Flags of Canada and Mexico fly next to each other in Detroit, Mich,, on Aug. 29, 2018.Rebecca Cook/Reuters
It was the summer of 2018 when, appropriately, the negotiations around a continental free trade agreement to replace NAFTA were heating up. And then the Mexican delegation informed the Canadians that the U.S. was trying to cut Canada out of the deal altogether.
In the end, however, Mexico went to bat for Canada, rebuffing the Americans’ effort to divide and conquer. “They felt they were in a stronger position if Canada was also in the agreement,” said Steve Verheul, Canada’s lead negotiator for the U.S.-Mexico-Canada Agreement, which would be signed a few months after the attempted bilateral break. “They didn’t want to be just head-to-head with the U.S.”
Ottawa should follow Mexico’s lead – not out of obligation, but because it just makes sense. Canada and its middle-power peers will need every asset and ally they can get as an unshackled Donald Trump returns to the presidency in January.
Instead, Canada has hit the panic button at the first whiff of danger: a social-media vow by the president-elect to implement a 25-per-cent tariff on Canadian and Mexican goods until improvements are made on illegal migration and fentanyl importation along America’s borders. Just days later, the premiers of Ontario and Alberta demanded that Ottawa take a “Canada First” approach by ditching Mexico and negotiating directly with Washington. And Prime Minister Justin Trudeau has since mused that “we may have to look at other options” beyond working together as a united continental market.
Viewing Mexico as a liability and rankling our continental partner is not just bad optics. It’s bad strategy, particularly in the runup to likely negotiations over continental trade in 2026.
Fear and desperation are understandable emotional responses in the face of a 25-per-cent levy – an existential threat to the country that would leave Canada with worse access to the essential American market than Trinidad and Tobago.
If Canadians are to take Mr. Trump at his word that the tariffs really are about illegal migration and drugs, Mexico certainly faces the bigger challenge. From last September to this October, the U.S. reported 1.53 million encounters with migrants at its southern border and seized 21,100 pounds of fentanyl there in the last fiscal year, compared with 23,721 encounters and 43 pounds at its northern border. These are big problems for Mexico, but now that Mr. Trump has linked both borders in his threat, they’re Canada’s problems too, however unfair that may seem.
Combining forces with America’s other top trading partner would be a boon, not a burden. It would allow each side to put additional pressure on the U.S. at the bargaining table, increasing their cumulative weight when talking about how tariffs would cause the cost of living in America to surge, and how retaliation could lead to massive U.S. job losses.
Canada’s position only improves if it can tap into the leverage that Mexico has as the primary provider of auto parts to the U.S., a fast-growing host of nearshored supply chains to the Americas, and a country with a young, low-wage labour force. That Mexico is led by a new and popular president with an authoritative mandate doesn’t hurt, either.
Even the state of the U.S.-Mexico border could prove useful to Canadian interests. Ottawa is more aligned with Washington on the big issues, such as Chinese investment and illegal migration, and working trilaterally could provide cover for such contentious issues as Canada’s commitment to supply management in the dairy industry and its deficient defence spending. “If we were in a bilateral negotiation, then there’s no place to hide,” said Mr. Verheul. “The U.S. would be looking to achieve greater concessions from us.”
Over the decades, Canadian politicians have tried to distance themselves from Mexico out of a belief that it would be in the national interest. The shocker now is that they’ve resorted to this hoary trope so quickly. Worse, it’s only been four years since the end of the last Trump presidency; it’s as if Canada has learned nothing at all.
A month before he’s restored to the highest office in the world, Mr. Trump is already wielding his narrow mandate as a licence to disrupt the international rules-based order. It will be difficult, to say the least, to negotiate with Mr. Trump – even more so than in his previous term, now that he’s surrounded by loyalists.
Yet, in an act of apparent desperation, Canada has chosen to discard a potential Trump trump card almost immediately, ceding an advantage before he even takes office.