U.S. Weighs Ending CUSMA for Separate Deals as Canada Intensifies Mexico Trade Efforts
While Canadian officials launched a significant trade offensive in Mexico this week, American leaders have been vocal about potentially dismantling the Canada-U.S.-Mexico Agreement (CUSMA) to pursue bilateral agreements instead. This development highlights growing uncertainties in North American trade dynamics, with political and economic implications for all three nations.
Trump's Stance and U.S. Trade Representative's Comments
U.S. President Donald Trump has repeatedly expressed skepticism about renewing CUSMA, suggesting it might be unnecessary for American interests. In a recent statement at a Ford plant in Michigan, he remarked, "There's no real advantage to it — it's irrelevant to me. Canada would love it. Canada wants it. They need it." This sentiment was echoed by Jamieson Greer, Trump's top trade representative, who told the New York Times that there is no "natural reason" for CUSMA to remain a trilateral pact rather than splitting into separate deals with Mexico and Canada.
Canada's Trade Mission to Mexico and Economic Disparities
In contrast, Canada has been actively promoting trilateral cooperation through a large-scale trade mission in Mexico City. Led by Internal Trade Minister Dominic LeBlanc, the delegation included 370 government officials, business leaders, and lobbyists aiming to strengthen trade ties and advocate for a renewed CUSMA. LeBlanc emphasized Mexico's shared commitment, stating, "I am reassured by the Mexican economy secretary ... his desire to work with Canada and to ensure that the review of CUSMA results in a strengthened and ongoing trilateral trade arrangement."
However, trade data reveals significant imbalances:
- Canada's exports to Mexico totaled $6.1 billion in 2024, while imports from Mexico reached $34.5 billion.
- This means Canada imports nearly six times more from Mexico than it exports.
- Exports to Mexico equate to roughly five days of exports to the United States, underscoring the vast difference in trade volume.
Political Motivations and Public Opinion
The Canadian government's focus on Mexico, despite the minimal trade compared to the U.S., appears influenced by domestic politics. Polls indicate that many Canadians view the U.S. as an unreliable ally, with 58% in a Politico poll expressing this sentiment. Additionally, Abacus Data found that only about half of Canadians believe ending CUSMA would be detrimental, suggesting political popularity may outweigh economic logic for the Liberal government under Mark Carney.
Meanwhile, Mexico has already begun negotiating aspects of a potential bilateral deal with the U.S., including a critical minerals agreement signed earlier this month. This move leaves Canada in a precarious position, as similar opportunities could have been pursued but were likely avoided due to political considerations.
Economic Risks and Future Outlook
Terminating CUSMA could inflict severe economic damage on Canada, given the U.S. market's immense value—68 times that of Mexico. Yet, the lack of a comparable trade mission to Washington this year raises questions about strategic priorities. As Trump continues to muse about ending the agreement, Canada's trade diplomacy faces challenges balancing economic interests with political narratives, potentially reshaping North American trade relations in the coming years.
