The breakdown of trade discussions between Ottawa and Washington may lead U.S. negotiators to pursue a more assertive approach in securing a deal with Mexico, according to a former Mexican trade negotiator. Kenneth Smith Ramos, who played a key role in the 2017-2019 Canada-U.S.-Mexico Agreement (CUSMA) negotiations, anticipates the U.S. will aim to establish a preliminary agreement with Mexico before year-end, deferring resolution of complex issues to a later date, such as potential restrictions on Mexican agricultural exports.
Both Canada and Mexico have been separately engaging with the U.S. to address tariff disputes and other specific trade issues in preparation for forthcoming trilateral discussions on amending and extending CUSMA. Talks between Canada and the U.S. collapsed on August 21 after Prime Minister Mark Carney withdrew negotiators due to last-minute American demands related to culture, automobiles, and sovereignty.
In response to the breakdown, Canada implemented retaliatory counter-tariffs on over 700 categories of U.S. imports, mirroring the U.S. threat to impose significant tariffs on Canadian goods valued at around $27 billion. The ongoing trade dispute has indefinitely postponed any trilateral negotiations regarding CUSMA enhancements.
The decision by the U.S. not to extend the CUSMA agreement was announced on July 1, despite Canada and Mexico expressing interest in extending the pact, emphasizing its benefits for all parties involved. Mexican Secretary of Economy Marcelo Ebrard highlighted the importance of finding common ground and moving forward amid tensions between Canada and the U.S.
Mexican President Claudia Sheinbaum and her administration are navigating trade tensions delicately, especially given their own ongoing negotiations with the U.S. Solange Marquez, from the Canadian Council for the Americas, noted Mexico’s cautious approach to avoid any negative impact on their bilateral conversations with the U.S., particularly following Canada’s withdrawal from talks.
The current trade climate in North America suggests a shift away from traditional free trade agreements towards discussions focused on tariffs and new trade terms, according to Marquez. Meanwhile, Mexican journalist Alex González Ormerod pointed out the potential for CUSMA to evolve into a unique agreement where Mexico and Canada may opt out of certain U.S. demands.
Both Marquez and González Ormerod emphasized the necessity for Canada and Mexico to strengthen their bilateral trade relationships independently of their ties with the U.S. Despite expressed interests in enhancing trade ties, the dominance of the U.S. in the relationship hinders the full potential of a robust Canada-Mexico partnership.