Can Canada learn from Mexico’s approach to Trump?

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This article was published 12/02/2025 (263 days ago), so information in it may no longer be current.

It’s time for Mexico and Canada to re-evaluate the so-called “three amigos” trade alliance.

U.S. President Donald Trump announced a 30-day reprieve from punishing U.S. tariffs against both Canada and Mexico (as well as adding the new steel and aluminum levies on Monday), but that doesn’t lessen the threat.

As the largest trade partner of the U.S. — compiling a huge surplus of US$130 billion in 2022 — Mexico obviously has a tremendous amount of exposure here. Setting to one side the fact that Mexico is a cheap source of labour for the U.S. economy, it also has the largest number of U.S. multinational companies operating within its borders.

It is also instructive to note that roughly 70 per cent of exports from Mexico actually come from those same U.S. businesses. So given that economic interdependence, whom exactly would these U.S. levies be hurting?

Clearly, there may be lessons here for Canada to think about as it moves forward under Trump’s persistent tariff threats. Besides working more closely and collaboratively with our Mexican counterparts, Ottawa should bolster its own bilateral “arrows” by reaching into Mexico’s quiver.

For one thing, Mexico is the second-largest importer of U.S. goods (accounting for some 15.7 per cent in 2022) — trailing only Canada’s 17.5 per cent. That means that retaliatory tariffs on U.S. imports could have a substantially negative impact on the American economy. Indeed, the fallout from U.S. tariffs could precipitate the loss of hundreds of thousands of U.S. jobs, lead to rising costs and prices and even cause a spike in inflation (never a political winner for a sitting U.S. president).

As Mexico’s top trade official during the NAFTA 2.0 renegotiations, Ildefonso Guajardo is quick to note: “Mexico is the No. 1 buyer of U.S. yellow corn and fructose, and a major buyer of U.S. poultry, pork and several other products. And we buy most of these products from U.S. rural areas that voted for Trump.” Spanish translation: Mexico can also punch below the belt.

Additionally, Mexico is now the largest source of goods entering the U.S. marketplace — surpassing China in 2023 — including 63 per cent of its vegetables and 47 per cent of its fruits. It also wants to be viewed as a low-cost alternative to China in areas such as electric batteries and precious semiconductors. With lower wages, a competitive cost structure and integrated supply chains, the Mexicans want the U.S. and Canada to see them as a reliable “nearshoring” production option instead of China or even Taiwan.

With respect to China’s growing economic relationship with Mexico (including a 150 per cent increase in exports to Mexico since 2016), the Mexican side is quick to point out that Chinese investment in Mexico is comparatively small from a wider North American context. Not only are there no Chinese EV automotive plants on Mexican soil, but Mexico imposed a 25 per cent tariff on Chinese electric vehicles in 2023.

Finally, there are also serious discussions taking place within Mexico today on how to establish a meaningful investment-screening process not unlike what exists under Canada’s Investment Canada Act (which could target potential Chinese investment offers).

The one thing that the Trump White House does not want to do is to push Mexico into the waiting arms of the Chinese. So it needs to be careful about going overboard in punishing the Mexicans. You can be sure that Mexico City wants to plant the seed in the minds of senior U.S. government officials that maybe they actually need Mexico more than they initially thought.

On another matter: does not Mexico significantly impact the flow of illicit drugs into the U.S.? It would seem to me that having Mexico in your corner is a better way to ensure that the government is cracking down on the illegal fentanyl trade.

The biggest card, though, that Mexico has right now is its capability to control the migrant flow still seeking greener pastures in the U.S. It also bears repeating that it is up to the Mexican government to decide whether to permit prospective immigrants to remain in Mexico while seeking a legal pathway to U.S. residency or citizenship.

Moreover, Mexican authorities have the ability to close or restrict the country’s southern border with Guatemala and thus impede asylum seekers from making their way to the Mexico-U.S. border. And the Mexicans would also have to be onside with any effort by the Trump Administration to deport to Mexico thousands of undocumented (and unwanted) non-Mexican migrants.

So while it is true that Mexico would have a great deal to lose if a full trade war breaks out with the U.S., the country is not totally defenceless. It does indeed have ways of inflicting pain on the Trump White House and the American people — as the current month-long tariff delay suggests — when it wants to play its various bargaining chips and arrows. It may be time, then, for Canada to stop disparaging its USMCA partner and start taking a page from the Mexican trade playbook.

Peter McKenna is professor of political science at the University of Prince Edward Island in Charlottetown.