In this week’s edition: Three areas where Canada and Mexico can deepen ties, how one smart idea can help alleviate canola farmers’ China challenge, and why infrastructure, not policy, may be holding us back.
How to reset things with Mexico
By Jordan Brennan, RBC’s Head of Thought Leadership
Six months into President Trump’s trade war, with no deal in sight, Canada has good reason to deepen its partnership with Mexico. (And, based on a couple of recent trips south, the federal and Alberta governments agree).
Despite being Canada’s third largest trading partner, Mexico accounts for less than 4% of Canada’s global merchandise trade, the bulk of which is imports. In 2024, Canada shipped just $9 billion of goods to Mexico while importing $47 billion of Mexican goods.
Make no mistake, no country can displace the U.S. when it comes to trading significance for Canada. But we see three broad areas where Canada and Mexico can deepen ties.
Build Bridges & Infrastructure. Canada’s ‘Maple Eight’ pension funds, with north of $2 trillion in assets, are among the largest in the world and possess expertise in major infrastructure projects like pipelines, rail and port capacity. That’s what Mexico needs: patient capital with financing expertise. Canadian capital is a source of financial influence that could be leveraged to advance geopolitical and trade interests, and enhance commercial ties. Canadian Pacific Kansas City Rail’s investment in the Patrick J. Ottensmeyer International Railway Bridge—a $100M project launched earlier this year that deployed innovative technology to improve continental cargo mobility on the U.S.-Mexico border—is a case in point.
Boost Bilateral Trade. Many of Canada’s export industries—from energy to steel and aluminum, copper, agri-food, softwood lumber, pulp and paper, and plastics—are products the 130-million strong nation imports. Enhanced trade flows, underwritten by the current CUSMA, could help several of our stressed industries find relief.
Unite On CUSMA. While the U.S. will remain the cornerstone of North American trade, both Canada and Mexico must prepare for the joint review of the CUSMA, which is officially scheduled for 2026 but may come sooner. Rather than being played against one another, which Trump has successfully orchestrated until now, diplomatic coordination between Canada and Mexico could affirm treaty mechanisms, ensuring duty-free access for CUSMA-compliant goods. Trade irritants in specific industries (think supply management) and trans-shipment for Chinese goods must be managed. With trade nested in a broader framework that includes border security, defence, infrastructure, and supply chain integrity, all three countries can be made better off by deepening their cooperation, ensuring balanced and mutually beneficial trade across the bloc.
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