chains. During his first term, steel and aluminum tariffs cost Canadian producers an estimated $3.2 billion, according to the C.D. Howe Institute. Mexico faced similar pressures on automotive exports.
“They’ve both been burned before,” explains Carlo Dade, trade director at the Canada West Foundation. “What’s different now is they’re realizing there’s untapped potential in working directly with each other rather than always triangulating through Washington.”
The numbers support his assessment. While Canada-U.S. trade reached $1.1 trillion and Mexico-U.S. commerce topped $798 billion last year, the Canada-Mexico exchange remains relatively modest at around $50 billion. Yet growth opportunities abound in several sectors.
Agriculture represents one promising avenue. Canadian beef and pork producers have seen Mexican exports grow 16% annually since 2018, with further potential as Mexico’s middle class expands. Meanwhile, Canadian consumers purchased over $3.4 billion in Mexican fruits and vegetables last year, according to Statistics Canada.
The energy sector offers another growth opportunity. TC Energy’s increasing investments in Mexican natural gas infrastructure demonstrate how Canadian firms can help Mexico reduce dependence on U.S. energy imports. Similarly, Canadian mining expertise aligns with Mexico’s substantial mineral reserves.
Digital trade, particularly in financial technologies, represents yet another promising frontier. Toronto-based payment processor Nuvei recently expanded operations in Mexico, while Mexico’s Clip has found traction in Canadian markets.
“The complementary nature of our economies is obvious once you look beyond the traditional U.S.-centric perspective,” notes Javier García-Bejos, Mexico’s former deputy trade minister. “Canada needs year-round produce and manufacturing capacity; Mexico needs investment and technical expertise in areas like clean energy.”
Despite this potential, significant obstacles remain. Transportation infrastructure between the countries is underdeveloped compared to north-south corridors. Regulatory differences create compliance headaches for businesses. And language barriers sometimes complicate negotiations that would proceed smoothly in bilingual U.S.-Canada or U.S.-Mexico contexts.
Some policy experts suggest using the CUSMA (also known as USMCA) framework more effectively. The agreement’s review mechanisms provide opportunities to strengthen bilateral cooperation without renegotiating the entire pact.
“The committee structures within CUSMA allow Canada and Mexico to coordinate positions before engaging with the U.S.,” explains Meredith Lilly, former trade advisor to Prime Minister Stephen Harper. “They haven’t fully utilized these platforms yet.”
Business leaders echo this sentiment. At the recent Canada-Mexico Business Summit in Winnipeg, attendees discussed practical steps to bypass potential U.S. trade disruptions. These included developing alternate shipping routes through Vancouver and Manzanillo ports and creating standardized certification processes for agricultural products.
“We’re not trying to replace U.S. trade—that would be impossible,” says Carlos Slim Domit, chairman of Grupo Carso. “But diversification creates resilience, especially when political winds shift.”
The potential benefits extend beyond economics. Enhanced Canada-Mexico cooperation could strengthen their negotiating positions on continental issues from climate policy to migration management.
For small and medium enterprises, the relationship offers particular promise. Mexican markets often provide a less competitive entry point for Canadian exporters than the crowded U.S. marketplace. Similarly, Canada offers Mexican businesses access to stable financial systems and proximity to northern U.S. markets.
“The big multinationals already navigate North America seamlessly,” observes Mauricio Ortiz, CEO of Maple Bear Latin America, a Canadian education franchise with over 30 locations across Mexico. “The opportunity now is helping smaller companies establish footholds in our respective markets.”
As preparations begin for the 2026 CUSMA review, trade experts suggest both countries should formalize their cooperation through bilateral mechanisms that operate independently of Washington. This could include dedicated trade promotion offices, regulatory harmonization initiatives, and transportation infrastructure investment.
The emerging Canada-Mexico relationship represents a pragmatic response to uncertain times rather than any fundamental shift in North American dynamics. Both nations remain deeply integrated with the U.S. economy, but the insurance policy of stronger bilateral ties could prove invaluable if protectionist policies return.
“Geography means North American trade will always flow predominantly north-south,” concludes Goff. “But building east-west connections creates alternatives. In trade, as in life, it never hurts to have options.”
