Canada is trying to salvage its relationship with Mexico after falling out with Trump: analysts

Prime Minister Mark Carney speaks with reporters Parliament Hill in Ottawa, on Monday, June 30, 2025. THE CANADIAN PRESS/Spencer Colby

MEXICO CITY - Prime Minister Mark Carney is scrambling to save his country’s relationship with Mexico after it disintegrated late last year when Canadian officials suggested they’d be better off negotiating a trade deal with the Trump administration alone.

Carney attempted to break the ice in a phone call with Mexican President Claudia Sheinbaum in July by complimenting an indigenous-made soccer ball she had gifted him at their last meeting and saying he hoped to visit Mexico soon.

The warm overture, relayed to Reuters by three people familiar with the call, highlights Canada’s attempt to repair the damage after a string of public slights by Canadian officials, including Ontario Premier Doug Ford, who said in November that any comparison of Canada to Mexico was “the most insulting thing I’ve ever heard.”

Mexico and Canada are in many ways natural allies. They’ve benefited from trilateral trade deals with the U.S. for 31 years: first the North American Free Trade Agreement in 1994 and subsequently the U.S.-Mexico-Canada Agreement that replaced it in 2020.

But the relationship between the two countries has been beset by allegations of betrayal on both sides and memories of fraught negotiations with Trump. Top officials virtually stopped talking in November after former Canadian Prime Minister Justin Trudeau mused about cutting a trade deal with the U.S. without Mexico, suggesting the U.S. and Canada were more aligned on issues like China.

A few days later, Trudeau flew to Mar-a-Lago for a surprise visit with U.S. President Donald Trump, stunning Mexican officials. It seemed as if Canada had already developed a strategy for dealing with Trump while Mexico was wringing its hands, one Mexican official said.

An infuriated Sheinbaum directed her lieutenants to stop dealing with the Canadians, at least until Trudeau left office, according to the official, who spoke on condition of anonymity.

Nine months later, Canada finds itself on the back foot with Trump while Mexico is reveling in its relative success. Last week, Trump gave Mexico a 90-day pause on new tariffs going into effect, keeping the rate at 25%, while raising tariffs on Canada to 35%.

Now, in a remarkable about-face, Canadian officials are on a campaign to win back Mexico’s favor and save the trilateral trade deal Trudeau suggested he was willing to ditch, according to two people with knowledge of the countries’ tense relationship.

That treaty continues to shield a large number of Canadian and Mexican exports to the U.S. from Trump’s latest rounds of tariffs.

Carney said on Tuesday that “it’s important to preserve” the trilateral agreement while Canada’s foreign minister and finance minister traveled this week to Mexico for a two-day visit with top officials.

Asked by Reuters whether the purpose of her visit was to repair shattered ties with Mexico, Canadian Foreign Minister Anita Anand said: “It is extremely important for Canada to have a resilient relationship with Mexico, and indeed, I’m here to kick start that relationship.”

Sheinbaum, on X, reiterated that message. “We’re strengthening the relationship between our countries,” she wrote.

A spokesperson for Sheinbaum declined to comment.

‘Look in the mirror’

Whether they repair their partnership and become a tightly-knit bloc in negotiations with the U.S. will have lasting consequences not only for the three countries but the thousands of companies that depend on free trade in the region, from automakers to medical suppliers, three trade analysts said.

“The big question I have is whether there’s a real sense of communication or co-ordination between Mexico and Canada,” said Kenneth Smith Ramos, a former trade negotiator for Mexico. “I don’t get the sense that is the case. I think both are operating bilaterally with the U.S. and that’s it.”

He said Mexico saved Canada from being ousted from the USMCA treaty when Canadian and U.S. negotiators got into a “severe fight” during negotiations in 2018.

“Mexico insisted that the agreement remain trilateral,” said Smith, who represented Mexico in those negotiations, adding it’s that history that likely made Mexican officials especially bitter when Canada appeared to spurn Mexico to curry favor with Trump.

A Canadian source involved in the 2018 talks sharply disputed that characterization.

“The Mexican team went behind our back and negotiated their own bilateral deal with the U.S. Trump then used that to pressure Canada to make concessions,” said the source, who spoke on condition of anonymity.

The source said the bad blood with Mexico stemming from the 2018 negotiations is part of the reason Canadian officials expressed interest last year in a bilateral deal with the U.S.

“If there are Mexicans who feel Canada betrayed them, they should look in the mirror.”

Trading barbs

After Trudeau came away from Mar-a-Lago empty-handed at the beginning of the year, the relationship became openly hostile with him and Trump trading barbs. Sheinbaum, meanwhile, insisted on staying on Trump’s good side, virtually at any cost, according to three people familiar with her strategy.

As the Canadians fell into a deeper rut with Trump, Carney, who replaced Trudeau as prime minister in March, sought to make amends with Mexico by inviting Sheinbaum to attend the Group of 7 summit in Canada.

Sheinbaum delayed accepting for nearly three weeks but eventually assented. Trump left the summit early without meeting Sheinbaum, a development that “worried” Mexico’s president, one of her advisors said.

Carney’s invitation and Sheinbaum’s attendance appeared to be a reset of sorts in the two countries’ relationship, said Pedro Casas, CEO of the American Chamber of Commerce of Mexico. It sent a “clear message” that the two leaders are “in this together,” he said.

The Canadian prime minister extended his good-faith gestures to Sheinbaum during their follow-up phone call in July. He told her that the following day Canada would announce limits on imports of steel produced in other countries in an effort to help the country’s domestic steel sector, which is reeling from Trump’s 50% tariffs.

But Carney assured Sheinbaum that the measure wouldn’t affect imports from Mexico, according to two people with knowledge of their conversation.

Whatever her reservations about Canada, Sheinbaum has made clear she is completely invested in saving the trilateral trade deal with it and the U.S. If the three countries fail to renew the pact next year, the treaty will automatically expire in 2036, creating a potentially disastrous economic blow to Mexico.

U.S. Secretary of Commerce Howard Lutnick has privately raised the idea of ditching the agreement in favor of a bilateral trade deal with Mexico, according to the Mexican official – a scenario the person said Mexico is not keen to pursue.

Secretary Lutnick did not respond to a Reuters request for comment. The White House did not respond to a request for comment.

“Mexico knows very well that if we try to go head-to-head, toe-to-toe with Washington the asymmetry in the negotiations is going to favor the U.S,” said former Mexican trade negotiator Juan Carlos Baker. “It’s always better to have a three-player game.”

Reporting by Emily Green, David Ljunggren and Stephen Eisenhammer. Editing by Christian Plumb and Michael Learmonth, Reuters